US consumer confidence dropped to 125.9, but levels remain high

    Conference Board US Consumer Confidence Index dropped to 125.9 in October, down from 126.3 and missed expectation of 128.2. Present Situation Index rose from 170.6 to 172.3. Expectations Index dropped from 96.8 to 94.9.

    “Consumer confidence was relatively flat in October, following a decrease in September,” said Lynn Franco, Director of Economic Indicators at The Conference Board. “The Present Situation Index improved, but Expectations weakened slightly as consumers expressed some concerns about business conditions and job prospects. However, confidence levels remain high and there are no indications that consumers will curtail their holiday spending.”

    Full release here.

    UK Labour said conditions for election are met

      As EU has confirmed Brexit extension till January 31, UK opposition Labour indicated that the conditions for supporting a snap election was met. Liberal Democrats and the Scottish National party have already offered support to Prime Minister Boris Johnson’s one-line bill to trigger early election in December. Though, the date was not confirmed yet. Based on current development, the bill will like be passed today. Johnson will refrain from pushing forward with his Brexit bill until a new parliament is formed.

      Labour leader Jeremy Corbyn said in a statement,” I have consistently said that we are ready for an election and our support is subject to no-deal Brexit being off the table. We have now heard from the EU that the extension of article 50 to 31 January has been confirmed, so for the next three months, our condition of taking no deal off the table has now been met. We will now launch the most ambitious and radical campaign for real change our country has ever seen.

      RBA Lowe: Extraordinarily unlikely to see negative interest rates in Australia

        RBA Governor Philip Lowe said in a speech that the key to a return to more normal interest rates globally is to improve the “investment climate”. There are two central elements to do so. First is “reduction in some of the geopolitical and other concerns”. Second is “structural measures” that boost people’s “confidence about future economic growth”.

        Domestically, Lowe said this year’s three interest rate cuts as “helping” the Australian economy and supporting the “gentle turning point” in growth. RBA is “prepared to ease” further if needed. But he emphasized it is “extraordinarily unlikely that we will see negative interest rates in Australia”. Though, it’s likely that “an extended period of low interest rates” is required.

        Lowe’s full speech here.

        RBNZ Hawkesby: Tactical rate cut demonstrate determination to meet inflation target

          RBNZ Assistant Governor Christian Hawkesby said the -50bps rate cut back in August was a “tactical decision”. A key part was that front-loading would “give inflation the best chance of meeting our policy objectives”. In particular, “it would demonstrate our ongoing determination to ensure inflation increases to the mid-point of the target”. Such commitment should ” support a lift in inflation expectations and an eventual lift in actual inflation.”

          The “regret analysis” suggested ” it would be better to do too much too early, than do too little too late.” The alternative approach could risk “inflation remaining stubbornly below target,”. Inflation expectations could “drift lower” and create an “even more challenging task to achieve our objectives.”

          Full speech here.

          UK Johnson failed to trigger election, accepted Brexit extension

            UK Prime Minister Boris Johnson failed in his attempt for snap election, as he got only 299 votes in favor, well short of 424 needed, or two-third absolute majority. After the defeat, he told the parliament, “we will not allow this paralysis to continue and, one way or another, we must proceed straight to an election. This House cannot any longer keep this country hostage.”

            Johnson would try an easier route on Tuesday, by proposing a one-line bill that changes the date of the next election to December 12. In this case, he only need a simple majority in the Commons, rather than two-thirds. However, other MPs could set conditions to on the change that Johnson might not like.

            Earlier, Johnson wrote to European Council President Donald Tusk to accept the Brexit flextension granted. But he also emphasized, “this unwanted prolongation of the UK’s membership of the EU is damaging to our democracy.” “I would also urge EU member states to make clear that a further extension after 31st January is not possible. This is plenty of time to ratify our deal.”

