Thursday

March 9 2017

March 9 2017

ECB Rate Decision Import Prices Mexico InflationBy Ben Baris and Geoff King

What to Watch President is widely predicted European Central Bank Mario Draghito leave interest rates unchanged and reaffirm a pledge to continue asset purchases through the end of 2017 The 745 am interest-rate announcement will be followed by Draghirsquos press conference at 830 am Follow the TOPLive blog for real-time coverage on the Bloomberg terminal

Economics Economists surveyed by Bloomberg forecast February US import rose 01 percent from a month earlier 830 am are prices Initial jobless claims

expected to rise to 238000 in the week ended March 4 up from an almost 44-year low of 223000 in the week prior 830 am is forecast to Mexicos consumer price indexhave risen 054 percent in February from a month earlier and 482 percent from a year ago following advances of 17 percent and 472 percent in January respectively 9 am

Government The US holds a meeting of Securities and Exchange Commissionits investor advisory committee at 930 am in Washington There will be two panel discussions one on investor behavior research and the other on unequal voting rights of common shares Commonwealth will begin a two-day meeting with the trade ministersUK which is pushing for greater trade links with its former colonies as it leaves the EU

EnergyCommodities The US EIA releases its weekly natural gas storage reportThe USDA puts out its weekly The Buenos crop export sales and shipments reportAires Grain Exchange releases its weekly PJM the largest wholesale crop reportelectricity market in the US releases its annual report State of the Market

Markets The rose with yields and the strengthened as US dollar Treasury eurocentral banks dominated markets today deepened their losses while edged Metals oilhigher after yesterdayrsquos selloff

(All times local for New York)

Live chart on the Bloomberg terminal

Eswar PrasadEswarSPrasad

US consumersmdashStop buying iPhones (imported from China) Economy would grow faster (Navarro) + everyone could afford healthcare (Chaffetz)Details

Commentary in This Issue

Nonfarm will beat the 200000payrollsBloomberg consensus estimate for February according to leading forecasters of this data Ben Baris

A Fed interest-rate hike will probably be the highlight of the global central bank calendar in March but it wonrsquot be the only garneringmeetingattention Michael McDonough

Quote of the Day

We think there is no logical reason why one country namely the US needs to have a trade deficit that roughly equals the combined trade surplus of the rest of the world Thats not our fate in life that we have to absorb all the net exports from everyone else

mdash Commerce Secretary Wilbur in an Ross

interview with Bloomberg

Chinarsquos preliminary approval of dozens of new trademarks for businesses and products owned by President Donald Trump and his family raises fresh questions about potential conflicts of interest with foreign governments several SenateDemocrats say More on the terminal

Tweet of the Day

Payrolls Preview

Dollar Strength Should Cap Import Price Inflation

Import prices climbed 04 percent in January the result of a 58 percent surge in fuel imports Excluding petroleum import prices fell 02 percent and were unchanged from a year ago Dollar strength has kept import-price inflation in check and with the US Federal Reserve looking to raise rates yet again the currencys increased purchasing power should further cap the cost of imports Consensus projects the headline to rise 01 percent in February

mdash Yelena Shulyatyeva and Richard Yamarone Bloomberg Intelligence economists

Economics 2 March 9 2017

Payrolls Preview

Warm Weather May Bump NFP Print to Big League Top Forecasters SayBy Ben BarisNonfarm payrolls will beat the 200000 Bloomberg consensus estimate for February according to leading forecasters of this data Claims for unemployment insurance have hovered near almost 44-year lows and economists including top-rated jobs forecaster Jim

of note that a warmer temperatures last month should boost outdoor jobs If the forecasts OSullivan High Frequency Economicsprove accurate we may be in store for Twitter activity from POTUS come the 830 am March 10 release mdash the report is the first for a full month under the administration of President Donald Trump who a LinkedIn report highlighting strong job growth to start toutedthe year and a graphic showing the outsize print of the February ADP private payrolls reportpromoted

Jim OSullivan chief US economist High Frequency Economics (March 7)

Payrolls probably rose by over 200000 again with some help from milder-than-usual weather adding to a strong trend A strong trend continues to be signaled by jobless claims We expect less than a 10000 drag from the federal hiring freeze

