The U.S. economy is growing at about a 6% annual rate, after adjustments, in the current quarter, according to the tracking models of the Federal Reserve Bank of New York. And that comes after robust payroll gains in March of over 900,000 reported on Good Friday, and booming auto sales in the first quarter, despite supply shortages. Ditto for residential housing, with tight supplies of new and existing homes acting as the main constraint.

None of which has escaped the notice of the stock market, with the Dow Jones Industrial Average and S&P 500 cruising to record highs and the Nasdaq Composite climbing back within 1.4% of its peak, reached a couple of months ago. The bond market, for its part, seems to have come to terms with the economy's vigorous expansion. The benchmark 10-year Treasury yield has been in a narrow range of 1.62% to 1.78% over the past month or so, after its steep climb from just under 1% at the turn of the year.

At the same time, investors' mood has improved markedly with the coming of spring. The VIX -- the Cboe Volatility Index -- has retreated to its prepandemic levels, ending at 16.69 Friday. Qualitative assessments also indicate waning fear and increasing ebullience among investors. The Investors Intelligence polling of advisors found 60.8% bullish in the past week and only 16.7% bearish. Bullish readings over 60% and bull-bear spreads exceeding 40 percentage points tend to come around market peaks.

The apparent complacency is making contrarians uneasy. Mark Haefele, chief investment officer for global wealth management at UBS, points to a big options player buying $40 million of calls positioning for a rise in the VIX, the so-called fear gauge, to over 25 in the next three months. Possible worries could be higher inflation and accelerating growth, along with new variants of the Covid-19 virus, he writes in a client note.

On the former score, Jefferies economists Aneta Markowska and Thomas Simons posit in a research note that nonfarm payrolls could surge by as much as 3 million in the April report, due out early next month. That would go a long way toward closing the 8.5 million payroll shortfall since the pandemic began.

A much faster-than-expected recovery in the jobs market, while wished for by all, could move up the eventual withdrawal of monetary stimulus sooner than anticipated. While Fed Chairman Jerome Powell likes to say that policy makers aren't thinking about thinking about paring the central bank's securities purchases, Bank of America economists see the monetary authorities setting the stage for a slowing in bond buying in the second half, starting tapering in the first quarter of 2022, and winding up the purchases by the end of next year. However, the Fed might not be able to taper fully, owing to the risk of a market tantrum, especially in light of what they euphemistically call a "material supply/demand imbalance," owing to burgeoning U.S. Treasury debt, which has expanded by 26% in the past year.

Read more Up and Down Wall Street: Gold Prices Have Sunk 14%. How the Fed's Policies Could Restore the Metal's Shine

At the same time, Jason DeSena Trennert, who heads Strategas Securities, worries that a fiscal drag from President Joe Biden's plan to raise taxes "sterilizes the positive impacts of opening and already passed stimulus, leading to an economic environment more consistent with the period of secular stagnation" after the 2007-09 financial crisis.


The sluggish progress of Covid-19 vaccination outside the U.S. is a key threat to the economic outlook, Federal Reserve Chairman Jerome Powell said Thursday, echoing calls to address the widening disparity between rich and poor nations.

While the U.S. is on track to vaccinate three-fourths of its population by late June and other wealthy countries are following suit, emerging-market economies are on pace to vaccinate just 28% of their populations by the end of the year, according to UBS research. That gap, and its economic implications, became a major focus of global policy makers this week in a round of meetings arranged by the International Monetary Fund.

"Viruses are no respecters of borders, and until the world really is vaccinated we're all going to be at risk of new mutations," Mr. Powell said Thursday in an IMF seminar on the global economy. "I would look at global vaccination as a risk the progress that we are making."

The IMF lifted its forecast for world economic growth this year to 6%, up from a projection of 5.5% in January. That would mark the fastest expansion in at least four decades, helped by vaccines and trillions of dollars of relief spending by rich countries' governments.

Near the front of the pack is the U.S. economy, projected by the IMF to expand 6.4% this year -- enough to recover all the output lost during last year's 3.5% contraction.

Mr. Powell on Thursday welcomed last week's Labor Department report showing robust U.S. job creation in March. But he reiterated that the central bank still needs to see significant improvement in the economy before dialing back policy support.

He and other Fed officials have indicated in recent weeks that they expect to hold U.S. short-term interest rates near zero through 2023. They also plan to continue the Fed's $120 billion of monthly bond purchases until the economy makes "substantial further progress" toward its goals of maximum employment and sustained, 2% inflation.

Inflation has remained below the Fed's target for most of the past decade, while the U.S. labor market remains about 8.4 million jobs short of its pre-pandemic level of employment.

