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Saudi Arabia’s sovereign-wealth fund pours $1bn into stakes in 4 European oil firms

  
  Analysis
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WSJ citing “according to people familiar with the matter“
  • Saudi Arabia’s sovereign-wealth fund has amassed stakes worth roughly $1 billion in four major European oil companies
  • buying assets it perceives as undervalued in a market depressed by the coronavirus pandemic and low oil prices
  • stakes in Equinor AS A, Royal Dutch Shell PLC, Total SA and Eni SpA
  • bought in recent weeks
  • the fund may continue to make stock purchases
That “buying assets it perceives as undervalued in a market depressed by the coronavirus pandemic and low oil prices“. You might recall from a few weeks ago OPEC+ failed to agree on maintaining output cuts and Saudi Arabia ramping production higher and thus sending the price of oil plummeting. The cynical amongst us might even suggest this was all part of a plan?

North Korea appears to have fired another missile – has not landed in Japan’s EEZ

  
Analysis, Politics
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The Japanese Coast Guard says the unidentified projectile appears not to have land inside Japan’s economic zone.

  • missile has landed in the East Sea
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“EEZ” is exclusive economic zone
a sea zone prescribed by the 1982 United Nations Convention on the Law of the Sea
Japans EEZ is in debate, but its approx. the area in the darker blue area in the map below
The Japanese Coast Guard says the unidentified projectile appears not to have land inside Japan's economic zone.

OPEC presidency urged an emergency meeting on collapsing prices, members said no.

  
  Analysis
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Algeria currently holds OPEC’s rotating presidency, urged convening a panel to consider assesses market conditions and falling prices.

Bloomberg cite an unnamed official as saying the request did not get enough backing to go ahead.
  • Key player Saudi Arabia said to be opposed.
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Algeria asked OPEC’s secretariat to convene a teleconference meeting of the Economic Commission Board.
Algeria currently holds OPEC's rotating presidency, urged convening a panel to consider assesses market conditions and falling prices.

Russia says that oil prices are very unpleasant, but not a catastrophe for the country

  
Analysis, Crude
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Comments by the Kremlin

  • There is no price war between Russia and Saudi Arabia
  • Our relations are good and doesn’t think anyone should intervene
  • Says Russia has safety buffer against unfavourable oil prices
I would argue that you have to read between the lines with this one. The fact that the OPEC+ joint technical committee meeting was cancelled goes to show that both sides aren’t exactly on speaking terms right now, so believe what you will.
In any case, their official stance still shows no backing down just yet.

China press warn of the danger of Trump administration downplaying the coronavirus

  
  Analysis
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China’s Global Times with the piece. GT is not the most, err, independent of media but given the Chinese experience with the dangers of COVID-19 they do have a point:

  • coronavirus continues to spread rapidly across the US
  • officials including President Donald Trump and some in the public still seek to downplay the risk of the deadly virus
  • an apparent bid to avoid disruptions to economic activities by arguing the common flu is more fatal than COVID-19
  • raises questions about whether the epidemic can be contained effectively
  • irresponsible for public health security

OECD cuts 2020 global economic forecast to 2.4% from 2.9% previously

  
Analysis, Economy
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OECD warns that the global economy may shrink in Q1 2020

This follows their November forecast here previously. Notably, they have slashed China’s growth forecast to 4.9% from 5.7% previously. Meanwhile, in the US they forecast a 1.9% growth for the year – slightly lower by 2.0% previously.

As for the euro area, OECD sees growth of 0.8% this year, down from 1.1% previously. They note that the forecasts are currently based on the coronavirus epidemic peaking this quarter and says Japan and Europe risks a recession in their downside scenario.

More new coronavirus cases starting to emerge in Europe

  
  Analysis
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Austria and Croatia confirms their first cases

The state of Tyrol in Austria has confirmed two positive cases of the new coronavirus, while Croatian prime minister Andrej Plenkovic confirms that the country also has its first case of the new coronavirus infection.

Meanwhile, Spain has also confirmed that it is testing hundreds of tourists in the Canary Islands after one new coronavirus case was identified – the case pertains to an Italian doctor staying in a hotel there, with the hotel now in lockdown mode.

Saudi Arabia energy minister: WSJ story on cuts of output is “absurd and utter nonsense”

  
Analysis, Crude
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WSJ report suggested a potential 300K cut.

Saudi Arabia’s energy minister Prince Abdulaziz is on the wires in reaction to an earlier Wall Street Journal article saying that they were mulling over a proposed 300K cut in output, says:
  • Media report on Saudi Arabia considering break from OPEC+ alliance “absurd and utter nonsense”
  • We will continue to act in a collective manner
  • Saudi Arabia is in continuous communication and dialogue with all  OPEC and OPEC+ partners
Crude oil futures are currently trading down $0.94 or -1.73% at $52.93. The low for the day reached $52.55. The high for the day was up at $53.86

AUD/USD on 0.65 big figure, first time in a decade

  
Analysis, Forex
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Australia is closely interlinked with China’s economy, and thus getting hit by the fallout of the outbreak

AUD/USD under 0.66 first time since 2009 with the news worsening on the coronavirus today, cases accelerating in South Korea. A freer media in South Korea reporting on cases is further cementing doubts about the veracity of the data on the virus impact out of China.
NZD taking a hit also
ps.  This from Goldman Sachs overnight:
  • “The number of ‘missing work days’ in China will be roughly equivalent to the entire US workforce taking an unplanned break for two months.”

Check this out to put the coronavirus impact into perspective

  
  Analysis
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This is one perspective, there will be others.

  • When the SARS epidemic hit in 2003 China had an economy size aroiund USD 1.7 tln
  • Today it is nearly an order of magnitude larger, around USD 13.7 tln
  • & China’s economy accounts for around a third of global GDP growth

ps.  this from Apple’s Tim Cook on what is happening with his business in China this week:

  • “We have closed one of our retail stores and a number of channel partners have also closed their store fronts. Our sales within the Wuhan areas are small, but retail traffic has also been impacted cross the country (China) in the last few days.”

Bolding mine.

Multiply the impact on traffic to Apple stores across the economy.

china coronavirus

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