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On August 2nd, Federal Reserve Board Governor Kugler abruptly announced his resignation on Friday, giving US President Trump an opportunity to fill the Fed vacancy earlier than expected and potentially forcing him to finalize his next chairmanship months in advance. Derek Tang, an economist at the monetary policy analysis firm LH Meyer, said, "The ball is now in Trumps court. He has been pressuring the Fed to install his own candidate. Now his opportunity has arrived." While Powells term as chairman ends in May of next year, his term as a governor runs until 2028. If Powell doesnt voluntarily resign as a governor, Trump wont have another chance to fill the vacancy before 2028. In this scenario, Trump might be forced to fill Kuglers vacancy with a candidate he plans to promote as chairman. Tobin Marcus, head of US policy and political strategy at Wolfe Research, noted, "The key is that this is the only vacancy Trump can fill. If he wants to find the next Fed chair from outside, the nomination could be announced earlier."On August 2nd, Canadas retaliatory tariff increase against the United States earlier this year is leading the Trump administration to adopt a differentiated trade strategy with Mexico. Previously, Canada and Mexico enjoyed equal treatment—both were subject to a 25% base tariff and enjoyed extensive duty-free access under the USMCA. However, this situation took a sudden turn on Thursday: Trump announced a 90-day suspension of tariffs on Mexican goods, while simultaneously raising tariffs on Canadian products to 35%. Existing retaliatory measures have not only failed to curb the escalation of the conflict but have instead prompted even more severe retaliation from the United States. Economist and former Bank of Canada Governor Mark Carney has stated that retaliatory measures are limited in effectiveness. In fact, the Canadian government has diluted retaliatory tariffs through numerous exemptions, refrained from retaliating when the US raised steel and aluminum tariffs to 50%, and even eliminated its digital services tax at the request of the US.On August 2, the Palestinian Islamic Resistance Movement (Hamas) issued a statement today (August 2) emphasizing that "unless our national rights are fully restored, the most important of which is the establishment of an independent Palestinian state with Jerusalem as its capital and full sovereignty, we cannot give up armed resistance."On August 2nd, Berkshire Hathaway took a $3.8 billion write-down on its Kraft Heinz investment, signaling that Buffetts iconic 2015 consumer goods deal is facing significant challenges. This marks Berkshires second impairment of the business, following a $3 billion write-down in 2019. As of the end of June, Berkshire lowered the investments carrying value to $8.4 billion. The investment was a rare disappointment for Buffett. While the investment remains profitable, the packaged food giants stock price has fallen 62% since the 2015 merger of Kraft and Heinz. Over the same period, the S&P 500 has risen 202%. Kraft Heinz is currently considering spinning off some of its businesses to address challenges such as inflation suppressing consumer demand and the impact of the healthy eating trend.On August 2nd, Warren Buffetts Berkshire Hathaway (BRK.AN, BRK.BN) announced that its consumer products business has been impacted by US President Trumps trade policies, which have increased tariffs on imported goods. The conglomerates consumer products division (which includes brands such as Fruit of the Loom, Jazwares, and Brooks Sports) reported a 5.1% year-over-year revenue decline to $189 million in the second quarter, primarily due to declining sales, tariff impacts, and business restructuring. Berkshire cited tariffs as delays in order deliveries. However, the company noted that Brooks, the athletic shoe brand, bucked the trend with an 18.4% revenue increase in the quarter, driven by increased sales. Because Berkshires businesses span multiple economic sectors, its performance is seen as a microcosm of the US economy, attracting considerable investor attention. At Berkshires annual meeting in May, Buffett strongly supported free trade, stating that tariffs should not be used as a "weapon" and emphasizing that "balanced trade is good for the world."

Hang Seng Index, ASX200, Nikkei 225: Hang Seng Hits Reverse

Cory Russell

Feb 24, 2023 15:22

Industry Snapshot

This morning's class was diverse. The Nikkei 225 and ASX 200 both made advances, and US economic data and a positive US stock market session provided support in the morning. The US Futures, however, were followed into bearish terrain by the Hang Seng Index.


The immediate concerns of a more active Fed interest rate trend were allayed on Thursday by US economic data. The US economy grew less quickly than anticipated, but the job market stayed constrained. In Q4 the economy expanded by 2.7% as opposed to a preliminary 3.2%. However, the Fed was given some fuel for thought when initial unemployment applications dropped from 195k to 192k.


The NASDAQ Composite Index increased by 0.72% in reaction to the statistics and US business profits, while the Dow and the S&P 500 increased by 0.33% and 0.53%, respectively.


The heavyweights were held back from making more significant advances this morning by market anxiety regarding today's US Core PCE Price Index figures. A challenging US session is expected, as evidenced by the Dow Mini's 19-point decline and the NASDAQ Mini's 18-point decline.


Kazuo Ueda, the new governor of the Bank of Japan, brought comfort to the market by promising to keep the country's ultra-loose monetary policy in place despite the most recent inflation figures.


This morning's Asian economic schedule was relatively light as the G20 meeting got started in India, where inflation, the situation in Ukraine, and the connection between China and Russia could be heated subjects.

ASX 200

The overnight advances in the US provided assistance for the ASX 200's rise of 0.27%. Investors were not given any statistics from the Australian economic schedule this morning.


Financial equities provided assistance. National Australia Bank (NAB) and ANZ Group (ANZ) both saw gains of 0.53% and 0.57%, while Westpac Banking Corp (WBC) increased by 0.35%. With an increase of 1.34, the Commonwealth Bank of Australia (CBA) took the lead.


The early session of mining equities was negative. BHP Group Ltd (BHP) and Rio Tinto (RIO) both experienced declines of 3.34% and 1.83%, while Fortescue Metals Group (FMG) experienced a decline of 1.99%. The price of Newcrest Mining (NCM) fell by 2.54%.


Crude oil prices increased, supporting energy asset values. Gains of 0.80% and 1.15% were recorded by Santos Ltd. (STO) and Woodside Oil Company (WDS), respectively. This morning, WTI Oil increased 0.77% to $75.97.

Hang Seng

This morning, the Hang Seng fell 1.33%, defying the general Asian market pattern. This morning's market risk appetite was not influenced by any economic data. On the first anniversary of Russia's attack of Ukraine, the Hang Seng Index was negatively impacted by a downbeat morning session for the CSI 300.


Alibaba Group Holding Ltd (HK:9988) fell by 4.15%, while Tencent Holdings Ltd (HK:0700) fell by 2.02%.


Additionally, the morning was negative for equities in banks. China Construction Bank (HK: 0939) and Industrial and Commercial Bank of China (HK:1398) both experienced declines of 0.61% and 1.00%, respectively, while HSBC Holdings PLC fell by 0.94%.

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