"We got a taste of what faster progress will look like with the March employment report: close to a million jobs," Mr. Powell said Thursday. "We want to see a string of months like that so we can really begin to show progress toward our goals."


SYDNEY--The Reserve Bank of Australia said Friday that it was alert to a sharp surge in house-price growth in recent months, adding that regulators are watching the situation closely.

The central bank's latest report card on financial stability said that with interest rates low around the world, "risks associated with asset prices and debt could build."

"In a number of economies, including Australia, housing-price growth has picked up notably in recent months and is being watched closely by regulatory authorities," the RBA said.

The RBA's sharpened focus on house prices comes after the country recorded its fastest monthly pace of increase since 1988 in March, fueling fears that the market could be on track to badly overheat.

Major banks have moved to radically raise their forecasts for house-price growth, with some now expecting gains in the vicinity of 15% in 2021.

The jump in house prices is fanning speculation that the banking regulator will soon be forced to introduce clamps on mortgage lending to cool the market.

Both the RBA and the Australian Prudential Regulation Authority have said recently that mortgage lending standards are under closer scrutiny.

Australia's house-price surge is being fueled by a much faster-than expected economic recovery, and the RBA's policy guidance that official interest rates won't be raised for another three year "at the earliest."

Australia has also had success in containing the Covid-19 pandemic, allowing business to return to normal for many companies, who are rehiring workers.

CoreLogic data shows national house prices were up 2.8% in March from February. The gains were broad-based, with values rising by at least 1.4% across each of the country's capital cities.

Sydney, Australia's biggest capital, is leading the pack, with values surging 3.7% in March alone, and 6.7% in the first three months of the year.

The last time Sydney house values recorded a quarterly rise that strong was in mid-2015, just prior to moves by the APRA to slow mortgage lending. Those moves, which mostly targeted property investors, triggered steep house-price falls.

APRA Chair Wayne Byres said recently that surveillance on mortgage lending had been ramped up.

"On the radar are signs that housing-credit growth is picking up, and likely to outpace income growth for the foreseeable future," Mr. Byres said.

"Should risks materialize we have a range of tools we could employ, ranging from interventions similar to that in 2015 and 2017," he added.

APRA is looking nervously toward New Zealand, which recently took drastic steps to slow runaway house-price gains that threatened to increase debt massively and freeze many out of home ownership. House prices in New Zealand are up 40% since 2017, with much of the rise happening over the past year.

Rising oil prices and a weak Ruble is just what Putin needs, $33 billion extra cash

Bloomberg -- Rising oil prices and a weak ruble could provide the Kremlin with as much as $33 billion in extra cash for social spending this year, giving Vladimir Putin the financial wherewithal to help head off growing public discontent.

Thanks to a 25% price surge this year, Russia now receives more rubles per barrel of Brent crude than any time since mid-2019. If oil remains high, the windfall would be enough to allow the budget to receive an extra 2.3% of gross domestic product, according to Sova Capital in Moscow.

“It’s very important to stimulate business and consumers whose disposable incomes were down last year,” said Artem Zaigrin, chief economist at Sova Capital in Moscow. “Without additional funding, there are risks that the economic recovery will fade.”

Amid growing tensions with the West and fears of new sanctions, Putin has been reluctant to spend heavily in recent years, even during the pandemic. Stagnant living standards have helped fuel public anger at the Kremlin, which has boiled over into the biggest nationwide protests in years and poses a challenge for Putin’s ruling party in parliamentary elections this fall.

So far, the Kremlin says it aims to stick with its earlier plan to cut spending this year and next, reversing most of the pandemic increase, in order to limit borrowing, as well as vulnerability to more Western sanctions on its debt. Any oil windfall usually goes straight to a rainy-day fund.

But after a decade of stagnating incomes, pressure is growing to spend more money. Just last week, the Kremlin changed the rules so it can add expenditure to the budget without approval from parliament.

Rising oil prices and a weak Ruble is just what Putin needs, $33 billion extra cash- RichDadph Forex Trading Beginner's Tutorial Philippines

Non-energy revenue was higher than expected last year after Russia experienced one of the smallest contractions of major economies, so there will also be leftover budget money to spend in 2021.

It’s premature to start thinking about extra spending since it isn’t clear yet if oil prices will stay high, said Alexandra Suslina, a budget specialist at the Economic Expert Group, a Moscow think tank. “It seems like a populist move ahead of the elections,” she said.

The Russian president may announce new spending measures at his annual address to the nation expected in the next few weeks. So far, however, his spokesman has denied reports of plans to announce more expenditures.

