Market News

• Japan has not fully exited from deflation
• Compiling extra budget would of course be an option as said before
• Government ready to take steps in a timely manner to combat economic impact from US-Iran conflict
• Markets are making big moves so we will respond nimbly while closely communicating with peers

With all the focus on the Middle East, we may get some added volatility from Japan before the week comes to a close. USD/JPY is bordering at the week's highs near the 158.00 level, threatening its highest levels since the 'rate check' at the end of January.

The main issue plaguing the currency is still the Takaichi trade for the most part. But amid the US-Iran conflict, higher oil prices are also weighing heavily on the economic outlook. And that…

• China hopes to convince Iran to allow LNG to pass through Hormuz
• Gulf states could review overseas investments - report
• Fed's Goolsbee: Institutions are facing a crisis of trust
• US admiral: Iran's ballistic missile attacks have decreased by 90%
• Trump says Iran is contacting them seeking guidance on negotiating a deal
• Costco beats on earnings but little reaction from shares

Markets:

• Gold up $57 to $5133
• WTI crude oil down 96-cents to $80.04
• AUD leads, USD lags
• Nikkei up 0.5%
• US 10-year yields down 1.2 bps to 4.14%

The US gave Iran a 30-day sanctions waiver to buy Russia crude in a move that's seen as an indication that the US has a limited appetite to continue to push oil prices higher. China is also pressuring Iran to allow ships carrying its energy…

Reuters is reporting that China is in direct talks with Iran to secure safe passage through the Strait of Hormuz for crude and Qatari LNG vessels. They cited three three diplomatic sources who are unnamed.

We're on day six of the US-Israeli conflict with Iran and the Strait is effectively closed for business, with about a fifth of global oil and LNG supply bottlenecked. Crude tanker transits collapsed from an average of 24 per day to just four on March 1. Around 300 tankers are sitting inside the Strait right now with nowhere to go and others can't get in to load once those ones leave.

Crude is up 15%+ since this kicked off and it's wildly bullish if the straight stays closed.

China gets roughly 45% of its oil through the Strait so Beijing…

The FT reports that pressure on the Arab Gulf states’ finances could cause them to review their overseas investments and commitments. The cost of the war is beginning to mount as Iran strikes at US allies and US bases in the region.

This report is undoubtedly aimed at putting pressure on the US to either subsidize their defense or seek peace in Iran. The countries have evidently held joint discussions about pressure on budges and may reassess how they manage the economic pain, including pulling overseas investment commitments.

Those commitments have been a signature achievement of Donald Trump's Presidency and this report was likely floated to get his attention.

Any move to pull back Gulf investment from the US and Western assets could put…

The mood is improving in Asia.

The steady selling of risk assets and flight to the US dollar has given way to some optimism in Asia and that's reflected in decent bids in the Australian dollar and broad USD weakness. That's come with some oil selling as the US floats more measures to stop the runaway rise in crude prices.

Notably, gold remains strongly bid as it has all week in Asia-Pacific hours. It just hit a session high, up $31 to $51.06.

S&P 500 futures are fractionally higher but the Nikkei's early bounce has given way to selling and it's down 1.3%, falling below the initial opening levels.

As for the Australian dollar, it's been a challenging week to trade as it's mostly been bounced around by war and oil sentiment. Early this week,…

The mood is improving in Asia.

The steady selling of risk assets and flight to the US dollar has given way to some optimism in Asia and that's reflected in decent bids in the Australian dollar and broad USD weakness. That's come with some oil selling as the US floats more measures to stop the runaway rise in crude prices.

Notably, gold remains strongly bid as it has all week in Asia-Pacific hours. It just hit a session high, up $31 to $51.06.

S&P 500 futures are fractionally higher but the Nikkei's early bounce has given way to selling and it's down 1.3%, falling below the initial opening levels.

As for the Australian dollar, it's been a challenging week to trade as it's mostly been bounced around by war and oil sentiment. Early this week,…

The clock is ticking on the USMCA joint review and Scotiabank just released a comprehensive report that's worth a read.

