The five main lines are all over the Golden Week overseas market
abstract
Main line 1: The US economic data is generally improving, and the superimposed tax improvement process is progressing. The US dollar and US stocks are boosted;
Mainline 2: In December, the Fed’s rate hike is expected to rise, and the hawks’ presidential candidate will be transferred, and the US debt will be under pressure;
Main line 3: The fundamentals of the European economy continue to improve, but political uncertainty is heating up, the European stocks are hard to rise, and the bond market is hard to fall;
Mainline 4: Prime Minister Mei’s status is in jeopardy, and the pound plunged, which is good for the UK stock market;
Main line five: OPEC extended the limit of production and two hearts and minds, the US supply force, crude oil fell.
Overall, the global market liquidity improved during the Golden Week, and the overall economic data of the United States, Europe, China and Japan was superimposed, and market risk preference was higher. All major stock indexes have risen steadily. Among the emerging markets with higher elasticity, the growth rate is relatively high. The UK stock market also performed well due to the decline of the British pound. The safe-haven assets such as the yen and gold declined.
Market dynamics
Main line 1: The US economic data is generally improving, and the superimposed tax improvement process is progressing. US stocks and US dollars are boosted.
During the National Day, Mid-Autumn Festival holiday and holidays, US stocks and US dollars rose. The S&P index rose for eight consecutive years, the longest continuous increase in four years; the US dollar index once broke the 94 mark. The strength of the US dollar is strongly driven by two factors:
1) Recently, many economic data in the United States have performed relatively strongly. The ISM manufacturing and non-manufacturing PMIs have reached new highs since 2004 and 2006 respectively. Among them, the manufacturing PMI is as high as 60.8, which is pointing to the accelerated economic expansion. The durable goods orders also appeared in August. Significant rebound; and despite the new non-agricultural employment less than expected, wage growth accelerated and unemployment rate hit a new low;
2) The tax reform has also made a breakthrough. The House of Representatives recently passed the 2018 budget resolution. If the budget is passed in the Senate, it means that Reconciliation can be initiated to pass the tax reform with a simple majority. Although the tax reform is not as strong as the tax cuts that Trump claimed before, it is still good for the stock market.
From the fundamental data, the US economic data recently released shows that the overall economic situation in the United States is improving: the survey and the prosperity index continue to strengthen. In September, the ISM manufacturing and non-manufacturing PMI indices continued to rise in August, surpassing expectations, reaching 2006. The new high in the year has boosted market sentiment; the labor market is generally stable, and the US non-agricultural employment unexpectedly fell in September due to the hurricane. However, the temporary disturbance did not cause market panic, the unemployment rate and salary growth rate were better than expected, and the overall labor market Still relatively stable; industrial, retail and wholesale are still not as good as expected, but the recent data has improved; the trade deficit has fallen to the lowest level in the last 11 months in August, and the US export is good to narrow the deficit; in the real estate market, real estate is in short supply. The situation did not appear to be significantly reversed, superimposed hurricane impact, housing sales are still weak, need to be alert to the possible drag of real estate in the short term.
About non-agricultural in September, you can read more here -
Affected by the hurricane, the US non-agricultural employment accident fell in September, but the temporary disturbance did not cause market panic. The unemployment rate and salary growth rate were better than expected, but boosted the US dollar and US debt in a short-term surge.
1) The sharp decline in the employment of the catering industry dragged down the non-agricultural employment accident in September, and the negative disturbance of the hurricane was the main cause. In September, non-agricultural employment in the United States fell by 33,000, lower than the expected growth of 80,000, the first decline in 2010, and the August data was revised from 156,000 to 169,000. Hurricane Harvey and Irma successively attacked the United States, which had a negative impact on the normal life of employees and the normal operation of the company. It was the main cause of the unexpected decline in non-agricultural employment in September: the number of people who were not on duty in the survey week of the 12th of the month was as high as 150. Tens of thousands of people have been the highest in the past 20 years, and according to the statistical methods of the US Department of Labor, workers who are temporarily unemployed during the survey week cannot be identified as employment by the institutional survey (CES) of the non-agricultural employment report. In terms of industries, the number of employed people in the leisure hotel industry decreased by 111,000, which was the main drag on the decline of non-agricultural employment. The number of employees in the catering industry decreased by 105,000, which is much lower than the monthly increase of 24,000 in the industry in the past year. The average level of employment. From historical experience, the impact of the hurricane on the labor market may be temporary and there is no need to worry too much.