Joe Biden and Xi Jinping spoke for the first time since U.S. Election

U.S. President Joe Biden and his Chinese counterpart Xi Jinping spoke for the first time since the U.S. election. 

According to a White House statement, Biden raised his “fundamental concerns” about Beijing’s “coercive and unfair economic practices, crackdown in Hong Kong, human rights abuses in Xinjiang, and increasingly assertive actions in the region, including toward Taiwan.”

Xi defended China’s policies as matters of sovereignty, but told the US leader confrontation would be “a disaster”, and called for the two sides to re-establish the means to avoid misjudgments, according to state media.

The call came just hours after the announcement of Biden’s establishment of a Pentagon task force on China and a senior state department official meeting in person with Taiwan’s representative to the US.

The statement said the two leaders also discussed countering the Covid-19 pandemic, and “the shared challenges of global health security, climate change, and preventing weapons proliferation.”

Officials said Biden also planned to express his hopes the two leaders could cooperate on issues such as nuclear nonproliferation and climate change.

Joe Biden and Xi Jinping spoke for the first time since U.S. Election - RichDadph Forex Trading Beginner's Tutorial Philippines

The call between the leaders of the world’s two largest economies, coming three weeks after Biden’s inauguration, follows a review of core elements of U.S. policy toward China during the Trump administration and extensive consultation with America’s allies, the officials said. One of them described Biden as now “in a strong position” to have a substantive conversation with Xi.

Biden’s administration is reviewing sanctions and tariffs imposed by Trump, but has said it will continue a tougher line than that held during Obama’s term. It has elevated the decades-old six assurances made with the island’s government to the same level as the three communiques outlining China-US relations, and the Taiwan Relations Act which requires the US provide material support to Taiwan for its self defense.

China’s military has reacted aggressively. Late last month it sent more than a dozen fighter jets, bombers, and reconnaissance planes into Taiwan’s air identification zone on two consecutive days, far more than the usual sorties of two or three aircraft sent on a regular basis in the past year. It was widely interpreted as a message to the newly inaugurated Biden.

Joe Biden and Xi Jinping spoke for the first time since U.S. Election - RichDadph Forex Trading Beginner's Tutorial Philippines

Bitcoin spikes 16% as Tesla Plans to Begin Accepting Bitcoin as Payment

Tesla Plans to Begin Accepting Bitcoin as Payment 

(Newswires) -- Tesla plans to begin accepting bitcoin as payment in the near future, the electric-car maker said in a regulatory filing. 

The Silicon Valley car maker also said that it has invested $1.5B in the cryptocurrency, after updating its investment policy in January to diversify and maximize cash returns. 

Chief Executive Elon Musk has described himself as a supporter of bitcoin. "I think bitcoin is really on the verge of getting broad acceptance by sort of the conventional finance people," he said last week on the social networking app Clubhouse. 

Tesla shares rise 2.1% premarket and bitcoin prices have risen 8% on the news.

👉  Bitcoin jumped 16% to all-time highs of $44,795.20 on Monday.

👉  The surge higher comes after Tesla disclosed in a SEC filing on Monday that it purchased $1.5 billion of bitcoin.

👉  Tesla expects to begin accepting bitcoin as a form of payment for its products in the near future.

The electric vehicle maker said in its annual 10-k filing on Monday that it bought $1.5 billion worth of bitcoin in January, and it plans to begin accepting the cryptocurrency as a form of payment in the near future.

"In January 2021, we updated our investment policy to provide us with more flexibility to further diversify and maximize returns on our cash that is not required to maintain adequate operating liquidity," the filing said.

Tesla isn't the first firm to convert a portion of its cash into bitcoin, with MicroStrategy adopting that policy over the past year, making it a de facto bitcoin trading vehicle.

Square also acquired $50 million worth of bitcoin last Fall, and PayPal recently opened its services to cryptocurrencies.

Bitcoin spikes 16% as Tesla Plans to Begin Accepting Bitcoin as Payment - RichDadph Forex Trading Beginners Tutorial Philippines

The Tesla filing went on to say, "We may invest a portion of such cash in certain alternative reserve assets including digital assets, gold bullion, gold exchange-traded funds and other assets as specified in the future."

Another digital asset that has caught Musk's eye in recent days has been Dogecoin, a cryptocurrency based on a dog meme. Tweets from Musk backing Dogecoin last week have led to a more than doubling in price for the cryptocurrency.

But there are risks associated with buying cryptocurrencies, which are laid out in Tesla's SEC filing.

"As intangible assets without centralized issuers or governing bodies, digital assets have been, and may in the future be, subject to security breaches, cyberattacks, or other malicious activities, as well as human errors or computer malfunctions that may result in the loss or destruction of private keys needed to access such assets."

