$Stock*Shop*Charts*News*Option$

[Tuff-Stuff]

AutomaticEarth<>Debt Rattle April 26 2017
Posted by Raúl Ilargi Meijer at 8:49 am



Pablo Picasso Self portrait 1906

• There’s a Huge Disagreement Between Bonds and Stocks (BBG)

• Trump May Pick Gary Cohn To Replace Janet Yellen At The Fed (CNBC)

• Trudeau’s Reward for Courting Trump Is a Trade War on Lumber (BBG)

• Apartheid Without the Racism’: How China Keeps Rural Folks Down (WSJ)

• Chinese Stock Market Roller Coaster Looks To Be Back In Full Force (CNBC)

• Cataclysm (Robert Gore)

• Currency Markets Suggest Traders Get Early Glimpse at UK Government Data (WSJ)

• Draghi’s Stimulus Could Blunt Populism (BBG)

• Juncker Against ‘Major Cuts’ To Greek Pensions (K.)

• As Bailout Negotiations Resume, Tsipras Tries To Sweeten Pill (K.)

• Trump On Greece: “They Are In Such A Terrible Situation There” (NM)

• EU Auditors Say Refugee Centers In Greece, Italy Overwhelmed (AP)

• Amnesty Calls For Shutdown Of Greece’s Elliniko Refugee Camp (K.)

“The rates market is pricing in the death of tax reform and dimming 2018 economic prospects..”

• There’s a Huge Disagreement Between Bonds and Stocks (BBG)

Markets are taking sides when it comes to the direction of the U.S. economy. In the green corner are stocks. The Standard & Poor’s 500 index is just 0.2% away from a record high reached in March on bets that Donald Trump’s administration will push through tax-code changes to spark growth. In the red corner sit U.S. government bonds, where benchmark 10-year Treasury yields have unwound almost half of their post-election increase, suggesting a far more pessimistic view the economy. “The increasing divergence between global equity market performance and bond markets has raised questions as to whom is right,” Jefferies Group analysts led by Sean Darby wrote in a note.

Figuring out which market will be on the right side of history is a pressing issue for analysts, investors and traders. If government bonds prove correct, risk appetite may soon vanish; if the optimism displayed by stocks and corporate bonds is vindicated, then interest-rate markets are likely to sell off in coming months, according to strategists. The issue is gaining added urgency as Trump nears his 100th day as president with plans to unveil Wednesday a proposal to lower the corporate rate to 15%. Optimism that the new U.S. administration would deliver tax cuts and boost corporate earnings may account for the resilience of bullish equity sentiment, according to strategists at Rabobank.

“The post-election jump in stocks could at least in part have been due to this mechanistic response rather than an optimistic view of the future,” strategists led by Richard Macguire wrote in a note. A cut in the corporate tax rate would automatically boost earnings per share, justifying an advance in stock prices, they argue. Still, interest-rate markets are flashing warning signals. Money markets such as the London interbank offered rate and interest rate swaps, for instance, show some alarm over growth prospects next year, according to Bank of America. “The rates market is pricing in the death of tax reform and dimming 2018 economic prospects,” strategists led by Shyam Rajan wrote in a note to clients.

READ MORE Briefs or use link for Full
https://www.theautomaticearth.com/2017/04/debt-rattle-april-26-2017/