Archives of “September 19, 2019” day

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Trump ready to escalate trade war if no deal, advisor says

  
  Analysis
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SCMP report

Trump has so far only imposed ‘low level tariffs’ and is prepared to escalate them further if no deal is agreed, Michael Pillsburt told the SCMP.
This is an interesting tidbit as well:
“It was very close and then something mysterious happened. China reneged,” Pillsbury said. “The mystery is the hardliners [in Beijing]. They apparently were not aware of the 150-page deal. They somehow became aware of it in April. Some new players got involved in Beijing and next thing we know their reneging took place.”
The location of the comments is also telling; the US is sending a message to China.

European shares are ending the session higher on the day

  
Analysis, Global Indices

German DAX, +0.5%. UK FTSE, +0.6%

The major European stock indices are ending the session higher on the day. The provisional closes are showing:

  • German DAX, +0.5%
  • France’s CAC, +0.6%
  • UK’s FTSE, +0.66%
  • Spain’s Ibex, +1.1%
  • Italy’s FTSE MIB, +0.82%
As  London/European traders look to exit, a snapshot of other markets are showing
  • Spot gold up $5.29 or 0.35% at $1499.30. The precious metal has been trading above and below the 1500 level for most of the New York session
  • WTI crude oil futures are up $0.45 or 0.77% at $58.56
In the US stock market, the major indices have pushed higher. The snapshot currently shows:
  • S&P index +10.53 points or 0.35% at 3017.36  The high reached 3021.99.  The high close for the S&P is up at 3025 area.
  • NASDAQ composite index is up 39.3 points or 0.48% at 8216.54. The high price extended 28237.43
  • The Dow industrial average is up 80.60 points or 0.31% at 27228
in the Forex market, the CHF remains the strongest of the majors but off the highs for the day. The AUD remains a weakest. The USD is still marginally lower. The greenback has fallen versus the CHF, JPY, CAD, EUR and is higher versus the AUD and NZD. It is near unchanged versus the GBP.

Russia energy minister Novak: Russia sticking to OPEC+ deal in full

  
Analysis, Crude

Crude oil is trading up $0.50 on the day

  • Russia is committed to OPEC+ deal in full
  • Talked to Saudi Arabia energy minister by phone on Wednesday
  • The situation has stabilized following the tax and Saudi Arabia
  • Saudi Arabia is not cutting its oil exports
  • No decision to change global oil deal targets
The price of crude oil is trading up about $0.50 at $58.61 currently. The high price today reached $59.54. There was some buying on the back of news that Saudi Arabia purchased oil from Iraq to fulfill contract obligations.  That gave traders some concern that production will indeed move back to normal by the end of September.  The low today reached $58.08.
Crude oil is trading up $0.50 on the day_
Technically the price remains above its 100 day moving average at $57.12. It’s 200 day moving averages at $56.33. Staying above those levels would keep the buyers more in control.
The spike high price on Monday, stalled ahead of the May high price at $63.81. The high price reached $63.33.

Wilbur Ross: China trade is more complicated than just soybeans

  
  Analysis
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Comments by US commerce secretary, Wilbur Ross

Trump Ross

Stating the obvious but well, let’s give him the benefit of the doubt. Judging by the above, it could be suggestive that any hopes of an interim trade deal whereby China just increases agriculture purchases may not be sufficient enough to appease the US.
But I’m sure most of us have a sense of that by now, otherwise we would’ve seen some semblance of a deal agreed upon a long time ago.

OECD sees global economy slipping towards weakest growth in a decade

  
Analysis, Economy
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OECD cuts forecasts to the global economy, warns of entrenched uncertainty