            Trump ahead of schedule in China trade deal, S&P500 hit record

              US President Donald Trump indicated on Monday that they are “ahead of schedule” on preparing the trade agreement with China for signing at APEC summit in Chile on November 16-17. He said “we’ll call it Phase One but it’s a very big portion.” Also, the deal would “take care of the farmers” and “also take care of a lot of the banking needs.” Meanwhile, US Trade Representative said it is studying whether to extend tariff suspensions on USD 34B of Chinese imports. The exemptions would expire on December 28 this year.

              US stocks responded positively to recent trade developments. DOW rose 0.49% overnight, while S&P 500 rose 0.56%. NASDAQ rose 1.01%. S&P 500 hit new record high at 3044.08 and touched 61.8% projection of 2728.81 to 3027.98 from 2855.94 at 3040.82. Firm break of this projection level will be an indication of underlying medium term momentum. Next target will be 100% projection at 3155.11.

              US goods trade deficit narrowed to USD 70.4B, down -3.6%

                US goods trade deficit narrowed by -3.6% mom to USD -70.4B in September, down USD -2.7B from October’s 73.1B. Exports of goods were USD 135.9B, USD 2.2B less than August exports. Imports of goods were USD 206.3B, USD 4.9 than August imports. Advanced wholesale inventories dropped -0.3% mom in September, versus expectation of 0.3% mom.

                Full release here.

                UK CBI retail sales rose to -10, retailers contend with looming Brexit deadline

                  UK CBI realized sales improved to -10 in October, but remained in decline for the sixth consecutive months. Rain Newton-Smith, CBI Chief Economist, said: “Retailers have now endured six months of falling sales, the longest period of decline since the financial crisis. The sector is struggling with ongoing digital disruption, layered on top of cost pressures from a weak pound and the cumulative burden of an outdated business rates regime.

                  “Retailers have also had to contend with the looming Brexit deadline, which has partly driven a record spike in stocks. The timing could not be worse: the run-up to Christmas is a crucial time of year for the retail sector, and not knowing where we will be on November 1st is adding more strain to an already beleaguered sector.”

                  Full release year

                  EU Tusk confirmed approval of 3-month Brexit flextension

                    European Council President Donald Tusk announced that EU27 has agreed that it will accept UK’s request for Brexit “flextension” until January 31, 2020. He expected to formalize the decision through a written procedure. The decision was made after a 30-minutes meeting of European ambassadors. It’s reported that the conditions attached to the extension including the “non-renegotiability” of the deal agreed.

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                    Former BoJ Shirakawa saw Japanification of policy in the world

                      Former BoJ Governor Masaaki Shirakawa said in a summit in Shanghai that there is a “Japanification” of monetary and fiscal policy in the world. And, “policy makers and mainstream academics are still obsessed with a specter of deflation.”

                      He added that the goal of monetary and fiscal stimulus should only be to “bring future demand to the present”. But, “the capacity to front-load will be restrained by the country’s potential growth rate, which will be kept low as perpetual low interest rates keep inefficient firms alive.”

                      EU leaders circulating text of three months Brexit extension

                        It’s widely reported that, despite objection by French President Emmanuel Macron, EU27 leaders were already circulating the draft texts of granting UK a three month Brexit extension to January 31, 2020. But Brexit could happen earlier on November 30 or December 31 if both sides were able to ratify the agreement in respective parliament in time.

                        The draft noted: “The period provided for in article 50 (3) TEU as extended by the European council decision (EU) 2019/584 is hereby further extended until 31 January 2020. In the event that the parties to that agreement complete their respective ratification procedures and notify the depositary of the completion of these procedures in November 2019, in December 2019 or in January 2020, the withdrawal agreement will enter into into force respectively on [the first of the month of the relevant month].”

                        EU diplomats will meet in Brussels to discuss the proposal today, a few hours before UK Commons section on general election. Prime Minister Boris Johnson called for generally election on December 12 but it’s believed that he wouldn’t secure two-thirds majority support for the motion.

