Sunday, April 23, 2017

SUNDAY 4/23/17; French Presidential Election

North Korea detains an American aid worker preventing him from leaving the country. The communist nation is holding three Americans in prisons. Leader Kim Jong-un is increasing his aggressive behavior which creates angst in the Pacific theater. Two Japanese warships join the United States armada headed to the Pacific theater led by the USS Carl Vinson aircraft carrier. North Korean nutcase Kim Jong-un proclaims that the nation stands ready to sink the US aircraft carrier to prove its military might. Tensions are rising.

Marches continue in Venezuela. The protestors are honoring the two dozen people killed over the last month in the protests. Nine people died after being electrocuted when looting a bakery to acquire food. Venezuela is in collapse and President Maduro’s goon squads are targeting citizens speaking out against the crumbling government.

In France, the polls are open and voting begins for the first round of the presidential elections. None of the 11 candidates are expected to attain 50% of the vote so a runoff election will occur in two weeks for the top two winners in today’s contest. Marine Le Pen and Emmanuel Macron are expected to win and then Macron is expected to win the presidency in the 5/7/17 runoff election. Le Pen’s poll numbers inch higher after the Paris terrorist attack two days ago.

French citizens are enthusiastic for voting with lines forming before the polls open. The turnout should be large for the historic presidential election. One-third of French voters is undecided but will make a selection over the coming hours. Polls close at 8 PM local Paris time (2 PM EST). Results should be known Sunday afternoon and evening in the States which will impact the futures market. Asian and European stock, currency and bond markets will react to the election overnight tonight.

Euro 1.0723. Dollar/yen 109.07. Pound 1.2809. WTIC oil 49.63. Brent oil 51.96. Natural gas 3.10. Gold 1286. Silver 17.91. Copper 2.55.

US Treasury yields are; 2-year 1.19%, 5-year 1.77%, 10-year 2.25%, 30-year 2.90%. The 2-10 spread is at 106 basis points.

Global 10-year yields are; Brazil 10.15%, Mexico 7.22%, India 6.92%, Greece 6.46%, Portugal 3.71%, Australia 2.53%, Italy 2.24%, US 2.25%, South Korea 2.16%, Singapore 2.08%, Spain 1.66%, Canada 1.48%, Hong Kong 1.28%, UK gilt 1.03%, France 0.93%, Netherlands 0.50%, German bund 0.25%, Japan 0.01% (on the verge of going negative), Switzerland -0.26%.

The France-German 10-year yield spread is at 68 basis points. The spread has been fluctuating between 60 and 70 points over the last few weeks. If Le Pen wins the French presidential election by 30% or more of the vote, or by a margin greater than 5% compared to the nearest competitor, the France-German spread will likely blow out higher above 70 bips (investors will seek perceived safety of German bunds while shunning French bonds; German bund yields will fall and French yields will rise). If Le Pen’s showing is poor, the spread will likely tighten to under 60 bips (French bonds will be well bid sending these yields lower).

At 10:35 AM Paris time (4:35 AM EST; 9:35 AM London; 5:35 PM Tokyo), Macron and his wife are at the polls voting. At 11 AM Paris time (5 AM EST; 10 AM London; 6 PM Tokyo), Marine Le Pen is voting at the polls. The turnout for the French election is large with polls packed full of voters and long lines. A robust turnout may favor Le Pen.

DHS Secretary John Kelly says President Trump will be insistent that money be allotted for the border wall as part of the spending bill to keep the government open. Democrats say the border wall is a non-starter and poison pill. Markets may sink in Monday trading since the confrontation over border wall funding makes a government shutdown more likely.

House Speaker Ryan says the number one priority is to keep the government open by approving the spending bill this week. A continuing resolution may be the way out for the demopublicans and republocrats. Both sides may agree to a continuing resolution that funds the government under the current guidelines for another 90 days or perhaps until the end of summer. This will allow time for more negotiations between republicans and democrats to try and find common ground. President Trump will lose face if spending is not allotted for the border wall.

The Washington, DC, baby games continue and the democrats have clout in this battle because whenever there is a government shutdown, the republicans are automatically blamed. 70% of the US media, including CNN, MSNBC and the broadcast networks such as ABC, CBS, NBC and PBS and NPR, tout the narrative that blames the GOP and the general population believes that since they hear it on the news. It will be an extremely politically-charged week ahead.

Americans are up and about on Sunday morning on the East Coast. At 7:30 AM EST (12:30 AM London; 1:30 PM Paris; 8:30 PM Tokyo), there is a strong turnout in the French presidential election. The number of French citizens voting is surpassing levels from 2012.

