18 Dec 2018

US President Donald Trump vents his disapproval of the Federal Reserve

Just ahead of tomorrow's crucial Fed meeting, where a 0.25% hike is all but priced in, US President Donald Trump, in a blistering tweet, vented his disapproval of the currently hawkish Federal Reserve.

Trump goes after the Fed, again


He said that “It is incredible that with a very strong dollar and virtually no inflation, the outside world blowing up around us, Paris is burning and China way down, the Fed is even considering yet another interest rate hike. Take the victory!” One of Mr. Trump’s closest allies, trade advisor, Petr Navarro joined the anti-Fed chorus, saying that the Fed should leave rates unchanged tomorrow “because the economy is growing without inflation”. It will be interesting to see if the White House intervention will have any influence on tomorrows Fed statement.


Dalata: Encouraging trading statement


Dalata issued a trading statement this morning in which it states that trading in the final four months of the year has been “as expected” and EBITDA for FY18 will be in line with market expectations. The group notes that the Dublin market remained “very strong” in H2 and its RevPAR, on a like-for-like basis, increased by 8.8% in the year to end-November, 140bps higher than RevPAR growth in the Dublin market for the same period. Regional Ireland RevPAR growth was 5.3% in the first 11 months, while it posted RevPAR growth of 3.2% in the UK – a positive outcome given the more challenging market conditions in the UK (RevPAR was +1.2% in the UK in the year to October). 


Dalata further notes that it outperformed the market in each Regional UK market it operates with the exception of Leeds where it was marginally behind. The group has seen “no negative impact on trading in any of our hotels in the UK or Ireland” as a result of Brexit uncertainty and continues to make progress on its development pipeline. It has opened two new hotels within the past month (Clayton Hotel Charlemont in Dublin and Maldron Hotel Newcastle), will open Maldron Hotel South Mall in Cork this week and the Clayton Hotel City of London is set to open in January.


AIB Group: S&P raises to investment grade 


S&P last night raised the long term issuer credit rating for AIB Group (HoldCo) to BBB- (and now at stable outlook), bringing the group to investment grade (OpCo raised to BBB+), after the ratings agency announced a series of positive ratings developments for the Irish banking sector. S&P also raised the long term issuer credit ratings for Permanent TSB Group HoldCo (BB- from B+) and KBC Bank Ireland (BBB from BBB-), and both now with stable outlook, whilst affirming the ratings on Bank of Ireland Group (HoldCo BBB-, OpCo BBB+) and Ulster Bank Ireland (BBB+).


Market Orders – Take advantage of volatility 


Theresa May seems to have avoided a parliamentary vote of no confidence by specifying a date for the meaningful vote (14-17 January, following a debate from 7 January). Markets have reacted positively to the news and sterling has strengthened marginally. With markets hyper sensitive to any Brexit related news and stateside the FOMC due to meet tomorrow, market orders are an excellent tool to take advantage of volatility. 


Corbyn goes after May


Brexit update: Labour leader Jeremy Corbyn has tabled a motion of no-confidence in PM May, saying she has led the UK into a national crisis after she indicated the ‘Meaningful Vote’ on the Brexit deal would not now be held until the week of 14 January. Downing Street was dismissive of the move however, which is not a formal motion of no-confidence in the government and therefore does not have to have time allocated for a debate in Parliament. It remains to be seen whether the largely symbolic Labour motion will be debated this week, though indications are that it would not. 


Note that the SNP, Lib Dems, Plaid Cymru and Greens have called on Mr Corbyn to press for a no-confidence vote against the government too, though at this stage the Labour leader appears reluctant to do this, particularly given that a number of anti-May Tory MPs have dismissed suggestions  they would support Labour in such a vote. The Prime Minister appears set on trying to get to the Christmas parliamentary recess starting Thursday, with the strategy perhaps to give MPs some reflection time over Christmas. Today in Cabinet, discussions will be focused on whether the government should ramp up preparation for no-deal Brexit whilst there will also no doubt be debate on the PM’s Brexit strategy, given the various reports that her ministers are openly asking her to test other Brexit options in a series of Commons votes.


Economic Releases


13.30 US Building Permits