NAB Morning Call

Wednesday 7th October 2020There’s been a strong reaction in the equity and currency markets to Donald Trump’s sudden decision to stop talks about a fiscal stimulus, even though he tweeted about the need for it whilst in hospital over the weekend. NAB’s Rodrigo Catril wonders whether he’s serious, or is it a last minute bargaining tactic? It comes after the Fed’s Jerome Powell warned that too little fiscal support would lead America to a weak recovery. All this at a time when Biden seems to be pulling away in the polls. Meanwhile, the RBA and Australia government are more in-tune on the need for stimulus to create and retain jobs, whilst the ECB is sounding more dovish. And Brexit talks – the reports are mixed. Deadlines are getting pushed back. Hosted on Acast. See acast.com/privacy for more information.

Tuesday 6th October 2020As the President prepares to leave for the White House there’s still hope that a deal will be reached to pass version 2 of the Heroes Act, adding more stimulus to the US economy. Phil Dobbie asks NAB’s Gavin Friend if that’s what’s driving the risk-on mood today, or is it the news that the President will be out of hospital soon? Gavin suggests the rising gap in the polls will also be driving the mood, removing the uncertainty perhaps of a drawn out election process. The President told people not to be afraid of COVID in a recent tweet, which could mould his campaign message from now on. The non-manufacturing ISM read has added to the plethora of strong(ish) data from the US. It’s a busy day for Australia today, with the RBA meeting and the Federal Budget tonight. Hosted on Acast. See acast.com/privacy for more information.

Monday 5th October 2020Friday was certainly a gamechanger. The US President went into hospital without a clear picture of his condition. Now, it seems he could be returning to the White House as soon as today. So, do the markets take back some of their risk concerns, and focus on the positives of the situation? That’s a question Phil Dobbie puts to Ray Attrill in today’s Morning Call podcast. One positive could be that Republicans are more prepared to reach a deal on a stimulus package. Friday’s non-farm payrolls in the US on Friday were largely ignored by the markets, but showed a slowing in jobs recovery. The pound strengthened on Friday on hopes that talks over Brexit will step up, but there’s still a lot of ground to be covered in a very short period of time. And locally, we’re one day away from the next RBA meeting and the budget, but markets are more likely to be eyeing Washington than hanging out for words from Josh Frydenberg. Hosted on Acast. See acast.com/privacy for more information.

Friday 2nd October 2020Equities in the US rose overnight despite a stalemate on the fiscal stimulus package. Optimists insist there is some hope that a deal will be reached but, as NAB’s David de Garis puts it, the whole thing is being held back by philosophical differences. The pound has had a choppy day today, with little progress on the Brexit talks. The EC has started legal proceedings against the UK with regard to their Internal Markets Bill, giving the UK Prime Minister a month to respond. By then you’d hope a trade deal will be reached, but there’s no guarantee the two parties will go into tunnel talks. Non-farm payrolls from the US will be the major bit of new data tonight, the weekly jobs numbers released last night showed the claw back in employment is slowing and many US companies have announced major layoffs this week. Hosted on Acast. See acast.com/privacy for more information.

Thursday 1st October 2020No sell off in equities after that yelling match that was apparently a presidential election debate. In fact, equities have been helped by some strong data from the US and continued hope on a stimulus deal, although enthusiasm for that waned somewhat later in the session. Elsewhere, the Bank of England’s Andy Haldane criticised the Chicken Licken mentality. NAB’s Gavin Friend says it’s a curious comment given the sharp rise in COVID-19 cases in the UK. The pound has gained more as the UK potentially gave some ground in the Brexit negotiations, and the Aussie dollar boosted by rising commodity prices and strong PMI numbers from China. The US manufacturing ISM and weekly jobless claims will be numbers to look out for tonight. Hosted on Acast. See acast.com/privacy for more information.

Wednesday 30th September 2020Despite a big jump in confidence in the Conference Board numbers for the US, there’s not much optimism in the markets today. NAB’s David de Garis says, as the virus refuses to settle down, the lack of a fiscal stimulus deal – the so-called Heroes Act – will be playing on markets (hence the title of today’s podcast, a homage to the 1970’s punk band The Stranglers). There’s also the pre-debate nerves, with Trump and Biden battling it out in the next few hours. Oil has taken a hit today, again because of COVID concerns and the realisation that demand will be slow to pick up. Today, China’s PMI numbers and RBA credit numbers will be of interest to Aussie investors. Hosted on Acast. See acast.com/privacy for more information.