At 2 PM EST (7 PM London; 8 PM Paris; 3 AM Tokyo Monday morning), the French exit polls indicate that Macron and Le Pen will advance to the second round. A poll indicates that Macron will receive 24% of the vote, Le Pen 22%, Fillon 20% and Melenchon 20%. The Le Pen supporters are disappointed that they did not take first place. A second poll indicates that Le Pen did take first place with 24.2% of the vote so the polls conflict on who won but the two winners are Macron and Le Pen.

The Macron campaign headquarters is a wild joyous party. Le Pen campaign headquarters are subdued. Usually, the poll results are accurate so Macron and Le Pen will advance to the runoff election on 5/7/17. The night in France may need to play out, however, to determine who took first place. One news source now says the election was 23% for Le Pen and 23% for Macron. Loser socialist Hamon throws his support behind Macron.

The Interior Ministry says Le Pen has 24.9% of the vote and Macron 21.1%. Macron proclaims, “We are turning a page of French political life.” The euro is expected to jump about 1 or 2% higher (1.08-1.09).

Europe will breathe a sigh of relief. Global populism in the euro zone is not gaining any traction. The Netherlands and now French elections are not favoring the global populism movement. Analysts universally agree that Le Pen will not win the runoff election on 5/7/17 and Macron is the next likely president of France.

FRIDAY 4/21/17; PMI Indexes; GE; HON; SLB; Existing Home Sales; OpEx; WTIC Oil Sub 50; President Trump Promises Tax Reform Plan Next Week

[excerpts from the daily chronology]

President Trump says a comprehensive tax plan will be released next Wednesday. Trump says the plan contains a “massive tax cut” in individual and business taxes. The orange-headed braggart proclaims that the “cuts will be bigger than any cut ever.” It is surprising for the president to hype the tax reform package promising the world; typically expectations would be kept in check so the plan can surprise to the upside.  Trump had better deliver the huge tax cut proposal next week or traders, and Americans, will be disappointed.

Investors and traders are becoming numb to the braggadocio talk since stocks are not rallying on the news. Over the last few weeks, stocks would rally strongly on tax reform news. Traders are concerned since President Trump continues bragging about big positive plans for the government but is not delivering thus far.

Trump is coming up fast on the first 100 days generally used as a report card for any new president. During the campaign, and as he began his term, he bragged that he would provide the biggest tax cuts since President Reagan (the main reason for the big Trump Rally since November). Trump promised that on the first day he would label China as a currency manipulator which is no longer on the table. He said he would clean up Washington, DC, and “drain the swamp” but instead he has appointed Goldman Sachs bankers into his cabinet.

Trump promised to repeal and replace Obamacare which ended in failure although he says next week, before the 100-day milepost, the ACA health care law may be repealed and replaced. The orange-headed president said he would clamp down on immigration but his plans are tied up in the courts.

Trump promised to build a wall on the southern border but the construction is not yet funded through Congress. The president may attach a provision for spending on the wall as part of the package to prevent a government shutdown next Friday. If so, the democrats said this would be a poison pill for the deal and the government would shut down. President Trump may flinch and not place funding for the wall in the package next week to avoid a government shutdown.

President Trump has only succeeded in signing a bunch of executive orders over his first 92 days. Congress has not passed any new legislation. The president will be pushing hard next week to try and create more wins for his first 100 days. President Trump now says this is not the time to judge his performance. The president now calls the 100-day report card “ridiculous” and says this milepost is not an accurate reflection on his accomplishments thus far.

Interestingly, the end of the president’s first 100 days coincides with the potential shutdown of the government next week. Trump does not expect a government shutdown proclaiming, “We are in good shape.” Trump has two victories with appointing the Supreme Court justice and striking back against the use of chemical weapons in Syria. The president will likely hang his hat on these two items if he receives heat at potentially failing at most of his campaign promises for the first 100 days. Next week will be filled with political turmoil that will cause gyrations in markets.


Global traders are fixated on the French presidential election on Sunday. Marine Le Pen is up one-half point in the latest poll after the terror attack. Macron and Le Pen are neck-and-neck at a 23% chance to win the first round election on Sunday. Since no candidate is likely to receive over 50% of the vote, the runoff election between the two top winners will occur on 5/7/17. Melenchon, the communist, is at a 20% chance to win on Sunday and Fillon, entangled in the fraud scandal, is at 19%.

About one-third of French voters are undecided and with all four candidates bunched at 20%-ish, anything can happen. The best outcome for markets is that the centrist candidates, Macron and Fillon, would win on Sunday. The worst outcome for markets is if right-wing Le Pen and left-wing Melenchon win. The expected outcome is that Macron and Le Pen will win on Sunday and Macron would likely win the runoff election on 5/7/17.