2) The unemployment rate has fallen to a low level since 2001, and the labor participation rate has risen. Although the number of employed people did not perform well, the unemployment rate fell by 0.2% to 4.2%, better than the expected 4.4%. The labor participation rate rose by 0.2% to 63.1%. Although the hurricane caused unexpected disturbances to non-agricultural employment, unlike CES, the Household Survey (CPS) for statistical unemployment rate identified unemployed workers who were temporarily unemployed during the week as employment. This is also the non-agricultural employment and unemployment rate. The main reason for the emergence of differentiation in the month.
3) The growth rate of wages is strong. The average hourly wage in September increased by 0.5% from the previous month, better than the expected 0.3% and 0.1% of the previous value. In July and August, the wage growth rate was slightly revised. The average weekly working hours remained unchanged for three consecutive months. In terms of industries, public utilities' hourly wages fell again this month, and information, business services and other services rose more. This month, employment growth in these industries is relatively limited, or from salary increase to recruitment. There is a certain lag in conduction. On the one hand, the proportion of low-paying leisure hotel industry workers has declined, which has a certain positive effect on the overall wage growth; on the other hand, the current overall shortage of labor market has caused a certain salary increase pressure for enterprises, and there are also data in this month. Reflected. Considering that the salary has been revised in the previous two months, it is currently one step closer to the upward turning point of wages, and continuous observation of subsequent data is required.
4) The non-agricultural data has a limited boosting effect on the market, and it is necessary to continuously pay attention to the transmission of wages to inflation and the impact of the interest rate increase path . After the data was released, the yields of the US dollar and US bonds surged, and gold rose first and then fell. However, the boosting effect did not continue. The news that North Korea will test missiles on the weekend will lead to a rise in market risk aversion. The US bond yield will fall from the high, the US dollar will retreat earlier, and gold will turn stronger. At the same time, the increase in wage growth is good for inflation that has not yet seen significant improvement. Considering that the Fed’s interest rate hike has increased its sensitivity to inflation, the market expects the interest rate hike in December to rise 5.1% after the data is released. Need to continue to pay attention to future data.
The tax reform was officially launched. Although the content and intensity did not significantly exceed market expectations, it is still good for the stock market. On September 28th, the White House and the Republican Senate and the House of Representatives fundraising and financial committee announced the latest tax reform framework. In terms of corporate tax, the September tax reform framework has changed as follows: 1) The corporate minimum tax rate and the highest small corporate tax rate fell to 20% instead of the April draft, compared to the previous tax reform proposal announced by the White House in April. 15% set; 2) refers to corporate expenses deductions, corporate net interest deductions and import and export tax concessions not previously covered; 3) corporate overseas income tax rates and unpaid taxes for the April draft The one-off tax on overseas profits was also elaborated in the framework of the tax reform in September. Among them, the tax rate for overseas income tax rate of enterprises is the lowest in overseas, and the rate of overseas profits in the form of non-liquid assets is lower than that of liquid assets.
In the legislative process of tax reform, if the Republican Senate and the House of Representatives reach a unified version of the 2018 budget resolution and initiate the Reconciliation process, the Republican Party does not need the support of the Democratic Party, and the simple reform of the Congress can complete the tax reform legislation. . Although the current budget resolution has not yet reached an agreement, the government debt ceiling issue may also interfere with the tax improvement process, but with the medical reform stranded (previously, three Republican members of Susan Collins, John McCain, and Rand Paul clearly expressed their opposition to the health care reform bill, which means that The Graham-Cassidy Health Reform Act, which was supported by 50 of the 52 Republican senators, passed the hopelessness of the year. The Trump administration, which has no substantive achievements at present, has been relatively low. The promotion of tax reform can still raise market sentiment. Vibration.
The Las Vegas shootings had little effect on the overall stock market, and the gun stocks did not fall. On the evening of October 1, a shooting incident occurred at the Las Vegas Music Festival. The incident has caused at least 59 deaths and 527 injuries, the most serious shooting in the history of the United States. After the incident, the overall response of the US stock market was not large, and the stocks of gunsmiths rose, driving the sports retail stocks to rise. Considering that the National Rifle Association of America (NRA) endorsed it in advance during the Trump campaign, Trump’s internal control guns are more limited, and the panic sentiment driven by guns’ self-defense demand drives the gun stocks. Upstream.
