Rocky IV revisited

Putin and Trump----Trump to meet in Hamburg

In the movie Dolph Lundgren and Sylvester Stallone beat each other to a pulp physically.

Today’s meeting of two similar heavyweights is likely to be confined to more verbal sparring. Russian President Vladimir Putin meets U.S. President Donald Trump at a side meeting during the G20 summit in Hamburg.

Trump was typically forthright in a speech in Poland yesterday, calling on the West to be prepared to fight for its democratic way of life. He also told Russia to “stay out of Ukraine”. This will have amused Putin given America’s continued “regime change” agenda.

Trump is in danger of being viewed as little more than a scaremonger deflecting attention from the daily “domestic terrorism” seen on U.S streets.

North Korea, Climate Change, Qatar and the end of the Financial crisis will be the major topics for discussion. However, it will be a perfect time for soundbites as several protagonists meet. Theresa May, the U.K. Prime Minister will meet the Queen, if not the President, of the E.U. Angela Merkel. Merkel has been critical of May’s proposals for the rights of E.U. citizens remaining in the U.K. following Brexit. May will likely want to hear her views on the rights of U.K. citizens remaining in the E.U.

Merkel will be ably accompanied by the actual President (in name if not responsibility), Donald Tusk. He may have given up his dreams of “welcoming the U.K. back into the EU fold” and will likely defer to Merkel given that she at least is an elected representative of her people.

U.S. Employment data set for release.

Here we go again. When I was (much) younger, it was the U.S. trade data that got the markets “in a froth”. Now it is the NFP.

The FOMC will concentrate on the wages and work-week data as signals of coming inflation. The market will get excited over a headline number likely to be revised next month. Last month’s data will likely be revised (probably higher) following a considerably weaker than average/expectation release.

Analyst expectation for the data has been replaced by the moving average of the last six months data as the actual is so unpredictable.

Yesterday’s ADP report on Private Sector jobs showed a significant fall from May’s release. This bears little resemblance to the NFP figure yet is still labelled as its precursor.

For the record market expectation is for 178k new jobs to have been added. Personally, I am looking at a number closer to 200k as the pickup in activity continues.

Sterling slumbers as U.K. Swelters

The sweltering summer weather that has returned to the U.K. will likely improve retail sales data as consumers become energized by high vitamin D intake.

The June data, to be released in a couple of weeks will most likely show a healthy rise following a report from a leading accounting firm that their consumer activity index has reached its highest level in six years. BDO report that fashion, consumer electricals and mobile phones have done well while furniture has not. This is presumably a typical seasonal reaction.

The pound has gone into its shell recently with ranges becoming narrower as liquidity remains high. It is hovering around the 0.8800 level against a common currency which looks a little overbought. The dollar has been also suffering from a lack of new drivers so it is no surprise that the pound is unable to hold above 1.3000 but doesn’t look likely to test 1.2880 support either.