Drama in the White House, Again

Daily Analysis - 14/03/2018



President Trump fires Secretary of State Rex Tillerson and stocks dropped. Major economic data will be reported today in the US and Mario Draghi is looking for more evidence regarding the growth of the inflation rate in the Eurozone.

Mixed effect Equities Market

Equities dropped in another choppy trading session on Tuesday amid concerns over global trade between the US and China. Stocks initially rose on the back of data that showed U.S. inflation remained steady, though investor appetite for risk was hit by U.S. President Donald Trump’s move to fire his Secretary of State, reinforcing market uncertainty about Trump’s future policies. The earthquake from the White House and the disruption of the global trade pulled back the stocks, mainly the tech shares.

The Trump Administration, the White House is Losing 1 senior staff member every 17 days. 24 departures in Trump’s first 417 days.

On the back of the CPI data release, the S&P 500 rose above 2,800 for the first time since early February as Tuesday’s report reinforced the belief that economic growth is picking up without price increases. The news give clues to traders trying to anticipate the path of monetary tightening in the world’s biggest economy ahead of the Fed meeting next week.

The Dow Jones closed 171 points lower. Dow climbed 197 points at its session high. Microsoft was among the worst-performing stocks on the Dow, falling 2.4%. The S&P 500 declined 0.64%, with tech falling 1.2%. Earlier in the session, tech rose as much as 0.9%. The heavy-tech Nasdaq index closed 1% lower and broke a seven-day winning streak.


US PPI and Retail Sales

The economic docket today is mainly dominated by releases coming from the United States and are highly correlated with the future of the US inflation growth rate.

Among the major economic announcements of the day, US PPI data for February for the will be coming out. The forecast for the headline rate is to have ticked up to 2.8% year-over-year from 2.7% in January, while the core one is expected to have risen to 2.5% year-over-year from 2.2%. Although accelerating producer prices suggest accelerating consumer prices, given that the nation’s CPI remained unchanged.

The US retail sales for the month are also due to be released today. Expectations are for headline sales to have rebounded to 0.3% month-over-month following a slide of -0.3% in January. Core sales are also expected to have risen 0.3%, after stagnating the previous month.


Eurozone’s Inflation is not Rising

The ECB continues to study all the data that come out from the bloc. The European Central Bank needs further evidence that inflation is rising toward its target, even if its confidence in the inflation path is increasing, ECB President Mario Draghi said on Wednesday.

“We currently see inflation converging toward our aim over the medium term, and we are more confident than in the past this convergence will come to pass,” Draghi told a conference. “But we still need to see further evidence that inflation dynamics are moving in the right direction.”

“So monetary policy will remain patient, persistent and prudent,” he added.

The strength of the euro is also a major factor that ECB policymakers study as it affects foreign investments and European exports, though the economy is set for a rapid expansion since the euro crisis and the austerity measures in nations like Spain, Greece and Italy are ending.

Last week, the European Central Bank kept its benchmark rate unchanged at a historic low of 0% on Thursday, signaling greater confidence in the Eurozone economy and its own chances of hitting its inflation target by dropping talk of boosting its mass bond-buying program.


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