Mainline 2: The Fed’s interest rate hike is expected to rise in December, and the hawks’ presidential candidate is running, and the US debt is under pressure.
Interest rate hike expectations + Fed president hawks candidates lead, US debt is under pressure. The rise in risk assets points to an increase in market risk appetite, but the factor that suppresses US debt is not just risk appetite:
1) The economic data is pushing up the expectation of raising interest rates during the year. The US stock market is also pushing up the expectation of raising interest rates again during the year. Recently, the Fed officials expressed their preference for the hawks. The expected probability of raising interest rates in December has exceeded 80%.
2) The Fed president's candidate announced that the hawks led the White House's next Fed presidential candidate. The hawkish Kevin Warsh is considered to have the highest probability of winning, and the future Fed chairman's hawks are also worried. City sentiment has a negative impact.
While the US debt is under pressure, the expected increase in interest rates will also form a certain support for the US dollar.
Inflation recovery + dot matrix suggestion + voter statement: the market is expected to gradually raise interest rates during the year. Since September, the market has gradually raised its expectation of a rate hike in December, which has reached 80.6%. The rise in oil prices and the support of housing prices, the CPI data in August rebounded, and the interest rate hike is expected to rise since the beginning of September. The dot plot of the Fed's interest rate meeting in mid-September showed that up to 12 officials supported the rate hike during the year, further boosting the market's interest rate hike expectations. After the meeting, a number of Fed officials made a series of voices, and the overall position was more hawkish. The superimposed US economic data continued to improve, and the market is expected to continue to raise interest rates at the end of the year.
The list of candidates for the next Fed’s chairmanship was released, and Warsh, who was relatively hawkish, took the lead. According to media reports, Trump’s next candidate for the Fed’s recent meeting includes current Federal Reserve Chairman Janet Yellen, current Trump Chief Economic Adviser, US National Economic Council Director Gary Cohn, and current Fed Governor Jerome Powell and former Fed governor Kevin Warsh, Stanford University economics professor John Taylor are also considering the scope. The US political bet site PredictIt's October 6th market data shows that Warsh is temporarily leading with a 39% chance of winning, and Powell is behind with a 26% probability of 26%. In October, Trump will submit the next Fed chairman and other local Fed president nominations, and the Fed personnel changes will have a certain impact on the future monetary policy path. Just as we are in the "Sandfield Point": the next Fed Chairman's Candidate Counting Tips for the candidates, the current leading Warsh is more hawk than other candidates: graduated from Harvard Law School, the granddaughter of cosmetics giant Estee Lauder Warsh once claimed that if he changed to him, he would start to shrink and slowly raise interest rates two years ago. This has further boosted the market's interest rate hike expectations.
In the future, US financial regulation may have a certain tendency to loosen: the Fed’s new director, who will loosen supervision, will be employed, and the number of informed sources reveals that relaxing financial supervision has become an important condition for the president of the Trump Fed. The US Senate confirmed this week that Trump-nominated Randal Quarles served as the Fed governor and vice-president of the regulation. Quarles said at the July hearing that he would loosen bank supervision to some extent and simplify the financial policies implemented after the financial crisis. At the same time, the White House insiders revealed that Trump hopes that the Fed presidential candidate will be willing to relax supervision. Therefore, from the perspective of personnel appointments, there may be some relaxation in the future of US financial regulation.
Main line 3: The fundamentals of European economics continue to improve, but political uncertainty is heating up, European stocks are hard to rise, and bond markets are hard to fall.
European capital markets: political uncertainty heats up vs. Basically oriented. The recent concern about the monetary policy of the European Central Bank has subsided. The European capital market shows a situation in which the stock market is difficult to rise, the bond market is difficult to fall, and the euro is falling. The reason behind this is mainly political uncertainty:
1) The results of the German election were released, and the influence of the Merkel party declined. Although the current party of Merkel’s party still ranks first, the vote rate has dropped sharply from the previous election. Merkel needs to form a cabinet with the Liberal Democratic Party and the Green Party, and its control over the government is expected to decline. This means that the difficulty of German-French joint promotion of European integration has risen sharply;
2) Independent referendum in Catalonia, Spain. Spain's Catalonia region claimed that 90% of the votes in the independent referendum supported independence, causing the market to worry about the split of Spain, which brought a great negative demonstration effect on the European integration process.
