World Markets Live - April 6 - CNBC Live Events

CNBC Live Events

World Markets Live - April 6

We’ll be updating you throughout the day with essential breaking news, data alerts, earnings reports and all the major market movements.

    Good morning! Our headlines as we get going. 

    • U.S. stocks post their biggest intraday reversal in 14 months, sending Asia markets into the red and weighing on European opening calls. 
    • This after a more hawkish set of Fed minutes indicates policy-makers will start unwinding the central bank's 4 point 5 trillion dollar balance sheet this year amid the rate hiking cycle. 
    • A series of polls see French Presidential frontrunner Emmanuel Macron lose ground to his far-right rival Marine Le Pen after the TV debate, as his election lead in the first and second round narrows. 
    • Greek Prime Minister Alexis Tsipras says he is just "a breath away" from reaching a deal with Brussels to unlock the next bailout, as euro zone finance ministers prepare to negotiate further at a summit in Malta. 

    Comment ()
    I would argue it was more about just unwinding the Fed the balance sheet. I think it was also about a stunning ADP jobs number and the downbeat mood of Paul Ryan regarding how quickly US fiscal policy can be enacted.

    Steve makes the case that yesterday's stock reversal was about much more than just the Federal Reserve minutes.
    Comment ()
    Asian markets look like this at present.

    The markets are tracking losses on Wall Street after the Federal Reserve released its March Federal Open Market Committee (FOMC) minutes, with Chinese stocks bucking the trend.

    Comment ()
    Donald Trump has removed chief strategist, Steve Bannon, from the National Security Council. 

    The reshuffle, which also restored the roles of other defense officials, comes weeks after Bannon's appointment sparked criticism. 

    NBC's Hallie Jackson reports from Washington. You can tap or click play to view the piece.

    by david.reid

    Comment ()
    European markets are tipped to open lower today.

    The FTSE 100 is seen 68 points lower at 7,253; the DAX is expected to start trading down by 78 points at 12,130 and the CAC 40 is set to begin 30 points lower at 5,055.

    Investors are also taking a cautious approach ahead of today's meeting between U.S. President Donald Trump and President Xi Jinping of China. 

    Meanwhile, in Europe, investors will also be looking at comments from the European Central Bank. President Mario Draghi will speak from 08:00 a.m. London.

    Comment ()
    Yesterday, former Atlanta Fed president Dennis Lockhart told CNBC that he could see the Fed trimming its balance sheet once the upper band of the Federal Funds rate reached 150 basis points.

    A question of how the Fed achieves this remains unknown.

    Some want the Fed to simply stop reinvesting in all of its assets at the same time, while others believe a phased approach would risk less volatility for markets. 

    Comment ()
    Geoff thinks the Federal Reserve will take a nuanced approach to cutting back its $4.5 trillion balance sheet.

    The Federal Reserve isn't going to be in a hurry to do this.

    If the Fed doesn't want to cause volatility it won't just rip the band-aid off, not when you think of the amount of debt sitting out there.
    Comment ()
    The Federal Reserve is not the only central bank that's creating chatter about reducing its monetary stimulus program.

    Bundesbank President Jens Weidmann believes the time could soon be right for the European Central Bank to hit the exit button. 

    In an interview with German newspaper Die Zeit, he said it's likely the ECB should soon be able to  'take its foot off the gas'. 

    Back to the Fed and on air from Frankfurt, Paul Sheard, Chief Economist at S&P Global, says a big question is whether the Federal Reserve may accelerate its unwinding by selling stocks.

    Sheard: The Fed might sell its assets  

    The first step is to stop reinvestment of securities that come due. That will allow a very slow reduction in its balance sheet.

    But the more radical idea would be to sell securities. The Fed in the past has indicated it won't do that but might it change its mind?

    Comment ()
    A new note this morning from Danske Bank on the process by which the Federal Reserve will reduce its balance sheet.

    Most notably, they don't expect the process to start this year.

    We expect the Fed to begin shrinking its balance sheet in Q1 18 (what we call quantitative tightening) while the consensus among both primary dealers and analysts is mid-18. 

    We think an announcement is likely in connection with the June meeting. The FOMC members still want quantitative tightening to be 'conducted in a passive and predictable manner' . 

    The minutes suggest quantitative tightening would likely depend on the Fed funds target range or the level of an economic variable (possibly the PCE inflation rate or the unemployment rate, as it was the case with the Evans rule). 

    The minutes indicate that the FOMC members 'generally preferred to phase out or cease reinvestments of both Treasury securities and agency MBS' . 

    Comment ()
    The oil market was another factor at play in yesterday's reversal in the stock market. 