"The future of [USMCA] is the single most consequential macro uncertainty facing the Canadian economy this year," the report says.

The good news first: Scotiabank's baseline is that USMCA gets ratified or extended with limited adjustments that don't materially change the macro trajectory. They're explicit about this — the agreement is mutually beneficial and much of the recent US rhetoric looks like bargaining posture rather than a genuine signal to blow the deal up.

But "low probability" isn't "no probability," and the report's scenario analysis shows why even a small chance of a bad outcome demands attention. Their…

CENTCOM Commander Admiral Brad Cooper is highlighting something that markets should keep in mind:

"If I just look back over the last 24 hours of the operation compared to the where we were to start, ballistic missile attacks have decreased by 90%... Drone attacks have decreased by 83%... we’re now up over 30 ships [destroyed]."

He also highlighted one of the goals of the operation:

"[Trump] gave us another task — to raze or level Iran’s ballistic missile industrial base. We’re not just hitting what they have, were destroying their ability to rebuild...we will systemically dismantle Iran’s missile production capability for the future, and that’s absolutely in progress."

How hard are they hitting?

"In just the last 72 hours, America's bomber…

Is this the start of the end?

Trump also said that further action to reduce pressure on oil is imminent.

Trump talked about a 4-5 week schedule but he hates:

• High oil prices
• Falling stock prices
• The market pricing out rate cuts (down to 36 bps from 60 bps before war)
• War in general

In contrast to Trump, Hegseth is saying they have only just begun to fight and will fight decisively. But we all know that Trump is the decision maker.

This article was written by Adam Button at investinglive.com.

• US stocks close lower but rebound into the close
• Crude oil settles at $6.35 higher or 8.51% at $81.01
• Kristi Noem is replaced as Homeland Security Secretary.
• Pres. Trump not looking to tap into the strategic petroleum reserve (SPR)
• European indices close sharply lower after reversing earlier gains
• Oil jumps above $78 helped by reported attack on Bahrain facility
• Energy and tech sectors drive mixed market movements
• Market Update: Gold reverses gains amid central-bank selling chatter
• Feds Barkin: Recent inflation data does raise doubts about whether the fight is over
• US unit labor costs for Q4 2.8% versus 2.0% expected. Productivity 2.8% vs 1.9% expected
• US import prices for January 0.2% vs. 0.2% expected. Export prices 0.6% vs 0.3% expected
• US…

Costco came in ahead on the top and bottom line in the after-hours report today. EPS landed at $4.58 vs. the $4.55 estimate, while total revenue hit $69.60B against the $69.27B consensus. Net income rose to $2.035B from $1.788B a year ago — a 13.8% jump.

The comp sales numbers are where it gets interesting for the macro view. Total company comps ex-gas and FX came in at +6.7%, well above the +5.9% estimate. Including gas and FX, comps printed +7.4% vs. the +6.72% consensus. The U.S. adjusted number was +6.4%, Canada +7.6%, and Other International +7.1%.

Digitally-enabled comparable sales surged 22.6% in Q2 (21.7% adjusted), showing the consumer is still spending and increasingly doing it online through Costco's platform.

Costco skews to the…

Major US stock indices are closing lower on the day, but well off the lowest levels. A late day fall in crude oil from a high of $82.16 down to the current level is $79.65 helped to shift the bias on hopes the worst has passed.

Looking at the major indices:

• Dow industrial average fell 784.67 points or -1.61% at 47954.74. At session lows the index was down 1162 points.
• S&P index fell -38.79 points or -0.56% at 6830.71. At session lows the index is down -98.72 points.
• NASDAQ index fell -58.50 points or -0.26% at 22748.99. At session lows, the index was down -307.19 points.
• Russell 2000 fell -50.43 points or -1.91% at 2585.57. At session lows, the index was down -75.01 points.

S&P components from strongest to the weakest.

🟢 Only 3 sectors green…