Markets: Budgets

Winners and losers dominate the headlines with the Boston Red Sox in baseball and Bolsonaro in Brazil the winners. Merkel and Xi appear to be losing so far today and Mexico maybe the EM pain trade to watch as voters there reject the $13bn airport redevelopment. China shares back as the headline spook on global risk with CSI 300 down over 3% below the Oct 19 lows likely adding to Chinese spending plans ahead to bolster the economy and confidence in the midst of the US trade tariffs. Asia overall weaker but Europe bounces with Italian BTPs leading the rally after the relief from S&P ratings holding at BBB but with outlook downgraded to negative on Friday. The budget conflict with the EU remains, but fears about ECB and reinvestment options in 2019 dissipates. UK Autumn Budget today adds to GBP excitement on the day and highlights the focus on politics in globally, not just for Europe. There are plenty of other political/financial budget stories beyond the Italian one. Austria cancels its last two auctions for 2018 as it’s ahead of its financing needs. For the EUR mixed fears – Germany’s Merkel – according to Speigel and Bild– will not run for CDU party head again after another bruising defeat in Hesse elections. She speaks at noon ET in Berlin with the race to replace starting in earnest. The party conference is in December and her role as Chancellor will be in despite her desire to serve out her term until 2021. While the EUR has the volatility so far this morning, its about GBP this afternoon, with 1.25 still more likely than 1.30 opening the US markets to further USD buying and more US equity doubts. 

Question for the Day:Has the US economy peaked? The selling of shares in the US and world last week had a number of key drivers beyond the usual blame from FOMC rate hikes and Trump trade tariffs. The biggest set of concerns was about peak earnings and peak US growth. The WSJ pushes this story today–