    Oil prices are lower since U.S. energy data revealed Wednesday that crude stocks in the country have risen to a new record of 535.5 million barrels.

    This appearing to overshadow OPEC and non-OPEC efforts to cut output and prop up prices.

    Brent still up on the week. 

    Comment ()
    U.S. treasury yields slid Wednesday after the Republican Speaker of the House, Paul Ryan, cast doubt over the prospects for the timing of tax reform. 

    The Speaker of the House said changing tax policy could take longer than overhauling healthcare, adding that the House, the Senate and the White House aren't yet on the same page about tax reform.

    This divide in the Republican Party is viewed as another contributing reason to the stock market reversal late in yesterday's session. 

    Paul Ryan, Speaker of the United States House of Representatives 

    Comment ()
    A reminder of our top stories:

    • European futures point lower after U.S. stocks post their largest 1 day reversal in over a year, as a more hawkish Fed indicates it will start unwinding its balance sheet this year. 
    • Unilever will cut some fat and sell its spreads business as it launches a 5 billion euro share buyback and ups its dividend.
    • Greek Prime Minister Alexis Tsipras says he is just "a breath away" from reaching a deal with Brussels to unlock the next bailout, as euro zone finance ministers prepare to negotiate further at a summit in Malta. 
    • A series of polls see French Presidential frontrunner Emmanuel Macron lose ground to his far-right rival Marine Le Pen after the TV debate, as his election lead in the first and second round narrows. 
    Comment ()

    We are just not yet at a point where monetary tightening is needed.

     - Jan Hatzius, Chief economist and Head of Global Economics & Markets Research at Goldman Sachs.

    Talking about Europe this time, the Goldman Sachs economist is telling Annette in Frankfurt that Mario Draghi is unlikely to start talking about exiting stimulus in 2017.

    He says Europe has improved and growing at a good pace but core inflation is still more than one percent target and unemployment is still high.
    Comment ()
    European bourses are set for a lower open this morning following indications by the U.S. Federal Reserve that it wants to pare back its balance sheet.
    Comment ()
    Jan Hatzius is the chief economist of investment bank Goldman Sachs and is with Annette in Frankfurt.

    Goldman Sachs' Hatzius: no hurry for Fed to trim balance sheet 

    He says it is not surprising that the Federal Reserve is formally confirming they might start reducing their balance sheet this year.

    I think it makes some sense but personally, I see no real urgency. 

    However, it does make sense to get started before Janet Yellen is replaced when her term comes to an end in early 2018.
    Comment ()
    A reminder that Mario Draghi is speaking live from the 'ECB and Its Watchers' conference at 08:00 a.m. London/ 09:00 am CET. 

    We'll bring you all the key quotes from his speech here on the blog.

    Comment ()
    Another guest from the ECB watchers conference on air today is Volker Wieland, Member of the German Council of Economic Experts.

    In other words, one of "Merkel's Wisemen".

    He tells Annette that it is time for the ECB to start slowly exiting its stimulus. 

    He says markets and peripheral countries could then prepare properly and not run the risk of dealing with a central bank that has fallen too far behind the curve.

    Volker Wieland 

    Comment ()
    ECB President Mario Draghi getting ready to speak at the 'ECB and Its Watchers' conference in Frankfurt. Meanwhile, here are some excerpts from his speech that is available on the ECB site now. 
    Draghi says monetary policy stance is still appropriate and a reassessment of the current monetary policy stance is not warranted at this stage.
    Draghi also says before making any alterations to the components of our stance - interest rates, asset purchases and forward guidance - we still need to build sufficient confidence. 
    Comment ()
    On inflation, ECB's Draghi in his speech says have established a four criteria to confirm a sustained adjustment:
    First, that headline inflation is on a path to levels below but close to 2% over a meaningful medium-term horizon; second, that inflation will be durable and stabilize around those levels with sufficient confidence; third that inflation will be self-sustained, meaning it will maintain its trajectory even with diminishing support from monetary policy. And finally, it goes without saying that in each case the relevant metric is euro area inflation not the inflation rates of any individual country.
    Comment ()
    Here are European markets. If you tap on an arrow you will see the peripheral bourses. Once again, please ignore Portugal which is yet to open.


    1 of 2

    Comment ()
    Unilever is selling its spreads business while merging its foods and refreshment units. 

    The moves are part of the consumer goods giant's strategic review, following Heinz Kraft's failed takeover bid in February.

    Carolin spoke to the CEO moments ago and asked him if Kraft-Heinz would be a likely buyer for the spreads business.

    Click or tap play to hear some of his comments.

    by david.reid

    Comment ()
    Minutes released from the Fed's March meeting show an agreement among board members to start shrinking the central bank's $4.5 billion dollar balance sheet later this year.

