Today - Friday, May 22, 2015
- Core CPI rose 0.3% in April, the fastest pace since January 2013. Forecasts had been for just a 0.1% gain. Over the last 12 months, core CPI was up 1.8% in April, the same as March.
- The overall CPI was higher by 0.1% in April and lower by 0.2% year-over-year.
- The dollar bull ETF (NYSEARCA:UUP) is up 0.4% after the news. Against individual currencies, the greenback jumped about 100 pips vs. the euro (NYSEARCA:FXE), with similarly-sized moves vs. the aussie (NYSEARCA:FXA), loonie (NYSEARCA:FXC), swissie (NYSEARCA:FXF), yen (NYSEARCA:FXY), and cable (NYSEARCA:FXB).
- ETFs: UUP, UDN, UUPT, UDNT, FORX, USDU
- ECB President Mario Draghi reiterated his call this morning for euro zone countries to reform their economies, warning that future growth would remain modest.
- "It should...be clear that the argument that accommodative monetary policy constitutes an excuse for governments and parliaments to postpone their reform efforts is incorrect," Draghi declared, stating that the ECB's money printing would have to be accompanied by an economic overhaul.
- "Recently, economic conditions have improved somewhat in Europe...but growth is too low everywhere," he added.
- Euro +0.8% to $1.1197.
- China's stock market burst back to life this week, continuing a year-long rally in the world's second-largest economy as Beijing steps up monetary easing and money floods in from overseas due to the new trading link with Hong Kong.
- The rally took a brief pause recently on worries it had gone too far and too fast, but it seems like the bulls have returned.
- The Shanghai Composite advanced 2.8% today, taking gains to 8.9% this week while Shenzhen rose 1.1% to bring its rally to a 12.2% gain over the past five days.
- ETFs: FXI, ASHR, EWH, CAF, YINN, KWEB, PGJ, GXC, FXP, HAO, YANG, TAO, CHIX, CHN, PEK, CHIQ, CQQQ, MCHI, TDF, QQQC, XPP, YAO, GCH, ASHS, YXI, CN, CHXF, FCA, CHNA, CNXT, CHII, CHIE, ECNS, EWHS, CHIM, KBA, KFYP, FCHI, JFC, FHK, AFTY
- The Ifo measure of German business confidence weakened for the first time in seven months in May, albeit only slightly, another sign that growth in Europe's largest economy is losing momentum.
- The Ifo business climate index slipped to 108.5 from 108.6 in April, its first drop since October 2014, but still rested above forecasts for a 108.3 print.
- Germany’s economy is still set to outperform that of the euro area, with unemployment at record lows, lower borrowing costs, and exporters gaining from the ECB's asset-purchase program.
- DAX -0.1% to 11,853.
- ETFs: EWG, BUND, EWGS, DBGR, GERJ, DXGE, BUNL, FGM, BUNT, GGOV, HEWG
- With time running out for a deal to unlock the last €7.2B tranche of bailout funds, talks between Prime Minister Alexis Tsipras, President Francois Hollande and Chancellor Angela Merkel broke up shortly before 1 a.m. on Friday with the three deciding only to stay in close contact.
- The leaders agreed that "significant progress" had been made, but "open issues" such as pensions, sales-tax rates and targets for a primary budget surplus remained.
- ETFs: GREK
- As a three-day meeting of the China-backed AIIB comes to a close, it looks like Asian countries will be taking a 72%-75% stake in the $100B lender, while European and other nations will own the rest.
- China and India will become the bank's two biggest shareholders, with a 25%-30% stake and 10%-15% stake, respectively.
- The meeting also aimed at finalizing the draft articles of agreement and operational policies for the establishment of the institution.
- Previously: AIIB founding members to discuss policies (May. 19 2015)
- As widely expected, the Bank of Japan kept its massive ¥80T monetary stimulus program intact on Friday, and revised up its assessment of the economy, despite inflation still hovering around zero.
- Data last week showed GDP grew an annualized 2.4% in the first three months of 2015, as consumption climbed for a third straight quarter and companies boosted spending for the first time in a year.
- Nikkei +0.2% to 20,244.
- ETFs: DXJ, EWJ, DFJ, DBJP, NKY, JOF, EZJ, JEQ, JPNL, DXJS, EWV, SCJ, HEWJ, JSC, ITF, JPP, QJPN, FJP, JPMV, DXJT, DXJR, DXJC, JHDG, DXJH, DXJF
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