Archives of “November 2019” month

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HSCB’s Bloom: Dollar is the currency to own

  
Analysis, Forex
  • A full blown US-China trade deal will be “game changer”
  • Yuan will stay pretty stable and risk assets will rally
  • Then you’ve got alternatives to the dollar
  • But don’t hold your breath (on a deal)
  • In the meantime, the dollar will “power ahead”
  • The dollar is the currency to own
I always love watching Bloom’s interviews because of how candid and eccentric he can be. He’s certainly a no frills kind of guy and this short clip accentuates that again.
He also goes on to talk about how USD/CNY made a move from 6.35 to 7.00 based on a ‘political change’ i.e. tariffs and how the big picture affecting both currencies is “all about the trade deal”, not cyclical factors such as the economy.

Let’s take stock of US-China trade talks

  
  Analysis
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What is the sentiment like at the moment surrounding US-China trade talks?

US-China
I remember questioning the sincerity of the more optimistic risk mood last month when China started to endlessly talk up chances of a trade deal across all media platforms.
It almost felt as if it was too good to be true and like it was too forceful since they have always been more reserved all along upon the conclusion of each phase of trade talks.
Well, look at where we are now. The mood has certainly made a complete U-turn with China staying eerily quiet and the only thing they’re willing to offer is that they had “constructive” talks with the US on trade over the weekend.
It feels like we’re reverting back to old habits again, that is before the round of trade talks in Washington last month.

Are we still on track for a “Phase One” deal?

(more…)

Eurozone September current account balance €28.2 billion vs €26.6 billion prior

  
  Analysis

Latest data released by the ECB – 19 November 2019

  • Prior €26.6 billion; revised to €28.5 billion
Another steady current account surplus for the euro area with surpluses observed in goods, services and primary income; offset against secondary income. Not much else to note from the reading here as the balance holds within range of previous months.

Moody’s: Global economy will remain fragile in 2020

  
  Analysis
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Moody’s weighs in with some commentary about the world economy

  • Global economy will remain fragile next year as risks to credit conditions rise
  • Rising political and geopolitical risks are exacerbating slow growth
  • That reduces economies’ abilities to respond to shocks
  • Trade uncertainty will continue to disrupt supply chains and weigh on investment
  • Overall global growth will remain lackluster amid deceleration in US and China
  • Recession risks will remain elevated in Europe and in the US
Adding that they do not expect a recession next year but recession risks are building amid a backdrop of trade policy uncertainty in the global economy.
They also mention that global interest rates will remain low and that yield curves are to remain flat for several years going forward.
I think this is pretty much the base-case scenario for the global economy at this point i.e. slow and sluggish growth with rising risks of things turning into something worse.
Any potential rebound in global trade and manufacturing conditions will likely take a few years to come about so if we can weather that storm, then perhaps the recession can will be kicked down the road again for a few more years.

NASDAQ, S&P and Dow all close at record highs

  
Analysis, US Market
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Late rally kicks the S&P into positive territory

the major indices all closed positive on the day and that means record closes. The S&P was the closest at not reaching the milestone, but some late buying kicked the index into positive territory.  The NASDAQ and Dow had an easier time of it.
The unofficial closes are showing:
  • The S&P index +1.37 points or 0.04% at 3121.84. The high reached 3124.17. The low extended to 3112.06
  • The NASDAQ index +9.109 points or 0.11% at 8549.93. The high reached 8559.78. The low extended to 8503.625
  • The Dow close up 530.52 points or 0.11% at 28035.43. The high reached 28040.97. The low extended to 27969.24.
The major indices open lower and was under early pressure, but started to come back after word Pres. Trump and Fed Chair Powell had a private meeting in the private quarters of the White House (with Treasury Secretary Mnuchin).    Concerns about China were replaced by hopes that the Fed Chair might be convinced to cut rates down the road.
Disney continues to be a boost to the Dow. It rose $2.98 or 2.06%.
Other gainers today included:
  • Lyft, +4.37%
  • Nvidia, +3.99%
  • AMD, +3.5%
  • Netflix, +2.58%
  • Chipotle, +2.22%
  • Square, +1.59%
  • UnitedHealth, +1.3%
  • Facebook, +1.22%
  • Nike, +1.18%
  • Procter & Gamble, +1.14%
  • Walmart, +1.1%
Some underperformers today included:
  • Under Armour, -2.59%
  • Fiat, -2.31%
  • Schlumberger, -1.92%
  • Chevron, -1.71%
  • Bristol-Myers Squibb, -1.64%
  • Beyond Meat, -1.26%
  • Caterpillar, -1.2%
  • Gilead, -1.14%

Sports equipment maker Yonex’s founder dies at 95

  
  Analysis
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Minoru Yoneyama, a former prisoner of war who founded Japanese sports equipment maker Yonex, a favorite among pro tennis players, died on Saturday at the age of 95.

Yonex’s rackets have been used by such tennis stars as Billie Jean King, Martina Navratilova and Kimiko Date, garnering worldwide attention for a company that started out making fishing gear.

Yoneyama was born in Niigata Prefecture, north of Tokyo.

No stranger to adversity, he entered into business after being released from a prisoner of war camp in Okinawa. He was part of a Japanese suicide unit meant to ram explosive-laden boats into American transport ships, but never received an order for a mission.

In 1946, Yoneyama started making and selling floats for sport fishing. He began producing badminton rackets in 1957, and they remain one of the company’s mainstay products.

U.S. tennis great Billie Jean King serves with a Yonex racket at Wimbledon in 1982.   © Getty Images

In 1958, Yoneyama established Yoneyama Co. to focus on rackets. It moved into tennis in 1969, followed by golf in 1982. The company was renamed Yonex and moved its headquarters to Tokyo.

Yonex secured contracts with King and other leading tennis players by asking them what they wanted in a racket, then improving the performance and design step by step until they were satisfied.

Yoneyama’s motto was, “If you fall, pick yourself up as a bigger man.”

His resilience was put to the test when a racket factory burned down in 1963. In just three days, the company was able to put up a new facility and resume production.

Yoneyama also played an active role promoting athletic activity through the Yonex Sports Foundation.

China’s Shi Yuqi in action at the Yonex All England Open Badminton Championships in 2018. Beyond tennis, the brand is well known in badminton-mad Asia.   © Reuters

European shares end the day mostly lower

  
Analysis, Global Indices

German DAX, -0.3%, France’s CAC, -0.3%. Spain’s Ibex, unchanged, UK FTSE +0.1%

the major European stock indices are ending the session mostly lower. The provisional closes are showing:

  • German DAX, -0.3%
  • France’s CAC, -0.3%
  • UK’s FTSE 100, +0.1%
  • Spain’s Ibex, unchanged
  • Italy’s FTSE MIB, -0.5%
In the European debt market are ending mostly lower. The exception is the UK 10 year at up 1.6 basis points. France’s 10 year OAT, tried to move back above the 0.0%, but stalled just short of that level at -0.006% at the session high before moving back to the downside.
German DAX, -0.3%, France's CAC, -0.3%. Spain's Ibex, unchanged, UK FTSE +0.1%_
In other markets as London/European traders look to exit:
  • spot gold is up $2.80 or 0.20% $1471.19
  • WTI crude oil futures are down $1.03 or -1.8% at $56.68
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