Mixed messages
Macro & Overnight
Conflicting macroeconomic data and policy statements are creating havoc in financial markets. The $ heading to 100 on its DXY value after the dovish FOMC press conference lurched through 103 after Friday’s higher-than-expected jobs data. Commodity prices, including oil, mirrored the $ moves.
Over half a million jobs gained in January is a huge number and screams of a tight labour market in the context of a 3.4% unemployment rate. However, this trend can continue for several months when set against the post-pandemic low labour participation rate.
Fed Chair Powell said last week in answer to the question, will 5% be enough? Certainly possible. Yeah, absolutely it’s possible. You know, it’s a question no one really knows. I think it’s because this is not like the other business cycles in so many ways. It may well be that as — Yeah, as — then it will take more slowing than we expect, than I expect to get inflation down to 2 percent.
Although much of what he said was dovish, he gave himself plenty of routes to a more hawkish, higher-for-longer, outcome.
Powell said that he would be data-driven. The question is, which data? The hawks on Powell’s committee will be concerned that inflationary pressures are evident in these labour market data. The doves will point out that wage increases remain moderate and below the level of inflation.
UK Company News
Speciality chemical supplier Croda is buying Solus Biotech for £232m to enhance its North Asian exposure.
Bonhill, the financial media owner, updated on its break-up strategy and trading. It received a non-binding offer from a US media buyer for the business and assets of InvestmentNews of $6.5 million in cash (equating to a price per share of approximately 4.5 pence). Its clients continued to delay the release of planned marketing spend. As a result, the Board now expects FY2022 revenue of £13.6m and a loss of £1.5m.
CFD provider Plus500 has been granted a UAE license, further extending its geographical footprint
Seeing Machines announced a tie-up with US-listed Mobile-eye.
Prognosticator
NB Prices are as at the previous day’s close.
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