Global
  • 2019 global GDP growth at 2.9% (previously 3.2%)
  • 2020 global GDP growth at 3.0% (previously 3.4%)
  • 2019 US GDP growth at 2.4% (previously 2.8%)
  • 2020 US GDP growth at 2.0% (previously 2.3%)
  • 2019 China GDP growth at 6.1% (previously 6.2%)
  • 2020 China GDP growth at 5.7% (previously 6.0%)
  • 2019 Eurozone GDP growth at 1.1% (previously 1.2%)
  • 2020 Eurozone GDP growth at 1.0% (previously 1.4%)
  • 2019 Japan GDP growth at 1.0% (previously 0.7%)
  • 2020 Japan GDP growth at 0.6% (unchanged)
  • 2019 UK GDP growth at 1.0% (previously 1.2%)
  • 2020 UK GDP growth at 0.9% (previously 1.0%)
Those are quite the amount of downgrades relative to its May forecast.
OECD says that trade tensions are the main cause for a more fragile and uncertain outlook to the global economy. Noting that intensifying trade conflicts and governments not doing enough to prevent damage will hurt global growth momentum going into next year.
The 2.9% forecast for global growth this year is the weakest projection since the financial crisis, almost a decade ago.
OECD

Iran’s foreign minister questions US remarks: “Act of war” or “Agitation for war”?

  
  Analysis
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Oil appears to be jumping on the tweet here by Zarif

The tweet reads:

“Act of war”or AGITATION for WAR?
Remnants of #B_Team (+ambitious allies) try to deceive @realdonaldtrump into war.
For their own sake, they should pray that they won’t get what they seek.
They’re still paying for much smaller #Yemen war they were too arrogant to end 4yrs ago.

Any call for war and undiplomatic resolve will up tensions in the region and keep oil prices underpinned. Trump played it down last night but it appears Iran is being more confrontational about the matter.
Oil prices are now at the highs for the day with Brent jumping nearly 2% to $64.90.
In related news, Saudi Arabia is said to have asked Iraq for 20 mil barrels of crude as Aramco seeks diesel, gasoline and fuel oil for domestic use. That could be another reason why oil prices are picking up over the past 15-20 minutes.

Beijing expert says that China and US may be close to agreeing an interim trade deal

  
  Analysis
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SCMP reports on the matter

US China

The report cites views and commentary from the chief economist for the China Centre for International Economic Exchanges, Chen Wenling, who is a researcher affiliated with the Chinese government.

Saying that China and US are expected to reach an interim trade deal next month, with Beijing agreeing to buy more American products and the Trump administration postponing further tariff increases and easing restrictions on Huawei.
That said, Chen notes that is would be “very difficult” to reach a comprehensive trade deal and argues that China may not meet demands from the US on IP protection as part of any interim trade deal, should that happen.
The full report can be found here.
The headlines sound great and we have seen hints of a compromise as of late but there’s some hints of biasness in the reporting that must be pointed out.
In Chen’s view, it is not necessary for China to make any more concessions other than agricultural purchases because “it has now gained the upper hand in fighting the trade war with the US”. Adding that:

“Trump is likely to win the election, and it would a good news for China. He is completely clueless in fighting the trade war without any strategies or master plans, and he has bullied US allies.”

That’s not the sort of stuff that gives you confidence as to why they are moving towards a compromise as egos are clearly a key matter in this trade ordeal.

SNB leaves policy rate unchanged at -0.75%

  
  Analysis

SNB announces its latest monetary policy decision – 19 September 2019

  • Prior -0.75%
  • Sight deposits rate unchanged at -0.75%
  • Willing to intervene and will remain active in FX market as necessary
  • Expansionary monetary policy continues to be necessary
  • Trade tensions could further hurt global economic mood
  • Franc remains highly valued
  • 2019 GDP forecast at 0.5% to 1.0%; previously 1.5%
  • 2019 inflation forecast at 0.4%; previously 0.6%
  • 2020 inflation forecast at 0.2%; previously 0.7%
  • 2021 inflation forecast at 0.6%; previously 1.1%

Brazil’s central bank cuts benchmark rate by 50bps

  
  Analysis
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Banco Central do Brasil: “That’s not a rate cut, THIS is a rate cut!”

50bps cut from Brazil’s central bank.
  • decision was unanimous
  • consolidation of benign inflation outlook should give room for additional policy stimulus
  • says economic data since last meeting consistent with gradual recovery
  • global economic outlook uncertain, risks of greater slowdown persist
  • underlying inflation at comfortable levels
  • sees inflation moving back to target over the relevant time horizon, which includes 2020 calendar yearbut sees inflation risk in both directions

Headlines via Reuters

Cut to 5.5%, which I think is the lowest seen in Brazil?
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