Therefore, although the overall European economic data has continued to improve overall, the euro has fallen, and European stocks have not seen a significant increase. The political uncertainty and the fundamentals of the saw also led to a lack of trend in the European debt in the short term.
The economic fundamentals of the Eurozone continued to improve. Soft indicators rose steadily: the EU economic sentiment index continued to climb, hitting a 10-year high; the manufacturing PMI fluctuated at a high level, and the service industry PMI reversed for several consecutive months and began to rebound, indicating that the overall economic situation is good.
The influence of the Merkel party in the German election has declined, and the German-French joint promotion of European integration has become more difficult. On September 25th, the results of the German election were released. The CDU led by Merkel won the election with 33% of the votes. However, it is worth noting that the influence of the CDU has declined compared with the previous one: 1) The 33% vote of the Alliance Party has fallen sharply from the 41.5% of the four-year election, and may have to join the Liberal Democratic Party of the Central Right ( FDP) and the Central Left Greens (HU); 2) In order to prepare for the cabinet negotiations, the strong supporter of European integration 朔Ibler retired as German Finance Minister; 3) anti-EU, anti-immigrant right-wing populism The party ADF jumped to the third party with 13% of the votes in this election and will receive 87 seats. The subtle changes in German politics have made it difficult to promote the future of European integration. French President Mark Long also called for the rebuilding of the European Union in his speech the next day in the German election.
Spain's independence situation in Catalonia is full of twists and turns, Spain's stocks and roller coasters. On October 2, the Spanish government of Catalonia announced that 90% of the votes in the independent referendum held on October 1st supported independence. The news immediately triggered market panic: Spain's stocks doubled, and the euro/dollar fell below 1.18. Subsequently, the EU and the Spanish central government successively stated that the referendum violated the Spanish Constitution and resolutely opposed independence. The Spanish Defense Minister warned that the military would defend the territorial integrity. The Spanish Constitutional Court suspended the local parliamentary meeting scheduled to be held next Monday. Since then, the media rumored that the independents considered postponing the independence plan, and the Spanish stocks rose immediately. However, the latest announcement of the independents said that independent meetings will still be held as planned. The independent story is full of twists and turns, and the Spanish market is expected to violently oscillate in the future. If Catalonia is truly independent, it will also hinder the EU integration process.
Main line four: Prime Minister of the United States is in jeopardy, the pound fell, benefiting the UK stock market
The pound plunged and the British stocks rose: Prime Minister Mei’s status was unstable. During the holiday period, the pound fell sharply, mainly because the status of Prime Minister Mei was no longer stable, and the fall of the pound also formed a certain positive for the UK stock market. In May of this year, Teresa May lost her seat in the early elections, causing the Conservative Party to lose some seats unexpectedly. Mei’s party support rate has also declined. On Wednesday, Mei’s “turn-on speech†on the opening of a series of domestic policy reforms by the Conservative Party Congress also encountered Waterloo. The media said that at least 30 Conservative Party members are preparing to sign a joint letter to ask May to resign, and 48 people can let the Prime Minister step down. Therefore, this is likely to cause Mei’s prime minister’s career to end before Christmas this year.
Earlier, Mei proposed that there would be a two-year transition period, but this proposal was opposed by Germany and France. Potential changes in British politics will also make the prospect of the Brexit process even more uncertain.
Main line five: crude oil fell, extended production limit, two hearts and two minds, the United States supply force
Crude oil fell: extended production cuts and two hearts + US supply . Recently, oil prices have dropped significantly, and WTI crude oil futures fell below $50. There are two main reasons:
1) OPEC and other countries that have reduced production are half-hearted in extending the agreement on production reduction. Russian President Vladimir Putin recently said that he did not propose to extend the production reduction agreement, and Saudi Arabia also expressed flexibility in extending production cuts. This ambiguous statement makes the market worry about whether the future production reduction agreement will continue;
2) US supply growth. According to data released by the EIA, the United States exported nearly 2 million barrels per day of crude oil in the previous week, marking the week of the highest US crude oil exports. Concerns about the growth of US shale oil supply also have a negative impact on oil prices.
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