Tuesday 29th September 2020US and European equities rose sharply, with rising confidence seeing a fall in the US dollar and a rise in the Aussie. The reports that the US President has paid very little in tax might provide some fodder for Joe Biden in the TV debate and NAB’s Tapas Strickland says it could influence undecided voters. Whichever way you look at it, it’s going to be a messy election. Meanwhile, the pound has gained in hopes of a Brexit deal, which has offset any concerns about further lockdowns in the UK. The gains in the Aussie dollar will be partially influenced by an expectation that the RBA won’t cut rates next week, waiting instead till November. Hosted on Acast. See acast.com/privacy for more information.

Monday 28th September 2020COVID19 cases continue to rise in Europe, with numbers in the UK and France now well above the first wave. Yet, whilst there’s very little in the way of new data to influence the markets this week, there’s plenty of non-COVID politics; the President’s nomination of Amy Comey Barrett for the Supreme Court, the first Presidential election debate mid-week, and the start of another round of Brexit talks, with hopes increasing that a deal will be struck. NAB’s Ray Attrill talks through a week which will be less about economic data and more about geopolitics – and virus numbers of course. Hosted on Acast. See acast.com/privacy for more information.

Friday 25th September 2020Equities were rising again in the US overnight on the hopes that a stimulus deal would be struck between the GOP and Democrats, but as optimism turned to reality, prices fell, the US dollar regained some of its strength and bond yields weakened. NAB’s Gavin Friend says it demonstrates how markets are clinging to any good news in amongst what’s a pretty bleak picture right now. The pound gained a little ground as the Chancellor Rishi Sunak unveiled the follow-up to the furlough scheme, but its clear many workers will not be covered and unemployment will rise. Have we reached the end of the road for sizeable bailouts from governments? Hosted on Acast. See acast.com/privacy for more information.

Thursday 24th September 2020NAB had forecast that the Aussie dollar would reach 74 US cents by the end of the year. It did earlier this month but, as global risk sentiment rises, it is rapidly losing ground. On his first day back from holidays, NAB’s Ray Attrill is asked whether he still thinks the Aussie will regain strength, given the hit it has been taking this week? How much of it is down to the easing expectations for the RBA? The risk-off mood is being driven by rising virus concerns and louder voices from the Fed on the need for a fiscal stimulus which looks less likely by the day. To add to global concerns, flash PMI numbers for Europe show a service sector in contraction, putting the kibosh on rapid recovery hopes. Hosted on Acast. See acast.com/privacy for more information.

Wednesday 23rd September 2020In the US Jerome Powell spelt out very clearly in his testimony before Congress that more fiscal stimulus was needed and had been assumed by many board members in their policy predictions. Meanwhile, in Australia Guy Debelle has hinted that more monetary easing might be round the corner. Tapas Strickland says NAB has revised its rates forecast and explains some of the reasoning behind it. It’s been a bad day for the pound, as infections rise further and more restrictions are imposed on the public. A swag of PMIs are out today for Europe and the US, which will give a clearer idea of how each economy is traversing the economic impacts of the pandemic. Hosted on Acast. See acast.com/privacy for more information.

Tuesday 22nd September 2020Concerns over the impact if a second wave in the US and Europe seem to be gathering momentum, driving investors to government bonds and safe-haven currencies. NAB’s Gavin Friend says banking stocks have added to the slide today following an investigation into how some big banks failed to stop money laundering up to three years ago. The US election is adding to uncertainty. But it’s the rising virus numbers that are the real concern and what else, if anything, central banks can do about it. All eyes will be on Jerome Powell’s testimony on the Fed and on Guy Debelle’s speech today, to see the direction the RBA is planning to head. Hosted on Acast. See acast.com/privacy for more information.