With those risks in mind, Tesla said that when it eventually accepts bitcoin as a form of payment for its products, it may or may not liquidate it upon receipt, according to the filing.

Bitcoin spikes 16% as Tesla Plans to Begin Accepting Bitcoin as Payment - RichDadph Forex Trading Beginners Tutorial Philippines

Fundamental Analysis webinar with AXI Phils. (FOREX 303)

Which central banks have the biggest footprint in the Forex Market?

With the dollar turning into a safe haven during the pandemic, risk appetite has become one of the most crucial elements for the FX market. The other main variable is interest rate differentials. In this piece we examine how much firepower each central bank has unleashed and what that implies for currencies. The Fed has been quite aggressive in this crisis, but Japan is the undisputed leader overall. Looking ahead, the ECB could deliver even more, whereas the Fed may have fired its final shot.    

The QE era

Changes in interest rates between economies have always governed exchange rates. Money flows gravitate towards the higher rate regime as investors search for yield, so when a central bank signals it will be raising borrowing costs, its currency tends to appreciate. In contrast, signals for lower rates typically harm a currency.

Some of the biggest FX moves happen when two economies go in opposite directions in their monetary settings. For instance, euro/dollar collapsed in 2014 as it became clear that the Fed would be raising interest rates soon whereas the European Central Bank was ready to experiment with QE for the first time.

Quantitative Easing (QE) is a process by which a central bank can push borrowing costs lower. When interest rates are already at zero but policymakers want to stimulate the economy further, they can start buying government bonds. Through massive purchases of these bonds, the yields on them fall, making it easier for governments to service their debt and spend more today.

This is the name of the game nowadays. With every major central bank having slashed rates to zero or below, it is the size of these QE purchases that mostly impacts currencies in this era. The more a central bank buys, the more its currency suffers, in theory. In reality, other factors can negate this downward pressure, as Japan has shown the world.

Fed: Go big and go early

In the US, the Fed has been especially bold during the pandemic. It cut rates from near 2% to almost zero and started buying $120bn per month in government bonds, mortgage-backed securities, and even some corporate bonds, to push longer-term borrowing costs down for the government and big corporations.

Its powerful actions were crucial in sinking the dollar, as it was buying much more than the ECB and the Bank of Japan. The other element was the improvement in risk sentiment. Once it became clear that the sky was not falling, investors lost their appetite for hoarding dollars defensively.

That said, the Fed’s most aggressive days are probably behind it. The US economy is much stronger than most of its rivals, is doing relatively well in the vaccination race, and there’s a volley of spending coming from Congress just for good measure.

The Fed’s next move will probably be to start reducing its monthly QE purchases, perhaps by early 2022. The markets could start to price in this shift much earlier, possibly by the middle of this year, at which point the dollar could really begin to shine.

ECB not at the final act yet

Across the Atlantic, the European Central Bank has been quite reserved during the pandemic, though it has accumulated massive amounts of bonds over the years, amounting to 55% of the Eurozone’s GDP as of the third quarter of 2020. The amount of its purchases per month varies depending on market conditions, but lately the total has been around €50-70bn a month.

Beyond buying government and corporate bonds, the ECB has also showered the banking sector in cheap money, through generous long-term loans called TLTROs. The Bank offers these loans to financial institutions at below market rates to encourage them to lend out more.

In contrast to the Fed, the ECB may not have fired its last shot yet. Most of the Eurozone is still in a harsh lockdown and the bloc has fallen way behind in the global vaccination race. The economy seems to be headed for a double-dip recession, and there isn’t any impressive government spending in the pipeline either to cushion the blow.

This suggests the ECB could be forced to open the QE taps even wider at some point, or at least that it will be among the last to scale back its purchases. There is not much to be optimistic about in Europe, and the narrative of US economic outperformance – and thus of ECB/Fed divergence – could become a dominant FX driver going forward, keeping the risks surrounding euro/dollar tilted to the downside.

Swift immunization pace allows BoE to step back

Staying in Europe, the Bank of England was surprisingly the most aggressive in terms of QE purchases relative to the size of its economy during the early stages of this crisis. In the bigger picture, however, it has been the least aggressive. Its total purchases over the years amount only to 31% of British GDP as of Q3 2020, far less than the Eurozone or Japan.

It has purchased £736bn of government and corporate bonds so far, out of a total envelope of £895bn that policymakers have approved. At the current buying pace of around £10-20bn per month, this would imply that the Bank would have to expand the program again towards the end of the year.

