NAB Morning Call

Thursday 10th September 2020There’s been a rebound in risk sentiment which NAB’s Tapas Strickland has been driven by a buy-the-dip mentality, with opinions still divided as to whether tech stocks remain over-valued. Meanwhile the US dollar has fallen again, boosting the Aussie dollar and the Euro. The rising value of the Euro of late will be of particular concern to the ECB which meets later – higher priced exports could hinder Europe’s recovery. The pound meanwhile is finding it hard to keep up as Brexit uncertainty remains and concerns over rising COVID infections, with new restrictions imposed in the UK today. All that said, the data over the last 24 hours has shown largely positive signs of recovery. Hosted on Acast. See acast.com/privacy for more information.

Wednesday 9th September 2020US equities have had a third session with substantial falls. NAB’s Gavin Friend says the damage is largely confined to the tech sector but there is evidence that it could be broadening to a fuller risk-off mood. The reasons for the uncertainty are clear, beyond irrational exuberance, we have increasing rhetoric from Donald Trump over China, expanding on his earlier decoupling comments; Boris Johnson is turning up the heat on Brexit negotiations, threatening to change the withdrawal agreement, even if it means breaching international law; and COVID-19 cases continue to rise. Hosted on Acast. See acast.com/privacy for more information.

Tuesday 8th September 2020A drop in the pound was the only significant market move today, driven by threats from Boris Johnson to walk away in mid-October if he doesn’t get the Brexit deal he wants. Normally such remarks are taken as brinkmanship as negotiations near the finish line, but today there was a market reaction – perhaps because there’s little else to go on. Data from Australia today will give a clear indication of the impact of the Melbourne lockdown on other states – the NAB Business Survey for August and the weekly payrolls numbers. NAB’s Tapas Strickland also talks through a Bloomberg survey showing the expectation for further rate cuts and increased bond buying from the RBA. Hosted on Acast. See acast.com/privacy for more information.

Monday 7th September 2020US jobs data on Friday helped the equities market to regain a little composure as it fell for the second day. It also saw Treasury yields rise sharply, steepening the curve. NAB’s Rodrigo Catril proffers his opinion on how much of this is a short-term response and how much the start of a longer-term shift. The Fed’s Jerome Powell said on Friday that the recovery ”will get harder from here”. There’s also the discussion on the impact on the Australian economy of the extension to the Melbourne lock-down announced yesterday. Hosted on Acast. See acast.com/privacy for more information.

Friday 4th September 2020There have been massive falls in US equities, particularly tech stocks. NAB’s David de Garis says thin trading in summer can always create sharper moves, but there’s little doubt a correction was overdue and tech stocks have borne the brunt of it. There’s been no encouraging news to divert attention – the Services ISM number came in lower than expected, with the employment component still in contraction. The weekly jobless claims numbers remain persistently high, with non-farm payrolls providing more detail tonight. And the Fed’s Charles Evans has suggested it’ll take more than two years to see a full recovery. The biggest victim of this negative mood – other than retail investors feeling the equity hit – is the Australian dollar. Hosted on Acast. See acast.com/privacy for more information.

Thursday 3rd September 2020The US dollar managed a slight recovery in the overnight session, which has also seen continued growth in US equities, echoed across the Atlantic. On today’s podcast Phil Dobbie asks NAB’s Ray Attrill why the positive sentiment when the data we’re seeing isn’t so positive? ADP employment numbers were softer than expected and the Fed’s Beige Book suggested the recovery in the US is slowing. They also discuss yesterday’s GDP numbers for Australia and the whole gamut of services PMI numbers out later today. Hosted on Acast. See acast.com/privacy for more information.

Wednesday 2nd September 2020Deflation in Europe comes as no surprise, just as the shift in the Fed’s monetary policy seems likeold news, but NAB’s Gavin Friend explains how the markets are still adjusting to it. Data releases have largely been positive, with a higher than expected increase in the USA ISM, and the Caixin PMI for China is at its highest level since 2011. So, what can we expect from Australia’s GDP numbers for Q2? Will they signal that the RBA, and the government, needs to do more to help the economy recover? Hosted on Acast. See acast.com/privacy for more information.

Tuesday 1st September 2020The Australian and NZ dollars reached two-year highs in the overnight session, with the US dollar declining further. Phil Dobbie asks NAB’s Rodrigo Catril whether the trend will continue, wand whether we could see the Aussie reach 80 US cents late next year. There’s also discussion on Warren Buffet’s investments in Japan, Richard Clarida’s explanation on the Fed’s policy change and how the rate of US COVID-19 fatalities seems to be reacting sluggishly to the fall in cases. Plus, what to expect from the RBA today and the US ISM manufacturing number tomorrow morning. Hosted on Acast. See acast.com/privacy for more information.

Monday 31st August 2020NAB’s Ray Attrill says the US dollar bore the brunt of Friday’s reflective thinking on Jerome Powell’s Jackson Hole speech. He says, if the market believes the Fed will run inflation up to 3%, then real US interest rates would be lower and higher inflation should force the currency down over time, hence the response. But isn’t this somewhat hypothetical when inflation has struggled to get anywhere near 3 percent? There’s also discussion about US confidence data, China’s ISM numbers today and the impact of Shinzo Abe’s resignation announcement. Hosted on Acast. See acast.com/privacy for more information.

Friday 28th August 2020Jerome Powell used his virtual address to the Jackson Hole Symposium to announcer the Fed’s strategy of targeting an ‘average’ 2% inflation rate, a subtle change that is likely to keep interest rates lower for longer. NAB’s David de Garis says that lower rates will help to propel investment once confidence returns, but it’ll take a while to eat into the current spare capacity. Meanwhile another million people signed for unemployment benefit in the US, business confidence seems to be picking up in Europe and the ABS provided confirmation that private capex in Australia was way down in Q2. Of course, the Q3 numbers will be a lot more interesting. Hosted on Acast. See acast.com/privacy for more information.