Archives of “June 2019” month

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G20 starts today, US – China meeting tomorrow. Deal seen as unlikely … but

  
Analysis, Economy
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Perhaps there is scope for some sort of US – China agreement stemming from the Trump – Xi meeting at the G20 summit.

‘Agree to keep talking’ seems the most likely outcome IMO, but we’ll soon find out. Any increase in hostility would be a negative but a dinner together is probably not going to lead to this, at least right away.
When do we get a deal? If we do.?
An interesting overnight note from ING says it’ll not be until towards the end of this year:
both sides want a deal
  • China can hurt the US economically but it knows that the US can hurt China even more. 
  • President Trump needs a deal to show the American people that he delivers on his promises to get better terms of trade for the US. He knows that this is best done without the US economy having to suffer from Chinese retaliation for an extended period of time.
We expect a deal to be struck in the last quarter of this year
  • it is likely that China as well as the US are prepared to make concessions in the end
  • After all, this is what’s happened in the renegotiation of Nafta
  • To strike a deal, Trump had to accept that Mexico and Canada would not agree to all of his original demands
—
On that 
  • Trump had to accept that Mexico and Canada would not agree to all of his original demands
You’d say the same of China, but so far they’ve held firm. 
Added – G20 start 28th.

Mixed day as earlier days erode. Nasdaq close higher. S&P and Dow end day lower.

  
Analysis, US Market

All major indices well off the highs

The US major indices are ending the day with mixed results. The NASDAQ index ended higher while the S&P and down ended with modest declines.   However, all three indices closed well off session highs and in fact, are clsoing just off the session lows
Below are the high, low change levels and the close change for the major indices in North America and Europe.
All major indices well off the highsThe chart below shows the % changes for the high, low and close.
The % changes for the day

Pres. Trump: If deal with Iran doesn’t happen, it’s fine with him.

  
  Analysis

Speaking on Iran

Pres Trump is on the wires saying:
  • if deal with Iran doesn’t happen, it’s fine with him
  • he has unlimited time
Of course the US is imposing economic sanctions intended to cripple the economy and lead to a deal.  Shooting down a drone did not tempt the President.  Where the line in the sand is (from provocation) is unknown but it would likely have to include loss of lives.

Bitcoin rally fueled mostly by crypto enthusiasts, not new money

  
Analysis, BITCOIN

If crypto can recapture the public’s imagination, it could go to new highs

Where is the money coming from that’s driving the rally in Bitcoin? Prices are up another 13% today to $12,874.
The answer is seemingly tether. That’s the controversial dollar-pegged crypto that’s often used to move money around but is dogged by questions of whether its reserves are truly backed.
Mati Greenspan from eToro highlights that much of the money flowing into Bitcoin in the past day originated in tether. Of the buying into Bitcoin, $4.25 billion started in tether while $1.27B came from USD cash.
If crypto can recapture the public's imagination, it could go to new highs

Another interesting tidbit is that even though money is flowing into other cryptos and prices are rising, Bitcoin continues to be the main beneficiary. Bitcoin volumes are higher than nearly all other cryptos combined and its value is over 60% of crypto for the first time since 2017.

EIA weekly US crude oil inventories -12788K vs -2873K expected

  
Analysis, Crude

Weekly US energy inventories and production data from the EIA:

  • Prior was -3106K
  • Gasoline -996K vs 0K expected
  • Distillates -2441K vs +100K exp
  • Refinery utilization +0.3% vs +0.5% exp
  • Production 12.1 mbpd vs 12.2 mbpd prior

API numbers released late yesterday:

  • Crude -7550K
  • Cushing -1260K
  • Gasoline -3170K
  • Distillates -160K

That’s the largest one-week draw since Sept 2016 and fifth-largest draw since the series started in 1982. WTI touched $59.93 on the headlines.

Durable goods orders and inventory data the highlight for New York trade

  
Analysis, Economy

Trump coming up too

Trump coming up too
The first event to look out for in New York trade is an interview with the President on Fox Business at 8:15 am ET (1215 GMT). The message here is the medium. Trump likes to bring good news so I imagine he will be saying something in an effort to pump up markets.
However the good news could be unwound quickly if data disappoints at the bottom of the hour. That’s when we get the May prelim US durable goods orders report along with data on wholesale/retail inventories and the advance goods trade balance. For what’s expected, check out the economic calendar.
At 10:30 am ET (1430 GMT) the weekly US oil inventory report is due. Here is the API data.
At 11:30 am ET (1530 GMT) we hear from the Fed’s Daly at the Forecasters Club of New York. The venue suggests the talk will be on monetary policy and the outlook.
Finally, there’s a US 5-year note sale today at 1 pm ET (1700 GMT).

Wilbur Ross: US is looking for reasonable deal with China over trade

  
Analysis, Economy

Comments by US commerce secretary, Wilbur Ross

  • Trump’s tariff threat on China is not a bluff
  • US has national security concerns over Huawei
Nothing that really stands out so far but just be aware that we’re seeing more US officials speak on trade with China so far today. Trump himself will be on the wires in just under an hour from now so best to be prepared.

Mnuchin says that US-China trade deal is 90% complete

  
  Analysis

US Treasury secretary, Steven Mnuchin, speaks to CNBC

  • Hopes that can seal a deal with China
  • Won’t speculate on timing of a deal
This reminds me of the whole Brexit agreement where lawmakers were constantly touting that 95% of a deal is complete. And look where we are now on that.
In essence, this here is no different. Sure, both sides may agree on many other issues that amount to 90% of an agreement but that 10% where they cannot reach a compromise on (issues such as exchange rate, IP protection) outweighs everything else which is basically not important in the grand scheme of a deal.
Mnuchin’s comments is getting wider airing now and is prompting a move higher in equities and bond yields. USD/JPY has moved up to a session high of 107.67 from 107.40 levels earlier. As mentioned, this sounds good on paper but I’m not buying into the optimism.
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