Monday 21st September 2020As COVID-19 cases rise in many parts of the world, and more restrictive measures likely in the UK and Europe, there’s the question of what more central banks can do to help stabilise the global economy? NAB’s Rodrigo Catril says this should be an interesting week in that respect, with central bank speakers out in force, including Jerome Powell facing a two-day grilling by the Senate and the Congress in the US. Meanwhile, uncertainty is hurting the share markets, which took a tumble on Friday. The pound could be a casualty this week with Boris Johnson set to announce more restrictions for the UK public on Tuesday, whilst, conversely, Victoria’s infection rates are falling and NZ is likely to ease measures from tonight. Hosted on Acast. See acast.com/privacy for more information.

Friday 18th September 2020It’s been a topsy turvy session overnight, that’s seen equities slide even though a day ago the FOMC was signalling years of near zero interest rates. NAB’s Gavin Friend says by extending the expected period of low rates investors dwelled more on the negative impacts of the virus. There was some optimism that a deal would be struck to provide more fiscal stimulus in the US, but despite the President’s calls for Republicans to be prepared to spend more, a deal still seems unlikely. In the UK the pound also twisted and turned, driven up by optimism over a Brexit deal from Ursula von der Leyen and driven down by talks of negative interest rates from the Bank of England. Hosted on Acast. See acast.com/privacy for more information.

Thursday 17th September 2020US interest rates will be lower for longer – that’s the takeout from today’s FOMC meeting. So, what are the implications of three, perhaps four years, of near zero rates? A question put to NAB’s Rodrigo Catril in today’s Morning Call podcast. How concerned should we be about deflation, with figures in the UK today showing a 0.4 percent fall in August? There’s also discussion on today’s labour market data for Australia, GDP numbers for Q2 for New Zealand and what to expect from the Bank of Japan and the Bank of England later on. Hosted on Acast. See acast.com/privacy for more information.

Wednesday 16th September 2020Equities are on the rise again in the US. NAB’s Gavin Friend says it has been driven by a flurry of M&A activity, alongside vaccine hopes and reasonable activity numbers from China, which showed retail sales turning positive for the first time this year. Compared to that, US data was decidedly mixed, with the pace of recovery seeming to slow. The FOMC meeting tomorrow morning will present a dovish view, says Gavin, with the possibility of downgrading some of their economic forecasts. On the podcast there’s also discussion on yesterday’s RBA minutes and why the latest UK employment numbers should be taken with a pinch of salt. Hosted on Acast. See acast.com/privacy for more information.

Tuesday 15th September 2020Shares climbed in the US today on the hope that Pfizer will have a vaccine ready by the end of the year. It’s a promise made by their CEO at the weekend and touted by the US President. The US dollar fell, with the NZ dollar the main beneficiary. NAB’s Rodrigo Catril says speculation is mounting that the RBA will buy more government bonds to bring interest rates down, which accounts for a why there’s been less interest in the Aussie dollar. Plus, more volatility for the pound, and activity numbers from China today will help determine whether consumer confidence has come back yet. Hosted on Acast. See acast.com/privacy for more information.

Monday 14th September 2020It’s just over six months since the COVID-19 pandemic was declared and we’re all still unsure about how it will all end. NAB’s Tapas Strickland said we can expect some optimism today as the Oxford University-Astra Zeneca trials resume, and that could help the Aussie dollar gain some ground? But could it also hit tech stocks, who have been enjoying their moment in the sun as home workers have been more reliant on technology. The tech bubble will be tested this week with a significant number of IPOs in the US. On today’s podcast there’s also discussion on the latest inflation numbers in the US ahead of this week’s FOMC meeting, the UK’s delayed recovery, China’s credit growth and Japan’s new Prime Minister. Plus a look ahead to the RBA meeting tomorrow. Hosted on Acast. See acast.com/privacy for more information.

Friday 11th September 2020The pound lost further ground today as the EU objected to a new government bill that would unilaterally overturn the Withdrawal Agreement. NAB’s Gavin Friend says observers have been aghast at the actions of the UK government and that’s being felt in the pound. But has the weakened pound held back the Euro? The ECB’s Christine Lagarde signalled that the ECB was watching the rising exchange rate, but it was not a target for the central bank. Does that give the currency permission to rise higher? Meanwhile, uncertainty remains in US equities, falling markedly today, with the US dollar holding its own, most likely because of the Sterling effect. Weekly jobs numbers in the US also disappointed a little. Hosted on Acast. See acast.com/privacy for more information.

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.