NAB Morning Call

Thursday 29th April 2021Excuse the American pluralisation, but “long ways to go” is the Fed’s Jerome Powell’s take on the path to recovery for the American economy, and the reason that rates won’t be lifting anytime soon, and the easing of bond purchases are, supposedly, also some way off. There were small movements in the market, says NAB’s Ray Attrill, mostly from the press conference rather than the FOMC statement. Also today, why housing subsidies partially account for Australia’s lower than anticipated CPI numbers yesterday. Plus, the problem with the US’s rising trade deficit, and how we can expect Australia’s terms of trade to rise even more later today. And the first look at earnings results for Apple and Facebook. Spoiler alert, both very strong.

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Wednesday 28th April 2021Markets are treading water ahead of the FDOMC meeting tomorrow morning, but there’s been a sudden rise in bond yields in the US which, NBA’s Rodrigo Catril, suggests inflation is still a concern, as optimism around a vaccine driven recovery escalates. But inflation is less of a concern in Australia - we get the CPI numbers today, Rodrigo tells us what to expect. There’s also discussion around what the Fed will say tomorrow morning, and why share prices aren’t always responding to earnings results which are generally beating expectations. Tesla, Microsoft and Alhabet are the latest to outperform. Has the market reached a peak for now?

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Tuesday 27th April 2021Equities are on the rise again as risk sentiment rises following largely positive data, including the PMIs talked about in yesterday’s Morning Call. Data over the last 24 hour shas been a little more subdued, with Germany’s IFO survey pulled down by lower expectations, and the US durable goods orders softer after the cancellation of Boeing aircraft orders. Nonetheless, the mood is generally positive, says NAB’s Gavin Friend, with Europe now getting into gear on vaccination rollouts and most S&P companies I the US have beaten their earnings estimate and copper – which is tied to the global reflation trade – is now at a decade high. The stars are aligned, for now, but the situation in developing nations – and in particularly in India – are a stark reminder that the problem won’t go away until the disease is tackled everywhere.

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Monday 26th April 2021Markets were on a positive frame of mind at the end of the week, with a strong set of PMIs in the US and Europe, which helped push equities still higher in America. But how much is too much? Phil Dobbie asks NAB’s Tapas Strickland whether some of this is being driven by a fear of missing out. Meanwhile, with all the positive news, how long can the Fed continue to argue the need for such high levels of bond purchases and years of low interest rates? Will there be any hint that a change in direction is even being considered, when the Fed meet this week?

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Friday 23rd April 2021Shares in the US have fallen this morning on news of a sizeable hike in capital gains for wealthy Americans. Although not officially released, NAB’s Gavin Friend explains how the rumour was enough to send shares falling, after a fairly positive start to the session. The ECB was asked whether they would follow Canada’s lead in tapering bond purchases sooner, but there won’t be anyu change until the June 10th meeting. Then the ECB might change its approach, depending on progress on containing the virus. Todays, it’s a day for PMIs, with the flash numbers for April for the Eurozone, Germany, the UK and the US.

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Thursday 22nd April 2021The Canadian dollar has been boosted by the Bank of Canada markedly increasing their growth forecasts for this year, bringing forward the expected date of rate rises and introducing tapering from next week. NAB’s David de Garis says markets were expecting a tapering announcement, but were taken by surprise by the size of the growth revision, with the country in the midst of the third wave of the pandemic. On the podcast today we also look at New Zealand’s CPI read and what it can tell us about Australia’s inflation numbers next week, plus we look ahead to the ECB meeting tonight. And yesterday’s Australian retail numbers was largely a rebound in growth for WA and Victoria, but it seems cafes and restaurants may have led the charge. Is Australia heading for an avocado on toast led recovery?

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Wednesday 21st April 2021There’s a cautious mood in the markets right now, with US stocks down, with smaller caps hit particularly hard. NAB’s Ray Attrill discusses whether this is all down to a revaluation of the speed of the economic recovery. Could the tightening of credit be responsible for this? It’s hard for businesses to recover without borrowing. There’s also discussion of yesterday’s RBA minutes and the expectations for Australia’s retail numbers out this morning.

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Tuesday 20th April 2021US equities dipped a little overnight, pulling back from record highs. NAB’s Tapas Strickland says there does seem to be a habit for a selloff whenever equities climb above the S&P500 200-day moving average. Will it all bounce back? Well, the vaccine news remains positive, with big reductions on cases in countries where vaccines have been rolled out extensively. That’s why we’re seeing strength in the Euro and Sterling today. But what about the Aussie dollar? Is it losing its momentum? It’s another quiet day ahead, with the RBA minutes not expected to reveal much, and earnings results for United airlines and IBM. Plus Apple are announcing something new.

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Monday 19th April 2021There’s still plenty of positive sentiment around as the US, UK and Europe continue to vaccinate at pace. Europe has picked up pace and now jabbed 20 percent of its adult population. The Fed’s Christopher Waller said the economy is “set to rip”, with 6.5 percent growth this year. Yet, despite all the positive news, we have been seeing a decline in bond yields. In today’s Morning Call NAB’s Rodrigo Catril suggests it might be because concerns over inflation have been overdone and the market is coming round to the message that the Fed is trying to deliver that any rises will be transitory. Bitcoin dropped 15 percent in value on Friday, with unsubstantiated reports that the US might be clamping down on money laundering. Today is fairly quiet for data releases, with US earnings reports the only numbers of any consequence.

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Friday 16th April 2021The news was largely positive overnight. Retail sales in the US were better than expected, initial jobless claims were down, the Philly Fed and Empire Manufacturing Surveys were strong – yet bond yields fell sharply in the US, spreading across much of Europe. It’s not the response you’d expect. NAB’s Ray Attrill says bond analysts had been expecting a period of consolidation, but perhaps not quite so much in one day, particularly surrounded by such positive economic data. The Aussie dollar has been one beneficiary of the positive sentiment surrounding that data, and there could be more to come if the numbers out of China are strong, including Q1 GDP, March Industrial Production, Retail Sales and Fixed Asset Investment, all out later on today.

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