IFO numbers from Germany continue to paint grim picture

JULY 25,2019


The latest IFO numbers from Germany continue to paint a grim picture, the lowest reading in 9 years. This morning the ECB left rates unchanged this morning, the ECB did open the door for a rate cut and said it is considering QE using other asset classes. We wait for the banks press conference this morning at  8:30. The initial reaction to the statant has been modest rally in Bunds, Treasuries.

The News Canada

  • CBC: Indigenous pipeline bidder launches 'listening tour' along Trans Mountain route” (http://bit.ly/2MewOFp)  // Kelsey Johnson: “Project Reconciliation says the tour will begin in Kamloops in mid-August and will invite First Nations and Métis communities along the pipeline route from Edmonton to the West Coast to share their thoughts about Indigenous ownership. Delbert Wapass, executive chair and founder of Project Reconciliation, says the tour will provide information on his group's proposal but is also designed to gather feedback to be reflected in its final submission to the federal government.”

  • CBC: “‘C.D. Howe report finds no winners in Canada-U.S.-Mexico free trade agreement” (http://bit.ly/2YlUldT) // Brandie Weikle: “In a new analysis to be released Thursday, it says Canada's real gross domestic product is expected to shrink by 0.4 per cent and its "economic welfare" — a measure of the value of household consumption — will decline by more than $10 billion US, It says Mexico's GDP will fall by 0.79 per cent and the U.S. will see a 0.1 per cent drop, leading to economic welfare setbacks of $14.9 billion and $17.4 billion, respectively.”

The News International

  • FT: “Higher Fed Inflation Target Before Recession Would Have Led to Faster Recovery, Economists Find” (https://on.wsj.com/32MRMB7) // Paul Kiernan: “A higher Federal Reserve inflation target ahead of the 2007-09 recession likely would have given the central bank more room to lower interest rates and resulted in a “substantially” faster economic recovery, a group of economists has found. If the Fed had set its inflation target above its current 2% level, that would have led to higher inflation over time, which would have caused interest rates to climb higher than they did before the recession, according to a paper by economists Janice Eberly, James Stock and Jonathan Wright.”

  • FT: “Boris Johnson vows to leave the EU in 99 days, ‘no ifs or buts’” (https://on.ft.com/2LFRtTj) // George Parker, Robert Wright and Jim Pickard: “Standing on the steps of Downing Street he said “no ifs or buts” Britain would leave the EU in 99 days’ time and carried out a cabinet clear-out that made Harold Macmillan’s 1962 “Night of the Long Knives” seem modest by comparison. In a defiant and brutal speech outside Number 10, Mr Johnson did not even mention Mrs May by name, but lambasted her for her indecision. “After three years of unfounded self-doubt, it is time to change the record,” he said..”

  • FT: “German manufacturing companies report industry ‘in freefall’” (https://on.ft.com/32SeWpq) // Adam Samson: “The Ifo Institute’s manufacturing business climate index slumped to minus 4.3 in July from positive 1.3 the previous month. The reading was the lowest in more than nine years and echoes a separate survey released on Wednesday that pointed to mounting troubles in Europe’s powerhouse economy. The broader Ifo sentiment gauge, which also covers Germany’s services sector, declined as well, hitting the lowest level since 2013.”

  • REUT: “U.S. warship sails through Taiwan Strait, stirs tensions with China” (https://reut.rs/2LCZYP3) // Idrees Ali, Huizhong Wu: “China expressed “deep concerns” on Thursday over a U.S. Navy warship sailing through the Taiwan Strait, a day after Beijing warned that it was ready for war if Taiwan moved toward independence. Taiwan is among a growing number of flashpoints in the U.S.-China relationship, which include a trade war, U.S. sanctions and China’s increasingly muscular military posture in the South China Sea, where the United States also conducts freedom-of-navigation patrols.”

  • REUT: “Nuclear talks in doubt as North Korea tests missiles, envoy cancels trip” (https://reut.rs/2Gtm81H) // Hyonhee Shin, Joyce Lee: “North Korea test-fired two new short-range missiles on Thursday, South Korean officials said, the first such launch since North Korean leader Kim Jong Un and U.S. President Donald Trump agreed to revive stalled denuclearization talks last month. South Korea’s Defence Ministry urged the North to stop acts that are unhelpful to easing tension, saying the tests posed a military threat.”


Thoughts & Trades

The first graph shows the CMB 2023 on the CMB curve.  It is clearly below the linear progression of the curve, making them expensive.  The second graph shows the Ontario 2023 on the Ontario curve, which is right on the linear progression of its curve.  This shows that the CMB 2023 expensiveness is a CMB thing.  It makes sense to sell them against either CMB22, 25 or Ontario 2023.

2019 Casgrain & Cie. All Rights Reserved

2019 Casgrain & Cie. All Rights Reserved