10.25 Financial Breakfast: Fed Chairman Renewal Variable Tax Change

On Tuesday (October 24th), the second half of the New York session staged a good show. US Senate Democratic leader Schumer slammed Trump’s tax reform plan, thinking that the version was designed for the rich and did not help reduce the deficit. . At the same time, Senate Republican leader McConnell said that three Republican senators will vote against the tax reform. Among them are the key figures that failed to pass Trump's medical reform, Republican Grand Slam McCain. The other is Corker, who had previously fought against Trump on Twitter. The Trump tax reform has just ushered in a major breakthrough, but several big crickets have stood on the opposition side, making the tax reform prospects suddenly cast a shadow. The US dollar index once plunged rapidly, from rising to falling, also reflecting the significant influence of the tax reform, and the market's sensitivity is extremely high.

But then, US Senator Scott cast a blockbuster. He said that when Trump had dinner with Republican senators, they asked them to express their position on the next Fed chairman by a show of hands. The results show that the hawks represent Taylor's highest level of support. Previously, Powell, who was a bit of a pigeon, was the most popular candidate. But all of a sudden, Taylor seems to win the game, and the dollar regains lost ground. In just half an hour, the US dollar index rose nearly a hundred points. On the whole, the Fed chairman's candidate is just around the corner, and short-term market volatility may still intensify at any time before the results are announced. The prospect of tax reform is a key factor that will really affect the dollar. At present, the three Republicans who were alleged to have opposed the tax reform did not respond positively. However, given the Democratic Party’s buzz on the tax reform plan, if the Republican Party’s internal differences increase, the prospects for tax reform remain uncertain.

On Wednesday (October 25), the Bank of Canada’s interest rate decision hit. Previously, the Governor of the Bank of Canada had said that the Bank of Canada did not have a default interest rate path, and interest rate hikes were mainly based on economic performance. According to analysis, the Bank of Canada has raised interest rates twice this year, and the performance of the economy after raising interest rates remains to be seen. The North American Free Trade Agreement negotiations still have variables that will have a profound impact on the Canadian economy in the future. Therefore, in this context, the Bank of Canada is expected to be biased. In addition, with the Bank of England's November meeting approaching, the Bank of England's 10-year or first rate hike is also heated by the market. The initial value of the UK's third-quarter GDP rate, which will be released on Wednesday, is expected to be a major factor affecting the Bank of England's interest rate hike and deserves close attention.

Wednesday Preview:

22:00 The Bank of Canada announced its interest rate decision and issued a monetary policy statement.

23:15 Bank of Canada Governor Stephen Poloz attended the press conference.

Review on Tuesday:

1 US Republican Senator Scott: Stanford University economist Taylor seems to win in the senator's show of hands;

2 US Senator Democratic Party leader Schumer: No one believes that the Republican tax plan will reduce the deficit;

3 White House Spokesperson Sanders: President Trump takes the decision of the Fed chairman very seriously;

4 Saudi Energy Minister Falih: OPEC will do everything in its power to reduce oil inventories;

5 Saudi oil captain Falih: We remain flexible and open to the OPEC-led production reduction agreement;

6 Qatar Energy Minister: The current oil market is moving in the right direction;

7Russian Energy Minister Novak: The implementation rate of the global production reduction agreement in the first nine months is around 102%;

8 US October Markit comprehensive PMI initial value of 55.70, the highest since January this year;

[List of major global markets]

stock market

On Wednesday, the three major US stock indexes rose collectively, and the Dow reached a new high. Caterpillar and 3M earnings are improving, pushing up market risk appetite. The Dow closed up 0.72% at 23441.76. The Nasdaq closed up 0.18% at 6,598.43. The S&P closed up 0.16% at 2,591.13. Caterpillar rose 4.98%, 3M rose 5.91%, both set a new record high. China's concept stocks rose mostly, Alibaba closed up 0.33%, Baidu closed down 0.8%, Jingdong closed up 0.23%, Thunder closed up 11.78%, NetQin closed up 10.06%, SouFun closed up 7.33%, and fun stores closed up 7 %, rebounded after falling for two days. Reith's subject English closed down 5.75% to $14.27, and fell below the issue price of $14.50 on the third day of listing.

commodity

The price of gold fell on Tuesday, as gold prices fluctuated because of differences in tax reforms between the US and the two parties, as well as rumors of the hawkish candidate Taylor or the final election of the Fed chairman. In addition, the stock market is strong and the geopolitical situation has calmed down, hitting demand for safe havens. In addition, the US third quarter GDP data will be released on Friday, before the gold price bulls or tend to wait and see.

