It’s the end of a week chock-full of notable events and like all such weeks, everyone is glad it’s over.
“Mueller Monday” certainly didn’t disappoint and neither did the BoE, which “succeeded” in delivering a rate hike so dovish that 5-year gilt yields actually fell the most since the bank cut rates in the aftermath of Brexit.
As far as things that were expected to disappoint or were otherwise seen ahead of time as being unlikely to cause much of a stir (despite the necessity of parsing them endlessly for some semblance of meaning), we checked all those boxes too. The tax plan was a dud and no one believes it has any chance of passing in its current form. The Fed meeting brought nothing new and the message is still “see you next month” (which is amusing because the December meeting will come just days after fiscal D-Day on the Hill). The Jerome Powell pick was leaked/confirmed ahead of Trump’s official unveiling. And finally, the jobs number missed bigly as did AHE, but we were free to ignore it and instead cherry pick ISM thanks to lingering hurricane “noise”.
Of course the Manafort/Gates indictment and the Papadopoulos bombshell put the U.S. one step closer to a constitutional crisis as conservative media outlets and some Republicans are scrambling around to figure out how to put the brakes on the special counsel’s investigation. That could embolden Trump to dismiss Mueller, a move that would almost surely accelerate the end of his presidency. Apparently unwilling to risk that just yet, Trump instead took to Twitter on Friday to try and strong arm the Justice Department into opening investigations into his political opponents. That’s not generally something one finds in a developed democracy. We’ll have more on that later.
As far as markets go, the dollar and yields knee-jerked lower on payrolls, bounced on the ISM beat, and then meandered around:
As far as stocks go, this is all you need to know…
Good day for Apple (earnings and also you’re reminded that they make a device called the “iPhone” which, as it turns out, people still want):
Venezuela is of course a disaster and Maduro’s overnight decision to “restructure” its debt (they’ll default) sent PDVSA bonds tumbling:
European shares were higher on the week, with the DAX outperforming and the FTSE getting a lift on Thursday from the dovish spin the BoE put on the hike:
The pound hit its lowest level versus the dollar in nearly a month:
Horrible day for Turkey as jitters about Erdogan’s involvement in a gold scheme designed to circumvent U.S. sanctions on Iran conspired with the highest read on core inflation since 2004 to send the lira tumbling sharply on Friday:
In China, bonds fell for a fourth week – that’s the longest stretch of losses since May. This is getting dicey:
WTI touched its highest levels since July of 2015 today:
Fourth weekly gain in a row for crude and the story remains the same as it ever was – “hope” around global demand and expectations for an extension of the cuts. “OPEC chatter sounds like both the Saudis and Kuwait are both game for extending the deal sooner rather than later,” Mizuho’s Bob Yawger said Friday.
“These are your markets on central banks”…
Oh and the VIX closed at a record low:
So with regard to volatility, I guess there is indeed a sense in which we’re like Donald Trump: “DO SOMETHING!”…
"SOMEONE DO SOMETHING!" pic.twitter.com/GGHI8XdabJ
— Walter White (@heisenbergrpt) November 3, 2017