August 8. 2017
Zuma’s future hangs in the balance, warnings mount over a pricey market, and Republicans discuss tax compromise. Here are some of the things people in markets are talking about today.
President Jacob Zuma faces a vote by secret ballot in today’s motion of no-confidence in South Africa’s parliament. The opposition filed the motion after Zuma fired Pravin Gordhan as his finance minister, with the debate in parliament scheduled to begin at 8 a.m. Eastern Time. Analysts suggest the rand could surge if the president is ousted in today’s vote, but also warn that gains in the currency – spurred by news that voting would be held via secret ballot – could quickly evaporate should Zuma prevail. There are also national elections in Kenya today with results expected later this evening.
When’s the crash?
DoubleLine Capital LP’s Jeffrey Gundlach said it is time to gradually move “towards the exits” as he reduces his funds’ positions in junk bonds and emerging-market debt, assets which he says are overvalued. He also said that his firm would stop marketing when assets reached $150 billion, saying there is a limit to how much Doubleline can manage well. Meanwhile, Steven Major, head of fixed-income research at HSBC Holdings Plc, has sounded the alarm on European investment-grade bonds, saying investors aren’t being compensated for the risks they are taking in euro-area debt markets.
Republicans are seeking a deal that will deliver on their promises for a major tax overhaul without adding to federal deficit. The compromise approach would combine lasting tax changes to corporations moving profits offshore and temporary tax reductions for individuals and businesses, according to three people familiar with the discussions. A deal on raising the debt ceiling, which the U.S. Treasury Department says could be needed by Sept. 29, remains elusive as discussions are unlikely to start in earnest until the House returns from recess early next month.
Markets (very) quiet
Overnight, the MSCI Asia Pacific Index rose 0.1 percent, while Japan’s Topix index slipped 0.2 percent as investors assessed China’s trade figures showing slower-than-expected growth in both imports and exports. In Europe, the Stoxx 600 Index was broadly unchanged at 5:45 a.m. in a quiet session. S&P 500 futures were 0.1 percent lower.
A barrel of West Texas Intermediate for September delivery was trading at $49.70 as of 5:45 a.m. as talks between oil producers continue in Abu Dhabi today. Findings from the meetings on compliance with the production-cut agreement will be presented to the Joint Ministerial Monitoring Committee, which oversees the agreement. Saudi Arabia, which last month said it would increase pressure on producers who don’t comply with the pledge to curb output, has started limiting sales to some Asian customers.