Dec 3, 2018, by Samuel Potter
Fixing trade (but not really)
It’s all over. Well, not really, but that’s what you wanted to hear, right? Instead, the trade war is at least on hold for a bit, after Donald Trump and Xi Jinping brokered a 90-day ceasefire at the G-20 confab in Argentina over the weekend. The exact details of the truce remain a little murky, but in markets the winners, from soybeans to emerging markets, are already on the up. Oh and the U.S. president offered an extra dose of Christmas cheer with a late-night tweet saying China has agreed to “reduce and remove” tariffs on imported American-made cars. Beijing has yet to confirm, so actually that’s a bit unclear too. Plus ça change.
Fixing oil prices (or trying to)
Looks like a big week for oil, and not just because of the OPEC shindig in Vienna. First up, there was more news from the sidelines of the G-20 as Saudi Arabia and Russia extended their pact to manage the market. Then Canada’s largest producing province ordered unprecedented output curbs, aimed at easing a crisis in the nation’s energy industry and adding to global actions to combat a price crash. Finally, Qatar surprised the markets with an announcement it’s leaving OPEC to focus on gas. West Texas Intermediate crude jumped more than 4 percent to $53.05 per barrel as of 6:01 a.m. Eastern time. All this before Europeans had finished their Monday morning croissant.
Europe needs fixing
Then again, it wouldn’t surprise us if many Europeans had lost their appetite. Dark clouds abound, and many of them are at the very heart of the continent. France, a country that knows a thing or two about protests, has experienced its worst civil disorder in decades as the “Gilets Jaunes” crisis escalates. One tunnel away, the Brexit saga continues, with Theresa May doing her best Jack Nicholson impression, presumably wandering the halls of Westminster yelling, “You can’t handle the truth!” Parliamentarians continue to demand full access to the legal advice over leaving the European Union, as her attorney-general prepares to deliver a statement on the matter later on Monday. In Spain, the establishment suffered another significant crack on Sunday as the far-right group Vox won its first-ever representation in a regional election. It’s not all bad news across the Atlantic, though – the Italians are making constructive-sounding noises about their budget. Maybe they figure the region has all the negative headlines it can cope with just now. Or perhaps they just like to be contrarian.
Markets fixed (for now)
Overnight, the MSCI Asia Pacific Index surged 1.9 percent as Japan’s Topix index closed 1.3 percent higher. In Europe, the Stoxx 600 Index was up 1.7 percent at 6:01 a.m. Eastern time with almost every sector rallying led by miners and automakers. The euro pared an advance after manufacturing data disappointed, and that took the edge off the dollar’s slide. S&P 500 futures pointed to a big jump at the open, the 10-year Treasury yield climbed back to 3.03 percent and gold rose.
It’s been about 20 minutes since we last heard from the Federal Reserve, so by the end of the day no fewer than five members will have spoken: Clarida, Quarles, Williams, Brainard and Kaplan are at various events. Meanwhile, the big data will be the U.S. manufacturing PMI at 9:45 a.m. And in the next few days there will be a host of events to commemorate President George H. W. Bush, with U.S. markets set to close on Wednesday.