But will it? A strong argument can be made that if the UK continues to vaccinate its population at such a rapid pace, the Bank won’t need to extend the QE program again. Nor is it likely to cut rates to negative territory, for fear of kneecapping the nation’s enormous financial industry. Simply saying that negative rates are an option is enough to deliver some of the easing benefits, without suffering the costs of that policy, which is exactly what the BoE is doing.

In FX terms, the outlook for the pound seems promising, especially against the euro. The UK economy might ‘return to normal’ much faster than the Eurozone, and the case for negative rates is likely to fade as the economy picks up. The main downside risk is whether the existing vaccines will be effective against all the mutated strains of covid. If some variants prove to be highly resistant to vaccines, this cheerful narrative could take a severe blow.

Bank of Japan unable to torpedo yen

The BoJ has not gone all-out during the pandemic, but over the years, it has been the most interventionist central bank by far. Its total balance sheet amounts to a stunning 128% of GDP, made up mostly of government bonds and stock market ETFs. Its stock market interventions have been so heavy that the BoJ has become the biggest shareholder of most large Japanese businesses.

Beyond buying a truckload of bonds and stocks, the Bank has also enacted negative interest rates, as well as a yield curve control strategy that keeps 10-year Japanese bond yields anchored at 0%. It is essentially a QE program on steroids.

One might ask then, why hasn’t the yen collapsed under the weight of such powerful actions? The answer lies with the nation’s gigantic current account surplus. Japan is the world’s biggest creditor nation, meaning that it exports much more than it imports, which fuels demand for its currency. This is also part of what makes the yen a safe haven. When the global economy is in trouble, Japanese investors tend to repatriate funds from abroad, boosting the yen.

Looking ahead, there’s some speculation that the BoJ might allow Japanese yields to move in a wider range, to support financial institutions that suffer from ultra-low rates. This would be a de-facto tightening move. However, with deflationary forces growing stronger, this is not the time to be withdrawing support. If the BoJ goes ahead with this move, it will most likely accompany it with some other easing strategy to keep the overall stance of policy constant.

As for the yen, with the BoJ having expended most of its firepower, the currency’s fate hangs mostly on external forces now. The biggest variable will be whether the global vaccine rollout proceeds smoothly. If expectations for a powerful global recovery come to fruition, the defensive yen could lose ground against currencies whose central banks may begin to scale back QE programs, like the dollar and pound.

Source: [XM]

President Biden is boosting Vaccine allotments, Freeing up more doses for States

Asian currencies mostly weaken against USD, as improved economic prospects for the U.S. versus the rest of the world increase the appeal of USD-denominated assets. The USD's outperformance reflects the better near-term outlook for the U.S. economy compared to the Eurozone and Japan, partly due to the faster rate of Covid-19 vaccinations in the United States of America.

The Dollar Continues to Squeeze Bears with Firmer US Data

👉  GBP and USD were strongest majors overnight, CHF and JPY were the weakest.
👉  Firmer US data strengthened the dollar, weighed on gold (which is back below 1800) and saw EUR/USD close beneath 1.2000.
👉  The steepening yield curve (US10-2yr) underscored the strength of the reflation trade
👉  Oil prices extended their bullish runs, with WTI and Brent at their highest levels since January and February respectively
👉  Global indices remained anchored at (or near) record highs
👉  BOE held rates, and their appetite for negative rates appears almost non-existent
👉  NFP is the main economic event today (with Canadian employment released alongside it)

In Washington, President Joe Biden’s administration announced Tuesday that it is moving to expand access to Covid-19 vaccines, freeing up more doses for states and beginning to distribute them to retail pharmacies next week. The push comes amid new urgency to speed vaccinations to prevent the spread of potentially more serious strains of the virus that has killed more than 445,000 Americans.

Starting next week, 1 million doses will be distributed to some 6,500 pharmacies across the country, the White House said. The administration is also boosting by 500,000 the weekly allocation of vaccines sent directly to states and territories for the coming weeks, up to 10.5 million. It is allowing state and local governments to receive additional federal dollars to cover previously incurred expenses relating to the pandemic.

“Getting it into pharmacies is a viable approach,” said Dan Mendelson, founder of the health care industry consulting firm Avalere Health. “The pharmacies know how to move people in and out.”

Part of the reason the vaccination campaign got off to a slow start, he added, is that states lacked their own infrastructure for mass vaccinations.

The partnership with drugstores was originally announced by the Trump administration in November. At that time, no coronavirus vaccines had been approved. Participating are major chains like CVS, Walgreens and Rite Aid, big box stores such as Walmart and Costco, and supermarket pharmacies. CVS said it will receive 250,000 doses initially, to be distributed to pharmacies in 11 states.

Source: [ and cityindex]