The US Federal Reserve released the minutes from its last meeting yesterday and the news was much as expected other than the tone seemed to suggest the Fed would start unwinding its massive $4.5 trillion bond stockpile later in the year. That, plus fear over what might happen when the US and Chinese Presidents meet. Trump’s campaign trail comments about China stealing US jobs but the Chinese press is turning the tables on the US president and complaining that low taxes, cheap land and cheaper transport in America are factors leading to Chinese manufacturers moving production to the US. It’ll be an interesting meeting.
Today’s news is heavily slanted towards the EU. It started with German factory orders which bounced back from a dire 6.8% drop in January to 3.5% growth in February. This is further evidence of recovery in Europe overall and specifically in Germany. We will also get minutes from the last European Central Bank (ECB) meeting this morning. That has been pre-empted by ECB president Mario Draghi suggesting the current stance by the ECB is appropriate and that has weakened the Euro in early trade. I suspect that has nothing to do with Greece’s unemployment rate, which we expect to remain gruesomely high at 23.1% or thereabouts.
Meanwhile, Sterling retains most of the gains it made last week, hovering as it is around €1.17 and $1.25. We are devoid of meaningful UK data today, so Sterling will be shifted by external factors. Tomorrow is a very different story and the Gross Domestic Product (GDP) data, manufacturing and industrial output numbers and the trade balance will move Sterling. The direction of travel is the only question mark.
And Donald Trump has removed hard-liner Steve Bannon from his National Security Council post. Whether it was for the controversy that seems to hang over Bannon wherever he goes or because he has a peculiar penchant for wearing two button down shirts at the same time is unknown.
A young lad buys a donkey for £100, but when the farmer delivers it, the donkey is stone dead and the farmer has already spent the money. "I'll take it anyway and raffle it off," says the boy. "You can't raffle a dead donkey," says the farmer. "Yes I can, I just won't tell them it's dead," says the boy.
A month later the boy meets the farmer at a market and he asked what happened with the raffle. "I sold 500 tickets at £2 a ticket and made £900 profit!" "Didn't anyone complain?" says the farmer. "Yes", the kid replies "Just the guy who won... so I gave him his £2 back".
[A career in investment banking beckons.]