    While a sell down in its holdings was expected, the timeframe had been murky until now.

    The minutes also showed discussion among the Fed about the high valuation of U.S. equities.

    The Dow and S&P posted their biggest reversal in over a year after the minutes were released.

    US stocks this week 

    The Dow Jones industrial average closed about 40 points lower, with Goldman Sachs contributing the most losses. The 30-stock index had traded 198.6 points higher earlier in the session.

    The S&P 500 dropped 0.3 percent, with financials lagging. The Nasdaq composite slipped 0.6 percent after hitting a new all-time high earlier in the session.

    The dollar and Treasury yields also headed lower and reversed earlier gains.

    Comment ()
    ECB President Mario Draghi has just started speaking at the 'ECB and its watchers' conference in Frankfurt. He says his speech would outline three main points:
    • First, that our monetary policy is working and that it has been a key factor behind the resilience of the euro area economy over recent years.
    • Second, that the recovery is progressing and may now be gaining momentum, though risks still remain tilted to the downside.
    • Third, that despite these improvements, inflation dynamics continue to depend on the continuation of our current monetary policy stance – a stance that is determined by the interaction between all three main policy instruments: interest rates, asset purchases and forward guidance on both.
    Comment ()
    ECB's Draghi says growth has been picking up in euro zone:
    Since mid-2014, the recovery has evolved from being fragile and uneven into a firming, broad-based upswing. Quarterly GDP growth has been consistently between 0.3% and 0.8%. Employment has grown by more than 4.5 million people. And this is despite the fact that we have encountered adverse shocks in that period, not least the slowdown in emerging market economies and renewed tensions in the euro area banking sector.
    Comment ()
    Risks still remain tilted to the downside.
    So says Mario Draghi and that might explain why the euro is shifting a little lower as he speaks:

    Comment ()
    ECB's Draghi says fiscal policy still remains a concern:
    Though fiscal policy has stopped being a headwind – as it was during the 2011-13 period – it has not been much of a tailwind to the recovery either. With governments still undertaking a necessary process of balance sheet repair, fiscal policy between 2013 and 2015 was basically neutral and provided only a mildly positive contribution to growth last year. This contrasts with both the post-Lehman and post-dotcom recoveries where the fiscal stance was more expansionary.
    Comment ()
    ECB's Draghi says the credit easing package has led to ease in financing conditions for the region:
    Since we adopted our credit easing package, we have seen a substantial easing in financing conditions for the euro area economy. Market financing costs have fallen, while bank lending rates for both firms and households have dropped by more than 110 basis points and are now at historical lows. This has been accompanied by rising lending volumes and improved access to finance, especially for small- and medium-sized enterprises.
    Comment ()
    Draghi says negative rates have been powerful at easing financing conditions. He also says no reason to deviate from current guidance on interest rates. 
    Draghi says there are indeed three features of the recovery which give us confidence that it may be gaining its own momentum, although – given the severity of the slump we are emerging from – monetary policy still remains critical to facilitate the transition.
    • The first is that the recovery is being propelled by a virtuous circle between rising consumption, employment growth and labour income.
    • Importantly, domestic demand has firmed against the backdrop of improved private sector balance sheets, which is the second key feature of the recovery. 
    • The third important feature of the recovery is its broadness across sectors and countries – which is to say, it has not only strengthened but become more homogenous across the euro area. 
    Comment ()
    The euro is now down by more than 0.30 percent, continuing its downward trend since Draghi started speaking around 15 minutes ago.

    The key takeaway appears to be that he is unlikely to remove monetary stimulus anytime soon. This a marked departure from yesterday's communication from his counterpart at the Federal Reserve, Janet Yellen.

    Comment ()
    ECB's Draghi explains two types of deleveraging in the economy:
    Bear in mind that there are two types of deleveraging: “macroeconomic” deleveraging – reducing debt ratios through nominal growth – and “balance sheet” deleveraging: paying off or writing down debt. Historically, the most drastic processes of deleveraging, including the post-war episodes and the recent post-crisis episode in the US, have relied on both mechanisms. But the contribution of nominal growth has always been decisive for success.
    He further explains that in the euro area, until recently, real growth and inflation were too low to foster macroeconomic deleveraging, so balance sheet repair had to take place through the more painful channel, conflicting with the objective of macroeconomic stabilization. 
    Comment ()
    ECB's Draghi now talks about employment in the euro zone:
    In early 2014 the vast majority of euro area headcount growth was coming from Germany. As that year progressed the contribution from Spain began to rise, driven by the recovery in activity and previous labour market reforms. And since the second half of 2015 the employment turnaround has extended into other formerly stressed economies as well, including in particular Italy, Ireland and Portugal. Just as for GDP growth rates, the dispersion of employment growth across euro area countries is now at record low levels.
    Comment ()
    As Draghi speaks, stocks across Europe are, on average, lower in session.

