NAB Morning Call

Tuesday 11th August 2020

Markets haven’t moved much overnight, mainly because there’s not been much in the way of data or geopolitics to offer any direction. The latest JOLTs (job openings) showed that there are 5.9 million jobs available, more than expected, but it didn’t give markets any kick. Meanwhile, there’s hope that a deal will be struck for stimulus in the US economy and that will negate President Trump’s executive order. NAB’s David de Garis suggests the President ultimately needs a deal to access the funds to provide the level of fiscal support beyond a few months. Oil prices have risen on the expectation that extra money will be available to boost consumption. China and the US have engaged in tit for tat measures, imposing sanctions on officials – the question is, will it interfere in a review of the phase one trade deal later in the week? Today the NAB Business Survey and weekly payrolls numbers will give an indication of how Australia is faring, in particular the relative strengths of each state.

Monday 10th August 2020

President Trump has been busy signing executive orders. First, late Thursday I the AUS, he signed one banning USD companies from dealing with Tik Tok and WeChat. It seems unlikely that China will take this lying down. NAB’s Tapas Strickland said the news hit technology stocks in the US and China on Friday. Markets were subdued anyway, as Congress failed to reach an agreement on the next phase of stimulus support. Over the weekend the President signed several more executive orders to continue some of the measures, to an extent, but there are likely legal ramifications. There’s also discussion on jobs numbers from the US, the RBA’s monetary policy statement from Friday, and a look ahead to the key events from the week ahead.

Friday 7th August 2020

Equities are rising in the US, again. This time it’s a mix of positive data – including weekly jobless claims, which are down a little on the week before – and further hopes of a resolution on the fiscal stimulus. On today’s podcast we explain why this stimulus is so important to the US economy. President Trump has indicated if no deal is reached he will use his executive powers, but NAB’s Tapas Strickland isn’t so sure he’ll be able to, and suggests a deal will be struck soon. There’s also discussion on the Bank of England’s latest forecasts and those from the RBA, plus what to expect in the US non-farm payrolls tonight.

Thursday 6th August 2020

Gold has broken the $2,000/ounce mark, so is it making a run for it? That’s a question Phil Dobie puts to NAB’s David de Garis in this morning’s Morning Call podcast. Some see it as a better investment than the negative real-yields of government bonds. Yet equities continue to rise, driven by the hope that Congress in the US will arrive at a fiscal stimulus package to keep the economy ticking over for the remainder of the year. They’d better hurry, senators are heading home for the summer recess. Stronger than expected services numbers added to the confidence overnight. Jobs could be the weak point – ADP data showed far fewer new jobs than anticipated. Other indicators are showing a similar story, so non-farms payrolls tomorrow night will be watched keenly.

Wednesday 5th August 2020

Treasury bond yields are reaching new lows, which has heightened the appetite for gold, with Comex finally remaining above the $2,000/ounce mark. NAB’s Tapas Strickland says there’s uncertainty in equity markets, driven by the continuing stand-off over the next phase of fiscal stimulus for the unemployed in the US, a number which shows signs of rising. Unemployment could reach 10 percent in Australia, according to the baseline forecast from the RBA – we’ll get the details on Friday. There’s a round of PMI releases later on – Tapas talks through them.

Tuesday 4th August 2020

There was a lot of optimism in the markets overnight, driven by strong manufacturing numbers in the US and Europe, the slow down in new COVID-19 cases in America, the hope that President Trump will be able to push on with some sort of fiscal stimulus and the success of the tech sector. As NAB’s David de Garis says, it’s looking fine if you ignore bank earnings and the continued lockdowns around the world. And the risk that the President fails in his endeavours and the US falls over the fiscal cliff. On today’s podcast there’s also discussion on the RBA’s latest forecasts due out this week, and today’s retail numbers for Australia. Oh, and Tik Tok. Sell to an Americna company or leave. That’s the ultimatum.

Monday 3rd August 2020

The Australian economy will take a hit from the stage four lockdown in Melbourne, but its not alone. Lockdowns continue in Europe, including Manchester in England’s north. NAB’s Rodrigo Catril says this trend is a growing concern. The US government still hasn’t reached agreement on a fiscal stimulus and the concern is that it will take some time, cutting back on the spending of millions of Americans. China‘s Caixin Manufacturing PMI and US Manufacturing ISM (both for July) will be watched for signs of recovery.

Friday 31st July 2020

The US dollar continued to slide, with a fall in shares and US Treasury yields, as GDP numbers showed the extent of the shock to the US economy in Q2. Shortly afterwards, President Trump tweeted the suggestion that the US election in November be delayed. A rise in continuing jobless claims added to the bad news from America, where the administration is no nearer reaching an agreement on the next phase of the fiscal stimulus program. In Europe Germany’s flash GDP umbers were worse than expected, as infection rates rise in numerous countries. At home cases might have peaked, but more controls will hit the economy harder. The AFR is suggesting today that last week’s mini budget is already out of date.

Thursday 30th July 2020

“We’re in a tough situation” – that was the response from Jerome Powell to one question during the FOMC press conference this morning. Without offering anything new, he reiterated the importance of fiscal support, without referring to the cliff that could see most support measures finish, without a replacement, tomorrow. Phil Dobbie talks to NAB’s David de Garis about the tone of the conference, which offered little in the way of optimism. Powell highlighted the way the virus has split the fortunes of the US population, evidenced in the US Household Pulse survey overnight. Meanwhile, even though little has changed since yesterday, equity markets are back on the rise. Perhaps disappointing GDP and jobs numbers today (for the US and Germany) will knock the wind from the sails.

Wednesday 29th July 2020

The US is no nearer reaching agreement on their fiscal stimulus package. NAB’s Tapas Strickland says its highly likely that some of it will be addressed before recess, so GOP candidates don’t go out campaigning ‘empty handed’. Otherwise the USD could be heading for a sizeable fiscal cliff. Meanwhile, COVID cases are rising in many US states, even if Florida and California are, possibly, reaching a plateau. Consumer confidence fell in the US in June, just as Australian job numbers fell. The only positive news is for those holding quantities of gold and those in New Zealand, where job numbers rose in June.