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Livesquawk - US Briefing - Friday 17.09
US Briefing - Friday 17.09
  • Quadruple Witching To Hit Market Where Traders Pay Up For Hedges
  • Axios: Biden Fails To Persuade Manchin On USD3.5T Spending Bill
  • ECB Cites FT Report On Inflation Target Outlook Is Not Accurate
  • ECB's De Cos: Mkt Expectations Don't Foresee Rate Hike In 2023
  • ECB’s Kazaks: Doesn’t See 2% CPI Goal Reached In Medium Term
  • EZ Aug. CPI In-Line: +3.0% Y/Y; Jul. Construction Output -0.1% M/M
  • UK Aug. Retail Sales See Surprise Drop: -0.9% M/M Incl. Auto Fuel
  • BoE Survey: UK Public Inflation Expectations Tick Higher In August
  • Britain Mulls Easing Covid-19 International Travel Rules For England
  • BoFA: Equities See USD51.2B Inflows; Biggest Inflows Since Mar’21
  • IFX: Russia Considering One Or More Rate Hikes In Next Meetings
  • Jiji: LDP’s Kono Tops Poll On The Best Candidate For Next Leader
  • China, Wall Street Meeting Focused On Transparency And Stability
  • Top China Forecaster Sees GDP Growth Near Zero In Third Quarter
  • PBoC Injects USD13.9B As The Evergrande Debt Woes Roil Market
  • Global Times Editor Cites: China Evergrande Is Not 'Too Big To Fail'
  • Barclays Cites Power Price Surge Risks Are Manageable For Now
  • IEA’s Birol Thinks High Gas Prices May Persist For Weeks To Come
  • Berlin To Buy Vonovia, Deutsche Wohnen Apartments For EUR24.6B
  • Mitsubishi UFJ Is Considering Sale Of Its US Unit MUFG Union Bank
Surprise Drop Leaves UK Retail Sales Lower For 4th Straight Month

LONDON – UK retail sales fell at an annual rate of 0.9% in August after a decline of 2.8% in July, offering the latest surprise for the summer as analyst consensus had forecast a 0.5% last month. The fourth straight decline indicated that a resurgence of Covid-19 cases in the UK is taking a toll on consumer confidence. The consecutive contractions represent the worst stretch for retail sales since 1996. The ex-fuel measure declined 1.2%, more than the expected fall of 0.8%, but better than July’s 2.4% decline.


The Office for National Statistics (ONS) said non-food stores reported a 1.0% decrease in sales volumes in August, which was driven a 3.7% decline at department stores falls and a 1.2% drop at other outlets such as sporting goods and computer stores. Despite the negative reading, the ONS said “volumes were up by 0.3% in the three months to August compared with the previous three months”, indicating a theme of steady consumer activity. The data suggests the government’s easing of restrictions in the hospitality sector has been effective in directing consumers towards eateries and drinkeries. Food store sales volumes slid 1.2% m/m as “people increased their social spending such as eating and drinking at restaurants and bars” according to the ONS.

(LiveSquawk – Continue Reading)

Triple Witching To Hit Market Where Traders Pay Up For Hedges

Like clockwork, the S&P 500 just endured another mid-month swoon before Friday’s options expiration. What’s less certain is whether the market can resume its record-setting rally at a time when traders are busy loading up on hedges.  The expiry of stock and index options this time is part of a quarterly event known as “triple witching,” where futures on indexes also expire. Strategists at Goldman Sachs Group Inc. estimated that roughly $3.4 trillion of equity options are set to mature Friday, including $720 billion of single stock options that is expected to be the most for any September expiration. 


Heading into the event, option traders grew antsy about the market, paying near record-high prices for put contracts. Calls for a correction in stocks are multiplying amid the spread of the Covid delta variant, a looming tax hike and the Federal Reserve’s plan to roll back monetary stimulus.  Meanwhile, the S&P 500 has managed to hold above its key trend line -- the 50-day average -- after a stretch of declines earlier this month that’s not been seen since February. The benchmark last closed at 4,473.75.   “We’re still cautious on the coming weeks as all the macro risks/overhangs remain unresolved,” Adam Crisafulli, the founder of Vital Knowledge, wrote in a note. “‘Cautious’ in this case simply means anticipating more of the same choppy, range-bound price action that sees the SPX hold above 4,400 but prevents the tape from setting fresh highs.” 

(Bloomberg – Continue Reading)

Canada Federal Election: The Man Who Could Topple Trudeau

A few days before Justin Trudeau called a snap election, Conservative leader Erin O'Toole sent a message to voters: he didn't want one. Canada was entering its fourth pandemic wave. "Now's not the time for an election," he said. "We can all wait and go to the polls when it's safe." At the time, Mr Trudeau and his party looked poised to secure a majority in Canada's House of Commons, with high approval ratings and general support of his government's pandemic response. Mr O'Toole was widely unknown to Canadians and his Conservatives trailed the Liberals in opinion polls.


But now, just days away from the 20 September vote, Mr O'Toole has tied Mr Trudeau for first place - and he's given the prime minister a run for his money. It's a shift for the new Conservative leader, who is barely into his second year in the job. At the start of the campaign, according to Abacus Data, 40% of Canadians didn't know enough about Mr O'Toole to even form an opinion about him. The 48-year-old was also scoring low on factors like likeability, said Conservative strategist Jamie Ellerton. "But I think a lot of people mistook that for strong disapproval rather than not really knowing Erin O'Toole."

(BBC – Continue Reading)

Barclays: Power Price Surge Risks Are Manageable For Now

Rocketing European power prices should be manageable for consumers and company margins at this stage, but pose risks if they persist, Barclays Plc said. The industries most exposed to higher power prices are transport, metals and mining, electricity generation and materials, strategist Emmanuel Cau wrote in a note to clients. The broker’s utilities analysts earlier this week said the less-regulated northern European stocks in the sector could be potential beneficiaries.


“Although it is likely that many have hedges in place to smooth out short-term fluctuations in costs, thus making their businesses and the prices they charge customers more manageable, the longer prices stay high, the more impact will be felt as hedges will start to roll off,” Cau said. This could ultimately hit margins and lead to higher prices for customers, again “adding to the inflationary mix given companies’ recent success in passing on input costs,” he said. Barclays strategists keep a relative preference for the energy sector over utilities as an inflation hedge. A surge in power prices to record levels spooked investors at the start of the week. This abated somewhat on Thursday, but the gains have resumed on Friday with no signs of improved supplies ahead of the winter.

(Bloomberg – Continue Reading)

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