European markets are higher today despite the fact that Greece is dragged back in the headlines by the IMF. Investors are optimistic this morning and willing to move on after a heavy sell-off, which took place last night over on Wall Street. Thanks to the Chinese Caxin services PMI number, it has assured the markets that there is hope that the Chinese economy will bounce back. The number came in ahead of expectations with a reading of 52.2 compared to a forecast of 51.4. Although, over in Japan, the expectations are building up that the Bank of Japan is not going to sit tight and let the strength of the Japanese currency undo all of their easing efforts. It is expected that the bank will intervene if we do fall below the 110 mark for the USD/JPY pair.
Warnings have started to creep in about global economic growth with Christine Laggard, IMF chief, warning yesterday that she is not pleased with the reform work carried out by various countries. Reforms have been the cornerstone of her agenda and she has echoed this message over and over. However, it is the most arduous strategy to adopt for politicians, seeing that it cuts into their own flesh with respect to their political party’s popularity.
The economic data out of Europe clearly highlights how meagre the performance has been in relation to reforms, especially in countries such as France and Italy. The services PMI fell back into contraction territory in France, and the adverse factory order data for Germany occupied attitudes yesterday. Expectations are not sky high today for Germany when its industrial production will hit the wire. The forecast number of -1.8% is well below the previous reading of 3.3%. It may get ugly if the actual number falls below the forecast and it could deflate the euro’s rally even further.
After another negative day, oil prices are looking a little firmer today as traders are willing to believe somewhat the comments coming from Kuwait. The country issued a statement which wasn’t popular initially, but in bad times any good news is appreciated. Kuwait anticipates that a production freeze could take place when OPEC members meet and this is helping oil prices today. Although, oil buyers will not want to rely on such comments if purchasing over the coming days. The biggest producer within the OPEC cartel, Saudi Arabia, has clearly stated their position with respect to a production freeze. The Saudis are not willing to freeze oil production unless Iran follows suit and adopts a similar strategy.
Back in the US, it is all about the FOMC, with everyone eagerly awaiting for what they have to say. The FOMC members need to put on a united front with a clear message that confirms that they are on the same page. It is bizarre for the FOMC members not to parade their solidarity. Showing a distorted front and issuing their own agenda will only make for a muddy message.
Traders will benchmark the statement with respect to when the next rate hike could be and if the tone amid Fed members is still dovish. Certainly the Fed chair, Janet Yellen, is in no rush to make any hasty decree now, for that could result in her paying the price later. But some members on her committee do not agree with her state of mind.
In terms of stock news, Pfizer (NYSE:PFE) is calling it a day with respect to their merger with Allergan (NYSE:AGN_pa). Allergan shareholders must be very bitter today when they were being offered the price which was substantially higher than their current market price. Nonetheless, for Pfizer the benefits audibly outweigh costs under the new law.
In terms of stock news, Pfizer is calling it a day with respect to their merger with Allergan. Allergan shareholders must be very bitter today when they were being offered the price which was substantially higher than their current market price. Nonetheless, for Pfizer the benefits audibly outweigh costs under the new law.
This is another victory for the Obama administration to stop the firms use the Smart Gates for tax avoidance. The fail merger is also a wake up call for new firms who were envisaging of using the similar strategy to fly to the tax heaven country. The new rules created by the Treasury are also going to make an impact on the banks which used to secure large sums of fees under these merger strategies. Shares for both firms have another day of volatile session ahead of them as investors will digest this news.
by Naeem Aslam