In terms of crude oil, both the US and the United States both rose, after Saudi Arabia, the major oil exporter, said it was determined to end the oversupply of crude oil. Oil prices were also boosted by expectations of further declines in US crude oil inventories and uneasy feelings about tensions in the Kurdish region of Iraq. According to API data, US crude oil inventories rose slightly by 519,000 barrels last week, while gasoline inventories fell sharply by 5.75 million barrels. After the data was released, the US oil was refreshed and it was stable at a high level.

In addition to the above quotes for gold, silver and crude oil, Huitong.com also quotes the Shanghai Gold Exchange for you.

Foreign exchange

The US dollar remained firm against a basket of currencies on Tuesday, as reports said that some Republican senators supported Stanford University economist Taylor as the chairman of the Fed, offsetting the impact of news that the tax reform plan may be blocked. The market believes that Taylor may lead the Fed to a faster rate hike, and he favors the determination of interest rates based on the "Taylor Rule." The optimism about tax reforms has cooled, after CNBC quoted an assistant to Senate Republican leader McConnell as saying that three Republican senators may not support the Republican tax reform bill.

[International Finance News]

[United States Republican Senator Scott: Stanford University economist Taylor seems to win in the senator's show of hands] US Republican Senator Scott: Stanford University economist Taylor seems to win in the senator's show of hands. Trump mentioned Stanford University economist Taylor, Fed governor Powell and Fed chairman Yellen, all of whom were candidates.

Note: The US Senate Republican Party Whip Cornyn said that Trump asked the senators to express their position on the Fed chairman's candidate in a show of hands.

[US Senator Democratic Party leader Schumer: No one believes that the Republican tax plan will reduce the deficit] US Senate Democratic Party leader Schumer: No one believes that the Republican tax plan will reduce the deficit. Trump’s comments on the tax plan are “obviously untrue”. What is completely untrue is that the Republican tax reform version was not formulated for the rich. So far, Trump has completely failed in his administration.

[White House Spokesperson Sanders: President Trump takes the decision of the Fed chairman very seriously] White House spokesman Sanders: President Trump takes the decision of the Fed chairman very seriously. President Trump knows that the candidate for the Fed chairman has a huge impact. President Trump has a good relationship with many Republican senators. President Trump urged the senator to agree to the candidate he nominated. President Trump told the Senate that there is an urgent need for tax cuts. President Trump said that the meeting with the senators was fruitful.

[US October Markit comprehensive PMI initial value of 55.70, the highest since January this year] US October Markit manufacturing PMI initial value of 54.50, hit the highest since January. The US Markit Service PMI New Business Index for October was 54.3, the lowest since April. Markit economist Tim Moore pointed out that the growth of the service industry and the rebound in manufacturing output have led to a significant increase in private sector output, the largest increase in two and a half years.

[Saudi Energy Minister Falih: OPEC will do everything in its power to reduce oil inventories] Saudi Energy Minister Falih: OPEC will do everything in its power to reduce oil inventories. Global economic growth will increase energy demand, and energy demand will increase by 45% by 2050. OPEC stands firm and we will continue to implement the established strategy. IEA energy demand is expected to be conservative. Oil demand is more resilient than people think. India's crude oil demand exceeds the country's refining capacity.

[Saudi oil captain Falih: We remain flexible and open to the OPEC-led production reduction agreement] Saudi oil captain Falih: We remain flexible and open to the OPEC-led production reduction agreement, and do not rule out various options. We are satisfied with the status quo, but the focus will be on hoping that everyone will work together. The level of implementation of the production reduction agreement will be monitored; we are determined to make every effort to reduce inventory to the five-year average. As we approach the inventory target, we will decide how to successfully exit the current arrangement.

We will not do anything to disrupt the way forward, we have reduced inventory, but there is still some work to be done.

[Qatar Energy Minister: The current oil market is moving in the right direction] Qatar Energy Minister: The current oil market is moving in the right direction. The current implementation rate of the production reduction agreement is about 120%; the final result of the production reduction agreement is that the oil market is moving toward balance. Overall stocks are gradually approaching the 5-year average, but still below expectations. The extension of the production reduction agreement will be discussed at the November OPEC meeting; if the meeting shows that the extension of the production reduction agreement is beneficial, Qatar will support the decision.

[Russian Energy Minister Novak: The implementation rate of the global production reduction agreement in the first nine months is around 102%] Russian Energy Minister Novak: The implementation rate of the global production reduction agreement in the first nine months is around 102%. As of 2020, investment in the oil industry will return to the level of 2014. It is still too early to discuss whether to extend the production reduction agreement until March next year.

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