                        EU to made final decision on Brexit extension on Monday or Tuesday

                          After a two-hour meeting with EU27 ambassadors in Brussels, EU chief Brexit negotiator said “no decision” was made regarding Brexit extension yet, despite the “excellent” discussion. It’s widely reported, and generally believed, that EU is in full agreement on the need for an extension. Work will continue over the weekend take make the decision by written procedure. But the duration for the extension is undecided, waiting for results on a vote on UK Prime Minister Boris Johnson’s push for Christmas election. The finally decision could be made on Monday or Tuesday.

                          Chancellor Sajid Javid told BBC Radio today that “The opposition have said, week after week, that if there is a delay of three months, which is what they requested through parliament, then they will vote for a general election, so let’s see if they keep their word. And if they don’t then we will keep bringing back to parliament a motion to have an election. And we will keep doing that again and again.”

                          Labour leader Jeremy Corbyn told ITV that Johnson needed to come to parliament on Monday and rule out a no-deal Brexit. He also criticized the December 12 election date as being “odd for many reasons – it’s so near Christmas, it’s after universities finish their terms”.

                          Forecasters downgrade Eurozone inflation and growth projections in ECB survey

                            In the Q4 ECB Survey of Professional Forecasters, Eurozone inflation expectations were revised down on average across all horizons. Real GDP growth expectations was also revised down, particularly for 2020. Meanwhile, unemployment rate expectations were also revised up.

                            • HICP inflation is projected to be at 1.2% in 2019 (vs Q3 projection of 1.3%), 1.2% in 2020 (vs 1.4%) and 1.4% in 2021 (vs 1.5%).
                            • Core HICP is projected to be at 1.1% in 2019 (vs 1.1%) 1.2% in 2020 (vs 1.3%), and 1.4% in 2021 (vs 1.5%).
                            • Real GDP growth is projected to be at 1.1% in 2019 (vs 1.2%), 1.0% in 2020 (vs 1.3%) and 1.3% in 2021 (vs 1.4%).
                            • Unemployment rate is projected to be at 7.6% in 2019 (vs 7.6%), 7.5% in 2020 (vs 7.4%) and 7.4% in 2021 (vs 7.3%.

                            Full report here.

                            German Ifo business climate unchnaged at 94.6, downward trend in manufacturing stopped

                              German Ifo Business Climate was unchanged at 94.6 in October, slightly above expectation of 94.5. Current Assessment index dropped to 97.8, down from 98.6 and missed expectation of 98.0. Expectations index rose to 91.5, up from 90.9, and beat expectation of 91.0. Ifo also noted that “the German economy is stabilizing”.

                              Also, in manufacturing “a stop has been put to the downward trend for now”, with the index improved from -6.4 to -5.5. Trade also improved from -3.7 to -3.3, ” thanks to considerably higher expectations in wholesale”. Services was relatively unchanged, down form 16.7 to 16.6. Construction dropped from 22.1 to 21.3.

                              Full release here.

                              Germany Gfk consumer sentiment dropped to 9.6, economic expectation dropped to near seven year low

                                Germany Gfk consumer sentiment for November dropped to 9.6, down from 9.8, missed expectation of 9.8. Gfk noted that besides known risk factors such as the global economic downturn, trade conflicts and Brexit chaos, there are increasing reports of job losses, such as in the automotive industry and on the financial markets, for example. These events have dampened the mood of consumers again and optimism is dwindling

                                In particular, economic expectation indicator continued its down trend dropped -4.8 pts to -13.8. That’s the lowest level in nearly seven years since December 2012. “According to consumer estimates, the risk that Germany could slide into a recession has increased again recently. Combined with the trade conflict, the global cooling off of the economy, which will especially impact the strongly export-oriented German economy, will not leave the German economy unscathed. Consequently, several automobile manufacturers as well as their suppliers have already announced redundancies. This loss of jobs at car manufacturers will be further intensified in future by the forthcoming transition to electro-mobility. Owing to the European Central Bank’s (ECB) low-interest-rate policy, banks are experiencing increasing difficulties.  As the example of Deutsche Bank shows, they are reacting with branch closures and redundancies.”

