Contributors Fundamental Analysis In Norway, Norges Bank’s Lending Survey Is Released

In Norway, Norges Bank’s Lending Survey Is Released

Market movers today

With no major euro area data releases on the calendar, today’s highlight will be speeches by Bundesbank President Jens Weidmann and ECB’s Benoit Coeuré at a conference on economic policy debates in Germany. With recent ECB at tempts to talk down the EUR over the last days markets will look out for any hints regarding future ECB monetary policy.

In the US, the Philly Fed index for January is released. Consensus is for a decline to 24.0, in line with the observed drop in the earlier released Empire manufacturing index, but despite a possible moderation the index remains at a high level.

This morning we will also get a bunch of data out of China including GDP data, retail sales, industrial product ion and fixed asset investments. Markets will digest these data for any indications of to what extent strong global export demand has cushioned the lower support from construction and infrastructure spending amid the housing market losing steam.

In Norway, Norges Bank’s lending survey is released. If banks signal further tightening of their credit practices this could fuel uncertainty as to the out look for private consumption and investments. Meanwhile, we have not had a sniff of any plans in this direction and it seems unlikely with the housing market now beginning to show signs of stabilisation.

Selected market news

Overnight most Asian equity indices have followed US counterparts higher amid earnings and growth optimism. The USD has erased yesterday’s losses amid US treasuries continuing to selloff. We at tribute the latest move higher in US yields to US treasury data showing declining foreign holdings and on further US companies committing to plans of repatriating foreign earnings suggesting a lower future treasuries demand (see below).

Also, developments in the US suggest the US as expected will avoid an imminent government shutdown as the Republican leaders seemingly have found sufficient votes for a plan to temporarily fund the government for an additional four weeks up until 16 February. Given the slim 51-49 republican majority in the Senate, the deal needs democrat votes to reach the 60-vote threshold needed to advance the spending legislation pushed forward by the House Republicans. Current government funding will expire by the end of tomorrow.

Yesterday Apple Inc. – the US company with the largest offshore cash reserve – announced that it plans to pay USD 38bn in repatriation taxes from foreign earnings. The announcement follows similar statements from a range of US peers that over the last days have stated they plan to raise US investments, increase US labour force pay and increase dividends/share buy backs via foreign earnings thereby utilising the tax discount brought forward in the US tax reform. Given the tax rate (15.5% on cash, 8% on less liquid asset ) and the latest fiscal reporting, the announcement suggest Apple is repatriating the majority of its foreign earnings. Market analysts estimate USD3.1 tn is held offshore by US companies. For more info see Financial Times.

In line with market pricing and analyst expectations Bank of Canada yesterday delivered the third 25bp interest rate hike since July. Meanwhile, the monetary policy report was to the soft side, not least emphasising the future of NAFTA as a key uncertainty for the rate out look.

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