Happiness is inside you , don’t look for it outside
Archives of “December 19, 2019” day
rssStanley Druckenmiller is wading into the global reflation trade in 2020
What the investing legend is doing in 2020
Stanley Druckenmiller says he was ‘timid’ in 2019 but still eeked out a double-digit return while relying on safer assets.
“I’m just too conservative in my old age,” he said. “I was well positioned but just too timid.”
His wagers for 2020 are on the Canadian and Australian dollars while shorting the yen and Treasuries. He also owns copper and equities from the US and Japan.
More recently, he bought the pound and UK banks. He said Brexit will ultimately be good for the UK economy.
Early in the year he reversed positions he had taken in late 2018 when he bought bonds, bet against financials and predicted a period of low returns.
“I couldn’t have been more wrong,” he said.
The main risks he sees are political, a turn in inflation that forces the Fed to hike and weakening credit. He said he doesn’t see any of that happening in the near term but “these things tend to happen after elections.”
I highly encourage everyone to watch the full video (50 mins) because he makes many compelling points.
China: Phase One trade deal content to be disclosed after the deal is signed
Comments by the Chinese commerce ministry
- US, China trade teams are maintaining close communications on signing of the deal
- No new information on talks with the US at the moment
What’s that saying again? Oh, right. Nothing is agreed until everything is agreed.
There’s no doubt that both the US and China have made great strides to get towards a Phase One deal but until it is officially signed off, there is still the fear that it could all fall apart – especially when there is the seemingly lack of details about the deal currently.
That said, I would still expect the deal to get through without any major hitches in the coming weeks. However, once again, this will just represent a temporary trade truce in what will be a prolonged war between US and China that can last up to many more years to come.
Chinese commerce ministry refrains from confirming if trade deal will be signed in January
China continues to keep mum over the trade situation in general
No details up on offer and no real confirmation by the Chinese side on how things are progressing. That hardly is surprising as this has been the case time and time again as far as US-China trade talks are concerned.
As mentioned earlier, there is still good reason to believe that both sides can sign off on the deal in the coming weeks but the lack of enthusiasm from China is a subtle reminder that nothing is ever agreed until everything is agreed.
Nikkei 225 closes lower by 0.29% at 23,864.85
Asian equities a little lower on more skittish sentiment
Japanese stocks continued to retreat on the week as investors continue to stay more cautious amid fading trade optimism with little else to go on in the new year.
The only notable news in the morning is Trump being impeached but it hardly is worth anything with the Senate surely to shoot down the case voted on by the Lower House earlier.
The Hang Seng is down by 0.5% while the Shanghai Composite is down by 0.2% amid more lackluster trading sentiment on the day.
The overall risk mood remains more modest though with US futures keeping flat with little change observed in bond yields. As such, USD/JPY is keeping in a narrow 15 pips range and resting at 109.57 currently to start the European morning.
Recap: Trump impeachment story, where are we now?
The Lower House has voted in favour to impeach US president Trump on two accounts earlier today
He is certainly not having a good day but it isn’t the end of the world for Trump, not even close in fact. The House of Representatives (Lower House) may have voted to impeach him on the two accounts above but it will not happen unless Senate also votes similarly.
And to that note, it is extremely unlikely to happen especially since the Republicans still hold a majority there and 2/3 votes are needed for the impeachment charges to succeed.
If you’re wondering why markets aren’t reacting to the news, that is the main reason why. Greg also gave a bit of an overview of the situation yesterday here.
The Democrats themselves know how this can all play out in the new year, which is leading to the suggestion that they may just prolong the process of passing things over to Congress – in hopes that the impeachment news will brew and bubble up among the public.
That said, it shouldn’t make much difference to markets unless this spills over to damage Trump’s election chances – which is also seen as unlikely at this stage.
So in short, Trump is one step closer to actually being impeached but it is almost certainly still not going to happen. As you were..
Global bond #yields are on the rise…
BOJ statement leaves monetary policy unchanged
Bank of Japan monetary policy statement for their December 2019 meeting
Policy is held steady but there are a few points to note, a little downbeat.
Policy:
- maintains short-term interest rate target at -0.1%
- maintains 10-year JGB yield target around 0%
- maintains forward guidance on interest rates, says they will remain at current or lower levels for as long as needed to guard against risk momentum for hitting price goal may be lost
The injection of 280bn yuan today by the PBOC was the biggest since January. Does it set up a rate cut tomorrow?
A little earlier the People’s Bank of China added 30 bn yuan into money markets via 7 day reverse repos
And 250bn via 14-day RRs.
This follows a big injection yesterday (after 20 consecutive days of no OMOs) and also a (tiny) rate cut on the 14 day yesterday.
Tomorrow (Friday 19 December 2019) we get the month Loan Prime Rate setting from the Bank.
The LPR rate is set by 18 banks with a spread above the one year Medium term Lending Facility.
Global Times says “US impeachment won’t change China’s trade stance”
US President Trump is about to be impeached, but the Global Times says it will not change the overall direction of the bilateral trade relationship
- China has come to the realization that no matter who sits in the White House, whether Republican or Democrat, the US’ ill-advised intention to contain China’s economic and technological rise will not change.
- However, the trade war has also shown that China would never bow to maximum pressure from the US, whether in the form of punitive tariffs or a global crackdown on Chinese technology companies or flagrant intervention in Chinese internal affairs
Fightin’ words.
GT is correct, doesn’t matter if Mr T wins the next election or not – the US and China are on a collision course.
Global Times is a very outspoken and forthright media outlet in China.