Ted Wieseman economist Morgan Stanley (38)

We flagged upside risks to our above-consensus payrolls estimate and ADP indicates our initial forecast was probably too conservative We now forecast a 250000 gain in February nonfarm payrolls instead of 200000 This was oneof the warmest Februarys ever recorded in the US a boost to outdoor industries like construction and recreation services The trend in jobless claims has hit a series of record lows all year including a stunning new low in last weeks report covering the period just after the survey reference week for the February employment report At the same time business surveys show hiring plans have continued to run at much better levels post-election

Gregory Daco head of US macro Oxford Economics (38)

We have 240000 with solid private sector job growth supported by a modest rebound in government employment On the goods side we expect construction to

TOP FORECASTERS NONFARM PAYROLLS

RANK IN 4Q ECONOMIST FIRM FEB EST (K) AS OF

1st Jim OSullivan High Frequency Economics 220 3062017

2nd Joshua Shapiro Maria Fiorini Ramirez Inc 240 3082017

3rd Stephan Buu CTI Capital Inc 210 3072017

4th Robert A Dye Comerica Inc 190 3032017

5th Ryan Sweet Moodys Analytics 200 3032017

6th Russell Price Ameriprise Financial Inc 210 3062017

7th Ted Wieseman Morgan Stanley 250 3082017

8th Gregory Daco Oxford Economics USA 240 3082017

9th Harm Bandholz UniCredit Research 200 3032017

10th P de BruinM Cabezas ABN Amro Inc 175 3032017Source Bloomberg NFP TCH Index ltGOgt ECOS ltGOgt

rise more than in January supported by warm weather Manufacturing employment should continue its modest progress On the services side we see seasonal factors supporting education (versus January) favorable fundamentalsand weather supporting leisure and hospitality employment We also expect solid retail sales and financial services employment This should be a satisfying report from a Fed perspective justifying a rate hike at the next meeting

David Kelly chief global strategist JPMorgan Asset Management (37)

Wersquove brought it down to 235000 [from 265000 last week] due to the federal hiring freeze Overall our models are still

pointing to strong private payroll growth reflecting super-low unemployment claims and good numbers in the ISM and conference board indices

Scott Brown chief economist Raymond James (37)

Ive bumped my forecast up to 185000 [from 165000 last week] given weather and jobless claims I do see a lower trend in job growth this year as the labor market tightens Increased business optimism could lead to a higher trend in the short run but the demographic constraints will become binding at some point mdash in which case we should see a further pickup in wage growth The Fed is justified in moving toward normal policy

Economics 3 March 9 2017

Central Banks

Economics 4 March 9 2017

Central Banks

Fed May Be Greatest But Its Not the Only Show on EarthBy Michael McDonough Bloomberg Intelligence economistAn interest-rate hike by the US Federal Reserve will probably be the highlight of the global central bank calendar in March but it wonrsquot be the only meeting garnering attention

While Chile is currently the only other central bank expected to move rates meetings by the European Central Bank Bank of England and Bank of Japan will provide policy makersrsquo perspectives on improving economic prospects

The schedule kicks off tomorrow when the ECB will likely revise up its 2017 inflation forecasts make minor adjustments to its GDP growth estimates and potentially tweak its forward guidance The economic backdrop should allow ECB President Mario Draghi to sound less dovish than usual at the meeting Nevertheless it will be months before a tapering of QE is announced

The US Federal Reserve is next up onthe calendar with its March 15 meeting Fed officials have clearly communicated that they plan to raise interest rates this month a move that is already reflected in the markets with a high degree of certainty BI Economics has revised its forecast for the path of interest rates in 2017 to three hikes which would cumulatively increase the fed funds rate by 75 basis points to 125-150 by the end of the year Rate hikes will most likely occur at the March June andDecember meetings

