US, Trump, Le Pen, Macron


Investors are focused on the FOMC minutes and the French presidential debate could add more colors about the election outcome.

Eurozone GDP Data Puts More Light On Draghi
European central bank has been pumping liquidity in the economy for some time to boost growth. The economic data out of France and Spain has confirmed that the recovery is still uneven. The number released today had confirmed that the job is not done yet for the president of the European central bank but he is not too far off.

Euro Stronger Ahead of French Presidential Debate
The euro has been strong against the dollar and this is primarily due to the reason that trader are no longer considering French elections as a threat. Round two of the presidential elections are going to take place on Sunday. Investors are very much pricing in that Macron will win the elections and if you look at the ETF inflow for French equities, it is also showing a decent inflow. This confirms that risk on trade is mostly on. Tonight’s presidential debate is going to be important and Marine Le Pen needs to do really well to close the polling gab which currently exists.

FOMC Statement Could be Slightly Dovish
Investors are vigilant about the upcoming FOMC meeting later today. We said last week that the weak US GDP data has taken a lot of wind out of the so-called hawkish stance which the Fed has adopted. So far, the intriguing element is that it is not only the GDP number, but also the personal consumption number which have seen a jaw-dropping drop. Moreover, the US Core PCE number isn’t something which the Fed can be really proud of today either.

So, does it mean that the Fed is going to be very dovish today? OR are they going to change their statement? Maybe not, just like how any positive set of numbers is taken with a bit of salt, the Fed would need to establish there is a clear down trend in the economy before they start to change their interest rate hike path.

Having said that, the weakness in the economic numbers is sufficient enough for the Fed to acknowledge it. For this year, three rate hikes, and possibly winding down their balance sheet is something which is on the agenda for the Fed and if the Fed is going to increase the interest three times this year, June is the month you should bet on. However, in the light of recent economic data, we think that the Fed may keep their powder dry during the next month.

Apple Missed Target While Investors Hang Their Hopes On iPhone8
Apple reported their appalling first quarter results last night due to their falling iPhone sales. The firm lacks innovation and it appears it is running out of ideas in a space which is highly competitive. If Apple wants to fend off its competition, it needs to assure investors that a new flagship version of the iPhone 8 has features which are beyond their consumers’ imaginations.

Simply put, there is no shortage of high-tech smartphones which are relatively cheaper than the iPhone. This creates enormous pressure for the iPhone maker. Apple’s iPhone is not the smartest gadget on the market and it is much more expensive than its peers. Therefore, the firm needs to assure its investors that the new version of the iPhone would not only encourage existing users to upgrade, which is where the big money is, but also lure new users.

Apple sold 50.8 million iPhones which was lower than the previous number (51.2 million) for the same period last year. But there is no doubt that a number of new and current users are waiting for the next flagship model to hit the stores and expectations are high. If Apple fails to deliver on those expectations, then it could open the door for a major downturn.

Nonetheless, Apple’s stock performance has been fairly good so far this year and we are up nearly 27 percent so far.

Also on the agenda for traders is round two of the presidential elections. Investors are very much pricing in that Macron will win the elections and if you look at the ETF inflow for French equities, it is also showing a decent inflow. This confirms that risk on trade is mostly on. Tonight’s presidential debate is going to be important and Marine Le Pen needs to do really well to close the polling gab which currently exists.

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US, Trump, Le Pen, Macron

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