•  
Mon, 26th June 2017

Anirudh Sethi Report

  •  

Archives of “May 10, 2017” Day

China (April) inflation: CPI 1.2% y/y (expected 1.1%) PPI 6.4% y/y (expected 6.7%)

The inflation figures from China for April

CPI  1.2% y/y
  • expected 1.1%
  • prior 0.9%
  • Up 0.1% for the m/m figure
  • Food inflation down 3.5% y/y (down 0.6% for the m/m)
  • Non-food inflation +2.4% y/y, +0.2% m/m
PPI  6.4% y/y
  • expected 6.7%
  • prior 7.6%
  • the PPI is down 0.4% for the m/m
We were kept in suspense for a few seconds there, data slow to come out

North Korea Ambassador Tells Sky: “We Are Ready To Turn To Ashes Any US Strategic Assets”

In a interview posted moments ago by Sky News, in response to a question “is a sixth nuclear test now imminent”, the answer of the North Korean Ambassador to the UK, Choe Il was “In regards to the sixth nuclear test, I do not know the scheduled time for it, as I am here in the UK, not in my home country. However, I can say that the nuclear test will be conducted at the place and time as decided by our supreme leader, Kim Jong-Un.”

Asked if he is afraid of a possible US military response, the ambassador answers that “we are developing our nuclear strength to respond to that kind of attack by the US. If the US attacks us, our military and people are fully ready to respond to any kind of attack. I do not think the US are considering a military attack against us.” 

Asked what would North Korea’s response be to a preemptive strike, he answer that: “The US cannot attack us first. If the US moves an inch, then we are ready to turn to ashes any available strategic assets of the US.”

He also added that “our nuclear power is our sovereign right”, which technically is true.

In reaction to his comments, stocks, and most FX pairs, have dropped to session lows.

WTI Crude Bounces Back Above $46 After Biggest Crude Draw Since 2016

WTI and RBOB prices slipped lower today after EIA raised its 2017 US crude output forecast (and the dollar rallied) along with Libya production headlines. WTI bounced on a much bigger than expected draw from API (-5.789mm v -2mm exp), but RBOB slipped towards the lows of the day on another unexpectedly large gasoline build.

API

  • Crude -5.789mm (-2mm exp) – biggest since 2016
  • Cushing -133k (+60k exp)
  • Gasoline +3.169mm (+350k exp)
  • Distillates -1.174mm (-800k exp)

Hope (for the bulls) is that crude oil stocks have peaked (with seasonal declines due) and API appears to confirm that with the 5th weekly draw (and largest since December – if this holds for tomorrow’s DOE data). Gasoline saw another big build though…

Heading into the API print, WTI drifted up to test $46 and RBOB above $1.49 but the kneejerk reaction was crude bid and gasoline offered…

“The Libyan output increase is putting pressure on the market and there is a lot of new bearish interest coming from funds,” warns Clayton Rogers, an energy derivative broker at SCS Commodities Corp. in Jersey City, N.J..

Fed’s Robert Kaplan: Baseline view is still 3 rate hikes in 2017

Robert Kaplan is head of the Federal Reserve Bank of Dallas

Adds that if the pace of the economy is faster than expected, could do more than 3 … and if its slower (you guessed it), could do less than 3
More:
  • Watching recent moves in 10 yr Ts, may be a transitory flight to quality
If only the flight was on United the Treasury’s could get punched in the face, that’d fix ’em!
And, more:
  • Says globalisation can be a tool to increase US growth
  • We are very near full employment
  • Some of President Trump’s proposals are positive, some are concerning
  • Says he worries about immigration and trade policy
  • Have not seen as much wage pressure as though at this low unemployment rate
  • Worried about high levels of government debt as a systemic threat

US Indices end the day with mixed results

The US stock market is ending mixed with the  NASDAQ index leading the way (new record close).  Apple is ending up $.95 to $153.96 and the rise has taken its market capitalization above 800 billion.  The S&P is ending down. The Dow is also lower on the day.
  • NASDAQ composite index is closing at 6120.58, oof  17.926 points or +0.29%. The  high reached  6132.996 while the low was at 6107.59. 
  • The S&P index is ending down -2.46 points to 2396.92.  The high reached 2403.87. The low extended to 2392.44
  • The Dow industrial average is closing at 20,975.78. That represents a decline of 36.50 points  or -0.17%. The high reached 21,046.85. The low extended to 20938.04.