    However, it should be noted that they have barely budged since his speech was released.

    Today's losses were incurred as soon as opening trades were executed, following on from yesterday's losses in the United States and overnight in Asia.

    Comment ()
    ECB's Draghi says despite signs of progress, it is too soon to declare success:
    In important ways the outlook for price stability remains unchanged. In particular, while growth and employment rates have been converging upwards across the euro area, significant gaps still remain in terms of levels. In large parts of the euro area there are still substantial under-utilised resources, reflected in a negative output gap and high unemployment rates.
    Comment ()
    This is the current picture for Europe's biggest equity markets.

    Comment ()
    Draghi says much of the increase in headline inflation in recent months has been driven by its volatile components:
    Of the 1.4 percentage point rise from November last year to February this year – when inflation peaked at 2% – more than 90% was explained by energy and food price inflation. Measures of underlying inflationary dynamics, by contrast, remain subdued. One such measure, HICP excluding food and energy, has hovered around 0.9% since mid-2013 and still shows few convincing signs of an upward trend. Most alternative measures are also sluggish by historical standards and show little movement towards our aim.
    Source: Trading Economics
    Comment ()
    ECB's Draghi outlines two drivers weighing on wage growth:
    Decomposing the forces that have weighed on wage growth, we find two principal drivers: first, the still-high unemployment rate and its effect on wage bargaining dynamics; and second, a below-average contribution from past inflation in wage formation, caused by the last few years of exceptionally low headline inflation. 
    Comment ()
    ECB's Draghi says for the time being there are grounds for being cautious when assessing the durability of the inflation outlook.
    For us to be confident that inflation will indeed stabilize around our aim, we would need to see clear evidence that underutilized resources are declining and feeding through more convincingly into domestic price formation.
    Comment ()
    ECB President Mario Draghi is speaking at a conference in Frankfurt. He says the central bank's stance is no longer determined by just one tool, policy interest rates
    It is determined by the calibration of, and interaction between, the whole array of instruments we have introduced: the level of policy rates, the pace of asset purchases, and our forward guidance on both. It is the combination of all these tools that sets a given stance. The different elements have complementary effects on preserving the very easy financing conditions that are necessary for generating sustainable inflation convergence.
    Comment ()
    Draghi reaffirms ECB's monetary policy as discussed during the last policy meeting:
    Since the Governing Council deems the current stance fully appropriate, it confirmed at its last meeting that net asset purchases will continue until the end of December 2017, or beyond, if necessary, and in any case until we see a sustained adjustment in the path of inflation consistent with our inflation aim. It also confirmed its expectation that key ECB interest rates will remain at present or lower levels for an extended period of time, and well past the horizon of our net asset purchases. 
    Comment ()
    ECB's Draghi in conclusion says outlook for economy currently improving:
    Before making any alterations to the components of our stance – interest rates, asset purchases and forward guidance – we still need to build sufficient confidence that inflation will indeed converge to our aim over a medium-term horizon, and will remain there even in less supportive monetary policy conditions.
    Comment ()
    European Central Bank president Mario Draghi has talked the euro down this morning but keep in mind that later we hear from Jens Weidmann, president of the Deutsche Bundesbank.

    Weidmann is among those calling for the ECB to exit its ultra-loose monetary policy.

    The German is likely to suggest that the ECB risks falling behind the curve as Europe's economy gathers momentum.

    Any faith in his comments could see the euro rise again. ING has issued a note suggesting the currency could touch 1.0740 versus the dollar.

    A bold call which would need the euro to strengthen a whole cent from current levels.

    Comment ()

    Here's a copy of ECB President Mario Draghi's speech at the 'ECB and its watchers' conference in Frankfurt

    Comment ()
    The European Central Bank's chief economist Peter Praet has released a speech explaining his take on the relationship between asset purchases and interest rates.

    He appears to be dispelling some market chatter that the interest rates of the ECB could rise before QE stimulus is removed.

    The ECB economist also reinforcing that interest rates looks set to stay at lower levels for some time.

    Comment ()
    European Central Bank President Mario Draghi insisted the bank's monetary policy stance remained appropriate on Thursday and stressed "sufficient confidence" would be necessary for the central bank to change tact.
    Here is a full write up of ECB President Mario Draghi's speech on CNBC:

    ECB's Draghi says monetary policy stance is still appropriate

    CNBCECB President Mario Draghi insisted the bank's monetary policy stance remained appropriate on Thursday and stressed "sufficient confidence" would be necessary for the central bank to change tact.
    Comment ()
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