                                Full release here.

                                China said to seek some tariffs removals in exchange for farm purchases

                                  US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin will speak with Chinese Vice Premier Liu He today by phone. Two sides are believed to be working on the text for Phase One of US-China trade agreement, for signing at the APEC summit in Chile on November 16-17.

                                  It’s reported that China will ask US to drop the plan to impose tariffs on USD 156B of Chinese goods on December 15. Additionally, Beijing could ask US to remove the tranche of tariffs imposed on September 1, on USD 125B of Chinese imports, too. That is, China is seeking to get back to tariffs on just the original USD 250B in goods.

                                  In exchange China would buy at least USD 20B of American farm products in the first year, as part of the phase one deal. That would bring purchases back to the level in 2017, before trade war began. In the second year of a final deal, purchases could rise further to USD 40B-50B, when all punitive tariffs are removed.

                                  EU weighing Brexit flextension while Johnson calls election

                                    EU27 is said to debate today the drafted text granting UK another Brexit delay . The purpose of the extension is “allowing for the finalization of the ratification” of the withdrawal agreement. There is no consensus on the date yet as some leaders prefer to idea of so called “flextension”. Meanwhile, some leaders might want to see the result of UK Prime Minister Boris Johnson’s early election motion first.

                                    Johnson called for an early election on December 12 yesterday and the Commons is due to vote on that on Monday. He said in a letter to opposition leader Jeremy Corbyn that prolonging the Brexit “paralysis” into 2020 would have “dangerous consequences for businesses, jobs and for basic confidence in democratic institutions, already badly damaged by the behavior of parliament since the referendum”. Corbyn, on the other hand, repeated that “the principle is take ‘no deal’ off the table, the EU answers tomorrow, then we can decide.”

                                    US PMI composite rose to 51.2, points to 1.5% annualized GDP growth in Q4

                                      US Markit PMI Manufacturing rose to 51.5 in October, up from 51.1, and beat expectation of 50.5. PMI Services rose to 51.0, up from 50.9, matched expectations. PMI Composite also improved to 51.2, up from 51.0.

                                      Commenting on the flash PMI data, Chris Williamson, Chief Business Economist at IHS Markit, said:

                                      “Despite business activity lifting from recent lows, the survey data point to annualized GDP growth of just under 1.5% at the start of the fourth quarter, and a near-stalling of new order growth to the lowest for a decade suggests that risks are tilted toward growth remaining below trend in coming months.

                                      “An increased rate of job culling adds to the gloomy picture, with jobs being lost among surveyed companies at a rate not seen since 2009. At current levels, the survey’s employment gauge indicates non-farm payroll growth slipping below 100,000.

                                      “The overall subdued picture reflects a spreading of economic weakness from manufacturing to services, but encouragingly we are now seeing some signs of manufacturing pulling out of its downturn, in part driven by a return to growth for exports and improved sentiment about the year ahead, linked to hopes that trade war tensions are starting to ease.

                                      “If manufacturing can continue to gain momentum this should hopefully feed through to stronger jobs growth and an improved service sector performance, leading to better GDP growth, but it remains too early to determine whether the economy has truly turned a corner.”

                                      Full release here.

                                      ECB Draghi’s press conference live stream

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                                        Introductory statement.

                                        US durable goods orders dropped -1.1%, ex-transport orders dropped -0.3%

                                          US durable goods orders dropped -1.1% in September to USD 248.2B, well below expectation of -0.5%. Ex-transport orders dropped -0.3%, versus expectation of -0.2%. Ex-defense orders dropped -1.2%.

                                          Full release here.