Monday 24th April 2017
NEWS TICKER, 24st April: HSBC has secured the advisory mandate for Saudi Aramco’s upcoming IPO, which is expected to be the benchmark deal of this deal, both in terms of pricing, demand and size of offering -- InfraCo Africa will contribute $1.65m to the financing of the 50-MWp Abiba Solar project in Nigeria -- Fiat Chrysler Automobiles UK Ltd has announced a major restructuring of its senior management team. The changes come with immediate effect. Alejandro Noriega has been appointed country manager, Fiat and Abarth, and will oversee retail sales and marketing for the two brands. Noriega was previously head of the Fiat Professional brand and his experience and track record in commercial vehicles equips him well to take on Fiat and Abarth. Richard Chamberlain is the new country manager, Fiat Professional, responsible for all business activities of FCA UK's award-winning commercial vehicle division. Richard joined FCA in November 2016 from Renault Trucks, and has experience at both OEM level and dealer retail, having also worked for Inchcape Mercedes as National Corporate Manager. Lee Titchner has been appointed Network Development Director, responsible for FCA dealers across the UK and Ireland. Lee moves from his previous role as head of FCA UK’s Mopar division to oversee the dealer network, where he is already well-regarded. Also, Sebastiano Fedrigo has been named as the new Mopar Service, Parts & Customer Care Director. Sebastiano previously headed up the Fiat and Abarth brands in the UK and Ireland, and will now leverage his considerable passenger car and commercial experience to grow Mopar, its products and its services, in this country. Previous country manager for Jeep/Alfa Romeo, Damien Dally, has moved to a role in FCA HQ, Turin. His replacement will be announced in due course -- MNI PINCH reports market pricing no chance of a 25bp rate hike at the next meeting on May 3rd, however the probability of a hike in June has risento 66% from 41.5% seen last Wednesday and in July, markets are pricing in a 70% chance of a hike, up from 50%. While the next full 25bp rate hike has been brought forward to September 2017 from Dec, according to MNI PINCH calculations - According to US GovInfoSecurity E news, new documents dumped online by the Shadow Brokers group have revealed apparent NSA programs designed to target SWIFT service bureaus in the Middle East, as well as a slew of exploits designed to infect Windows systems, patched last month by Microsoft – The US is gradually upping the stakes in its attempt to change the terms of trade with selected countries. In the latest salvo by the Trump administration, Secretary of Commerce Wilbur Ross has announced the initiation of a new antidumping duty (AD) investigation of imports of carton-closing staples from the People’s Republic of China. “The Department will act swiftly, while assuring a full and fair assessment of the facts, to ensure that everyone trades on a level playing field,” says Secretary Ross. “The Trump administration is committed to the enforcement of America’s vital trade laws that ensure US businesses and workers have a fair chance to compete.” The petitioner, North American Steel & Wire, Inc./ISM Enterprises, filed a petition seeking relief from the effects of dumped merchandise on the US industry on March 31st. More than 30 Chinese producers of carton-closing staples are identified in the petition. The estimated dumping margins range from 13.76% to 263.43%. In 2016, imports of carton-closing staples from China were valued at an estimated $73.2m -- Private equity-owned ING Life Insurance Korea says it has priced its IPO near the lower end of an indicative range to raise a total of $973.54million. It priced the IPO at 33,000 won per share, compared with an indicative range of 31,500 won to 40,000 won per share, ING Life said in a filing.

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Trump – the reflationary outlook

Friday, 07 April 2017
Trump – the reflationary outlook The first 100 days of the Trump administration have been less than exemplary; marred by controversy and political setbacks. Can the president and the GOP now deliver on promises of a radical shake up of taxation and fiscal stimulus? Eric Lascelles, chief economist, RBC Global Asset Management, assesses the likelihood of success. http://www.ftseglobalmarkets.com/media/k2/items/cache/9954f20aa73bffcb06a37d2651a41d88_XL.jpg

The first 100 days of the Trump administration have been less than exemplary; marred by controversy and political setbacks. Can the president and the GOP now deliver on promises of a radical shake up of taxation and fiscal stimulus? Eric Lascelles, chief economist, RBC Global Asset Management, assesses the likelihood of success.

The US administration has suffered two significant setbacks in recent weeks. The first was the failed effort to repeal Obamacare despite claims of universal revulsion by the Republican Party. The second is the mounting spectre of a political scandal as the FBI hints of broadly-based complicity between the Trump team and Russia.

There is nothing stopping politicians from taking another crack at Obamacare at some future date, but a heavy legislative calendar and the inability of the Republican-dominated House to secure the necessary votes despite widespread loathing of the incumbent law has delayed it indefinitely.

Meanwhile, the mounting toll of ousted and compromised officials over Russian linkages presents a further threat to the legislative agenda. While the outright removal of President Trump before the end of his term remains an unlikely event, it is not impossible. Betting websites put the odds of his early exit at a lofty 45% to 55%. We assign a lower 35% probability. This scenario thus warrants at least a moment’s contemplation. Early Presidential departures have historically had a short-term negative influence on equities. That said, the policy contours of a hypothetical President Pence – who sports a worldview that embraces tax cuts and small government, but without the same protectionist twist as Trump – could substantially ameliorate the market’s medium-term interpretation of a hypothetical ouster.

All of this matters in its own right, but is also relevant as we look forward to the next waystation on the US legislative agenda: tax reform. This is the big-ticket item that the market has long anticipated. Its prospects are surely somewhat shabbier given the inability to rescind Obamacare and the distraction of political intrigue.

Tax reform was going to be tricky at the best of times given the Republican goal of making the tax cuts permanent so as to avoid the fate of the now-expired Bush tax cuts. The constraints of a Republican party that falls shy of a Senate supermajority demands that the “reconciliation” process be employed. Among its many nuances, any legislation deployed in this way be budget neutral over the long run. Tax cuts cannot be described as neutral even under the most optimistic assumptions. This is why the border adjustable tax (BAT) remains in the mix – it has the theoretical capability of maintaining a fiscal balance by taxing foreigners more, though with many undesirable attributes as well. Other options include eliminating loopholes and tax credits, though many Republicans have pledged not to raise taxes in any form. At a minimum, tax reform will take longer to unfurl than previously imagined.

We still budget for a partial delivery of fiscal stimulus via tax cuts, but acknowledge that the size and prospect have both dimmed somewhat. Of course, it is still very early, deregulation is still on track, and the delivery likelihood of some of the Trump administration’s less desirable platform planks such as protectionism has also fallen. In fact, if anything, the outlook for protectionist actions has declined more precipitously than that of tax cuts as the centrist Wall Street element at the White House is said to have outmuscled the isolationist faction.

In the end, the US policy shift underway still seems capable of boosting growth over the next few years, but negative factors could subsequently start to drag. This argues that there is still some validity to the reflation trade that has dominated the narrative since last autumn, but other macro factors will have to lend a helping hand over time. Fortunately, they broadly are, with various global signals beginning to strengthen well before the US election spectacular.

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