If Le Pen takes 30% or more of the vote on Sunday, markets will likely react negatively since she will be on her way to potentially winning the race. Also, if Le Pen wins on Sunday and has a spread of 5% or more compared to the nearest competitor, that will likely cause market turmoil since Le Pen will be in good standing to win it all. Le Pen wants France to exit the euro which would throw Europe into a tailspin. If Le Pen wins on Sunday, the euro will likely drop lower and if the win is decisive, the euro will drop towards parity (1.00) with the US dollar index. Business news outlets plan to provide live coverage of the French election on Sunday evening

Tuesday, April 4, 2017

March Publication of the Daily Chronology of Global Markets and World Economics 2017-03 is Available from Amazon; SPX, INDU, COMPQ, NDX, RUT, NYA & TRAN ALL-Time Highs; SPX 2,400 and INDU (DOW) 21K; Fed Hikes Key Rate 3/15/17; London Terrorist Attack; Netherlands Election; Subprime Car Loans; Westinghouse Bankruptcy; Obamacare Trumps Trumpcare; SNAP, JILL, GOOS & PUMP IPO’s

The March Publication of the Daily Chronology of Global Markets and WorldEconomics 2017-03 is available through Amazon. The epic market action continues with more new all-time stock market highs. The one-half of the United States that own stocks are joyous day after day while the other half of the United States struggles through eight years of high unemployment and debt. The gap between rich and poor in America is the widest in five decades.

March Cover Highlights;
SPX 2,400 AND INDU (DOW) 21K

The chronology explains the reaction in stocks, bonds and currencies to key events and economic data releases. If you are trying to make sense of the markets this is the resource for you. No other publication exists where the stock, bond and currency moves are detailed and explained as world events take place in real-time. You can re-live the real-time price moves and excitement in markets for any past event including Brexit (2016-06 and 2016-07), the US election (2016-11), economic data releases, Fed meetings, etc...

As always, all monthly publications of the Daily Chronology of Global Markets and World Economics are available from the links in the margins of the K E Stone blog sites or simply searching on Amazon or Google. The monthly publication contains updated information not posted on the Keystone the Scribe web site as well as clarifications, edits and refinements to the ongoing daily blog text.

The April 2017-04 chronology is tentatively set for publishing by Amazon on Saturday, 5/6/17.

Thursday, March 30, 2017

FRIDAY 3/31/17; EOM (End-of-Month); EOQ1 (End-of-First Quarter); SORL; YGE; Personal Income and Outlays; Chicago PMI; Consumer Sentiment; NDX (Nasdaq 100) All-Time Record High

Today is the last day of March (EOM) and the last day for the first quarter (EOQ1; January, February, March). Monthly charts receive new 

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THURSDAY 3/30/17; TITN; WOR; GDP (Gross Domestic Product); Fed Speak; WTIC Oil is Above 50; COMPQ (Nasdaq Composite) and NDX (Nasdaq 100) All-Time Record Highs; AMZN Record High; VJET

Treasury yields are; 2-year 1.27%, 5-year 1.93%, 10-year 2.38%, 30-year 2.99%.

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 former cabinet member making an immunity deal to provide testimony is not good news for any sitting president. Trump’s feet are sinking into the soft mud in the Washington, DC, swamp that he had vowed to drain. Flynn was a close confidant of the president over the last two years so it will feel like a stab in the back from his one-time very close friend. How appropriate since it is the Ides of March when Julius Caesar was betrayed even by his close friend Brutus. Caesar asked his friend, “Et tu, Brute (you too, Brutus?)?” Trump is asking, “Et tu, Flynn?”

Tuesday, March 28, 2017

WEDNESDAY 3/29/17; UK PM Theresa May Invokes Article 50 to Begin Brexit Process; PAYX; UNF; Fed Speak; Toshiba’s Westinghouse Declares Chapter 11 Bankruptcy; NDX (Nasdaq 100) All-Time Closing High; AMZN (Amazon) All-Time High; LULU; SIGM

Euro 1.0811. Dollar/yen 111.11. Sterling 1.2451. Mexican peso 19.0043. Canadian dollar 1.3342. Dollar/yuan 6.8795. Aussie dollar 0.76236.

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 on news that ConocoPhillips is selling off assets. Synovus is buying Cabela’s. SNV is trading flat. CAB -2.2%.

Monday, March 27, 2017

TUESDAY 3/28/17; CCL; DRI; MKC; International Trade; Consumer Confidence; Yield Curve Flattens; US 2-10 Yield Spread Drops to 109 Bips; European and US Stocks Rally; 5-Year Note Auction; PLAY; SONC

S&P futures are up +3. Dow +27. Nasdaq +9. Australia’s ASX 200 is up +0.9% in the early going fighting to regain the 5.8K level. Gold and coal operations are 

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are a moderate build at 1.9 million barrels on target with the 2.0 million barrels expected. Gasoline and Distillates are draw downs. WTIC oil 48.36. Brent oil 51.29. The EIA Oil Inventories are released at 10:30 AM EST tomorrow.