Halister News

(Bloomberg) -- AUD/USD is vulnerable to testing the low in May should a trade deficit widen, raising the possibility of a first recession since 1991, Bloomberg strategist David Finnerty writes.

• October trade deficit was larger-than-expected, adding to concerns that net export volumes may weigh on 4Q GDP
  • If November data, due on Jan. 6, corroborates this, the probability of negative 4Q growth on a quarterly basis increases unless other parts of the economy offset it
  • Net exports accounted for -0.2% of GDP in 3Q
• Market pricing is indicating that interest rates will remain at 1.50% for 1H2017, with a hike beginning to be priced in 2H
• If trade data changes expectations for an RBA rate cut instead, AUD/USD could test support at 0.7145, May 24 low, in near-term; breach of this level may see FX pair eye test of 0.70 handle
• NOTE: David Finnerty is an FX strategist who writes for Bloomberg. The observations he makes are his own and are not intended as investment advice.

(Bloomberg) -- Macy’s to cut 6,200 jobs and close 68 stores; closures are part of the ~100 closings announced in August 2016.

• Sees year EPS $2.95-$3.10, saw $3.15-$3.40
• Shares down 4.9% post-market
• Statement:Link

(Bloomberg) -- Kohl’s sees FY2017 adj. EPS $3.60-$3.65, saw $3.80-$4.00 (Nov. 10); est. $3.94.

• Says comp sales down 2.1% y/y in fiscal months November and December combined
• KSS down 9% post-market on 163k shares

Link to Statement:Link

(Bloomberg) -- Minutes of FOMC’s Dec. 13-14 meeting show policy makers foreseeing chance that rate hikes could exceed current FOMC projections, and reinvestment policy could be back on table sooner than expected due to upside risks, Jefferies economists Ward McCarthy and Thomas Simons write in note Wednesday.

• NOTE: Minutes reveal that several on FOMC said circumstances that might warrant changing path of fed funds rate may also have implications for reinvesting proceeds from maturing USTs and principal payments from agency debt/MBS
• FOMC appears to be “waving a yellow flag” that both economic activity and inflation may exceed its expectations, especially if there’s significant fiscal stimulus enacted in 2017
• It’s been long time since upside risks dominated FOMC discussion, and downside risks were “secondary consideration”
• FOMC beginning to “awaken” to idea that policy may fall behind the curve, or may already be behind the curve