Authored by Tho Bishop via The Mises Institute,
In the end Donald Trump will get what he wanted, a “low interest rate person” who also happened to be a “Republican.”
Jerome Powell is expected to replace Janet Yellen in an announcement later this week. If so, this means Trump will ensure that, while the stationary at the Eccles Building will change, the monetary policy guiding it likely will not.
Against disappointing China PMIs, US Manufacturing PMI surged back near 2017 highs in October - shrugging off the efects of recent storms, floods, and wildfires - with factory jobs near their best since the financial crisis and gains broadening out to smaller firms too. However, ISM Manufacturing disappointed, falling back from 13 year highs.
So take your pick... is manufacturing momentum picking up (PMI) or fading (ISM)?
Pershing Square's Bill Ackman, who has been engaged in a 5-year long feud with Herbalife, betting its stock price would tumble to zero, came one step closer to admitting defeat on Wednesday when he told CNBC that his hedge fund recently restructured its position in the nutrition and supplements maker. "We converted the short position into a put position," Ackman said in an interview with CNBC, adding that his firm's potential losses on Herbalife will now be capped at 3 percent of the firm's capital. "We can still lose money but the loss is capped."
Ignoring the bullish ADP report, the yield curve, and especially the 5s30s has collapsed, bear flattening to 82.8bps, the lowest level since November 2007.
The long end leads the gains across the curve, with 30Y yields richer by 1.7bp on the day, breaching 2.86% for first time since Oct. 20; while 5Y yields are cheaper by 1.5bp.
US equity futures have hit a new records, helped by surging Asian and European stocks which have all started November on a euphoric note. Surging commodity prices, optimism about tax reform and hope for a new dovish Fed chair all combined to drive global stock markets to record highs on Wednesday, with the MSCI’s world stock index climbing 0.3% to a fresh all time high. Mining stocks lead gains as nickel and other industrial metals soar.