A day later the BOE will release a policy decision along with minutes of its March meeting The central bank is likely to keep policy on hold The economy has proved resilient but UK growth is still setto slow BI Economics expects the BOE tomaintain its current stance through two

years of Brexit negotiations with the EUAlso on March 16 Chilersquos central bank

will likely cut rates by 25 basis points This is consistent with below target inflation and a widening output gap Excluding Mexico all of the Latin American central banks currently maintain an easing bias Brazilrsquos central bank not meeting until April has cut its benchmark rate by 175 basis points over the past three months with more cuts excpected

The BOJ will be in a relatively

comfortable position during its March 15-16 meeting on the back of strong above-potential growth a recovery in private investment and improving inflation conditions This should give the BOJ confidence to keep policy unchanged Risks to the BOJ include a deterioration of US economic conditions or an escalation of geopolitical risks stemming from North Korea either of which could trigger safe-haven demand for the yen that could cause the central bank to react

Data amp Events

Bloomberg Intelligence Central Bank Monitor

Economics 5 March 9 2017

Data amp Events

TIME COUNTRY EVENT SURVEY PRIOR

730 US Challenger Job Cuts YoY mdash -3880

745 Euro Area ECB Main Refinancing Rate 000 000

745 Euro Area ECB Marginal Lending Facility 025 025

745 Euro Area ECB Deposit Facility Rate -040 -040

745 Euro Area ECB Asset Purchase Target EU80b EU80b

830 Canada Capacity Utilization Rate 8250 8190

830 Canada New Housing Price Index MoM 010 010

830 US Import Price Index MoM 010 040

830 Canada New Housing Price Index YoY mdash 300

830 US Import Price Index ex Petroleum MoM 000 000

830 US Import Price Index YoY 440 370

830 US Initial Jobless Claims 238k 223k

830 US Continuing Claims 2062k 2066k

900 Mexico CPI YoY 482 472

900 Mexico CPI MoM 054 170

900 Mexico CPI Core MoM 075 058

945 US Bloomberg Consumer Comfort mdash 498

1200 US Household Change in Net Worth mdash $1593bSource Bloomberg Surveys updated at 505 am in New York

Live chart on the Bloomberg terminal

Calendar

Click on the to see the full range of economists forecasts on the terminal highlighted releases

Overnight

French manufacturing sentimentjumped to its highest in almost six years last month prompting the

to lift its forecast for Bank of Francegrowth this quarter Sentiment among manufacturing executives rose two points to 104 its highest since May 2011 the central bank said today It raised its prediction for first-quarter economic expansion to 04 percent from 03 percent a month ago That would match the pace in the last three months of 2016

Chinarsquos broadest measure of new credit moderated in February as shadow banking activities slumped signaling policy makers are making good on pledges to cut leverage and deflate asset bubbles Aggregate

was 115 trillion yuan financing($166 billion) compared with a median estimate of 145 trillion yuan in a Bloomberg survey New yuan

stood at 117 trillion yuan loansversus a median estimate of 950 billion yuan while M2 money supply increased 111 percent versus a median estimate of 114 percent

Chinarsquos surged at producer pricesthe fastest pace since 2008 further lifting the outlook for global reflation as manufacturers in the exporter to the world look to pass on higher costs The producer price index rose 78 percent last month from a year earlier compared with median estimate of 77 percent in Bloomberg survey and a 69 percent in January

Some officials at the Bank of are considering whether they Japan

will need to give further guidance to the market on interest rates once inflation begins picking up according to people familiar with central bankrsquos discussions

Europe

Asia

US Oil Supply Keeps Rising Despite OPECrsquos Best Efforts

US oil inventories keep surging and prices are near a two-month low much to the chagrin of Saudi Arabia and other OPEC members who agreed to cut production to reverse a glut Domestic output has increased to fill part of the gap and refiners have been using less crude while conducting seasonal maintenance The global inventory drawdown has been slower than expected Saudi Energy Minister Khalid Al-Falih said this week adding that ldquothe green shoots in the US are growing too fastrdquo

mdash David Marino

Economics 6 March 9 2017

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Ben Baris

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James Crombie

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Global Director Economic

Research amp Chief Economist

Michael McDonough

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Chief US Economist

Carl Riccadonna

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US Economists

Richard Yamarone

ryamaronebloombergnet

Yelena Shulyatyeva

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