Four Stories to Watch Today, Plus Record Prime Numbers and Record Debt

01/05/2018 3:14 pm EST

Focus: CURRENCIES

Robert Savage

Partner & CEO, CCTrack Solutions

The world’s global debt just reached $233 trillion in 3Q. The private non-financial debt is at record highs in Canada, France, Hong Kong, South Korea, Switzerland and Turkey, worth considering with the global call for rates to rise, says Bob Savage, CEO of Track Research.

For many on the East Coast of the US, it’s a day of digging out from snow and dealing with ice and freezing temperatures.

Lots of folks will be like the sea turtles in Florida – floating listlessly stunned by the Arctic blasts – appearing dead but just really cold and breathing once every 1 ½ hours.

For markets – a similar lesson - most are flatlining into U.S. unemployment with a boisterous equity mood tempered only slightly by inflation fears.

The better German retail sales and French consumer sentiment mostly ignored, while the weaker Australia trade data and Japanese Service PMI dip also forgotten.

Bonds, stocks and commodities can be resurrected by the data ahead with the ADP surprise Thursday lifting the NFP whisper today to 210,000.

However, trading on the lottery of the U.S. jobs report has been less than useful to most traders and investors over the last 5 years.

Maybe 2018 will be different and the U.S. dollar (USD/EUR) gets a new lease on life today. The better focus might be on the weekend risks for a mood reversal.
Overnight there were some notable stories to watch:

1) Brexit talks. Macron in the UK Telegraph warns of the split of the EU on the second round of talks. EU must end hypocrisy of allowing Turkey to become a full member, says Macron.

2) Periphery Debt Issuance. The Italian Treasury wants to extend the duration of its debt according to Il Sole 24 Ore – not fresh news – but a reminder that the periphery is watching the ECB buying and playing for time that maybe over faster than politicians in Europe want or need. The WSJ picks up on this theme for a risk into the March election.

3) Chinese yuan (CNY) to 6.20 but when? Bank of China argues the CNY is set to gain to pre-August 2015 levels citing 5 factors: China's stable economic performance, a basic balance of cross-border capital flows, a weak U.S dollar index, a wide interest rate spread between China and U.S government bonds, and active forex management by Chinese government regulators.


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4) More talk about North Korea ICBM tests. The CBS cited activity at the site where the last ICMB test took place in November. U.S. Ambassador to the UN Nikki Haley said that the U.S. was aware of the rumors and would take tougher steps against North Korea if this proves true. At the same time, North and South Korea are holding talks next week about the Olympics. Korea talks set for next week, with low expectations and lots of wariness.

Those stories can’t compete with the two others that seem historically more important – the largest prime number with over 23 million digits was just discovered – and the world’s global debt just reached $233 trillion in 3Q according to the IIF.

The private non-financial debt is at all-time highs in Canada, France, Hong Kong, South Korea, Switzerland and Turkey – something worth considering with the 2018 global call for rates to go up.

When you throw in that some of this debt is denominated in the USD this is even more interesting.

That leaves many wondering if the USD weakness and equity strength that has started 2018 continues today – with the USD watching 92.26-92.50 for a breakout Friday on stronger US jobs.

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