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All Eyes on (the) US

06744 CC Trader Talk V2

Tonight brings the much awaited March decision on interest rates by the US Federal Reserve. While a hike is pretty much priced in, the market will eagerly scour the announcement, forecasts and ensuing press conference for clues about the pace of future rate hikes. Any indication that hikes are being brought forward or accelerated in any way will undoubtedly put pressure on bond prices, aid the dollar and boost stocks.

The Fed will undoubtedly try to cushion the impact if it does so, by saying that its policy remains flexible. However it is now fact that US monetary policy has definitely turned a corner bar any major global shock such as, say, a war with North Korea… In a statement by the state news agency, the ‘Democratic’ People’s Republic of Korea said that if the US aircraft carrier strike which is currently in South Korean waters – reportedly for training – infringes “on the DPRK’s sovereignty and dignity even a bit, its army will launch merciless ultra-precision strikes from ground, air, sea and underwater”. So much for a warning!

Intel Splurges

Shareholders in Israeli automotive-tech company Mobileye must have popped open the champagne on Monday after Intel announced it would pay a staggering $15.2 billion in cash to acquire the company. That’s a 34% premium on Mobileye’s Friday close, and 30 times more than its projected revenue for the next 12 months.

Intel hopes the purchase will give it the edge over rival chipmakers in the self-driving car industry, particularly Nvidia Corp who already supplies Google and Tesla. Although the industry has generated a lot of hype and attention over the last 18 months, fully autonomous cars are still quite a way off. Nonetheless Intel hopes to develop an end-to-end system which might then be adopted by major automakers going forward.

Like a Rock

The gravity-defying British Pound fell on Tuesday morning, in a delayed reaction after the House of Lords ‘cleared’ Prime Minister Theresa May for the all-important triggering of Article 50. The market seems to have ‘woken up’ to the reality of tough negotiations, especially in the light of yesterday’s announcement by Scottish First Minister Nicola Sturgeon for a second referendum of Scottish independence.