Morning 2-24

Schatz yield  german 2 year.

schatz

RISK OFF:  European Stocks getting hit hard as Company earnings weigh. Royal bank Of Scotland -6% as it reports 9th straight quarterly loss. BASF Chemical maker In Germany reported earnings and said “profit outlook weighed down by gloomy European view “That stock down 3.6% biggest drag on Dax. All 30 Dax stocks lower today and all 19 stock sectors in Europe Lower. The largest decliner is the Basic resource sector down 2.75% as a group. This is an important characteristic as the strength of the trump reflation trade is in serious doubt. These doubts stem from comments from Trump administrators, most recently treasury secretary munchin and people on the hill. If congress wants/Has to do Obamacare first, then tax cuts, then infrastructure plan   impact will not be felt till 2018 at the earliest. The cart has definitely been put in front of the horse  on this trade so pull back, profit taking disappointment call it what you like but the Reflation trade may have overstayed its welcome. Trump gives a speech today to Conservative convention and then on Tuesday to Congress. The reflation trade could be back in full swing after the Tuesday speech if he talks up stimulus package. But for now Spoos down 10 handles Dax -1.6% and Cac -1.4%.French politics not playing a role today as latest Poll has le Pen losing ground in second election. Just about stocks, Ftse mining Index -2.9%, of the 500 European Stock Index 400 lower. The 2 year schatz is discussed everyday now, her yield down again today to -.94%, commentary is of no near term bottom. Keep buying them.( see chart above )

In the risk off mood precious metals higher both gold and silver highest in 3 months, but surprisingly base metals are all higher. This really puts a dent in my Reflation trade is dead commentary. One explanation could be the weekly commodity stockpiles in Shanghai dropped 2.9 Tons. Dollar down 31 ticks also maybe helping the move higher in them. Yen and Euro higher as well

Calendar:

  • New home sales 9:00
  • Trump speech to CPAC conference at 9:15 He is speaking to his base  so remember that
  • Day 2 of annual USDA conference so be on lookout for Grain comments

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