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Key Events In A Tumultuous Week: ECB, Brexit Vote And A Barrage Of Economic Data


by Tyler Durden
Mon, 12/10/2018 - 09:04


The biggest events of this very week will be the ECB meeting on Thursday and the Brexit Parliamentary vote tomorrow, which however now appears to be indefinitely postponed. On the ECB, Jim Reid notes that DB economists expect a “dovish tightening,” i.e. an announcement that QE will end at the end of the calendar year. To soften this blow, Draghi will also probably argue that policy remains accommodative due to the stock effect of a large balance sheet and the commitment to keep rates low for as long as needed to meet the inflation target. Draghi is likely to tacitly endorse current market pricing, which does not include a hike until into 2020. Any acknowledgement of TLTRO2 being in the offing next year will also be looked out for.

On Brexit there has been a flurry of speculation that tomorrow’s vote could be delayed to avoid a sizeable defeat for the government. Assuming the vote goes ahead, assuming the government lose, what happens next and at what pace, is where all the drama will be. To add to the intrigue the ECJ will this morning (8am) formally rule on whether Britain can unilaterally revoke Article 50. This follows last week’s advice from the EU advocate general that suggested the U.K. should be able to. A myriad of scenarios remain on the table after tomorrow’s vote.

The data highlight next week comes on Friday with the flash global December PMIs due out. At the time of writing little change is expected for the broad Euro Area readings. Another big focus will be the November CPI report due out in the US on Wednesday. The consensus is for a +0.2% mom core reading which should be enough to push up the annual reading to +2.2% yoy. As Reid notes, the market is rapidly removing US hikes from the 2019 outlook (less than one now priced in) and even for next week’s expected hike some doubts are creeping in.

In a busy week for Tier 1 US data we've also got the November PPI report on Tuesday, and November retail sales report and November industrial production print on Friday. Keep an eye on Thursday's claims reading too which are slowly becoming more eye catching in light of the creep higher.



The other data worth flagging in Europe next week includes the October industrialproduction report in the UK on Monday, October/November employment stats in the UK on Tuesday alongside the December ZEW survey in Germany, and final November CPI revisions in Germany and France on Thursday. In China we've also got a number of important releases including November trade data tomorrow, November CPI and PPI on Sunday and November activity indicators (retail sales, industrial production and fixed asset investment) on Friday.

Elsewhere, with the FOMC in blackout mode and the ECB meeting scheduled, it's a quiet week for central bank speak. Indeed only the ECB's Angeloni (Monday), Guindos (Tuesday and Friday), Hakkarainen (Wednesday) and Lautenschlaeger (Friday) are scheduled.

Finally, there's a few other potentially significant events worth flagging. In Italy Deputy PM Salvini is due to hold a press conference in Rome on Monday while PM Conte will speak to Italy's Lower House of Parliament on Wednesday. On a related note, on Thursday EU leaders are due to meet to discuss the bloc's budget, as well as Macron's reform plans, migration and Brexit. On Tuesday there is likely to be plenty of focus on Google CEO Sundar Pichai testifying before the US House Judiciary Committee with likely questions on election meddling and data privacy. On Wednesday the European Parliament is due to vote on the draft free-trade agreement between the EU and Japan, while German Chancellor Merkel answers questions in the Bundestag and the two-day WTO general council meeting kicks off.

Courtesy of Deutsche Bank's Craig Nicol, here is a daily summary of key events in the week ahead:
  • Monday: We kick the week off on Monday in Europe with Germany's October trade balance and current account balance, France's November Bank of France industry sentiment index, the UK's October trade balance, industrial production, manufacturing production, construction output and October monthly GDP print, and the Euro Area's December Sentix investor confidence reading. In the US, only the October JOLTS job openings reading is due. Away from that, BoE Deputy Governor Cunliffe, ECB's Angeloni and Italian Deputy Premier Salvini are due to speak.
  • Tuesday: All eyes on Tuesday will be on the Brexit vote in the House of Commons. Prior to that, we get France's Q3 payrolls data, the UK's October/ November employment stats and Germany's December ZEW survey. In the US, the November NFIB small business optimism index and November PPI report is due. Meanwhile, ECB Vice President Guindos is due to speak while Google CEO Sundar Pichai will testify before the US House Judiciary Committee including likely questions on election meddling and data privacy.
  • Wednesday: The main highlight on Wednesday is the November CPI report in the US. In Europe the only data due is October industrial production and Q3 employment for the Euro Area. The November monthly budget statement will also be out in the US. Away from that the ECB's Hakkarainen is due to make comments, while Italian Premier Conte will speak to Italy's Lower House of Parliament. The European Parliament also votes on the draft free-trade agreement between the EU and Japan, German Chancellor Merkel answers questions in the Bundestag and the two-day WTO general council meeting commences.
  • Thursday: The ECB meeting is the big highlight on Thursday. Data wise we get final November CPI revisions in Germany and France, while in the US we get the latest weekly initial jobless and continuing claims reading along with the November import and export price index prints. Late in the evening, Japan's Q4 Tankan Survey is due out. EU leaders are also due to meet to discuss the bloc's budget on Thursday.
  • Friday: It's a busy end to the week on Friday with the flash December PMIs for Japan, France, Germany, the Euro Area and the US the highlight. Also due out are the November activity indicators in China and October industrial production in Japan. In the US we'll also get November retail sales, November industrial production and October business inventories. The ECB's Guindos and Lautenschlaeger are also due to speak.
Finally, here is Goldman with a focus on the US along with consensus estimates, noting that the key economic data releases this week are the PPI report on Tuesday, the CPI report on Wednesday, and the retail sales report on Friday. Goldman does not expect any policy-related speeches by Fed officials, reflecting the blackout period ahead of the December FOMC meeting.



Monday, December 10
  • 10:00 AM JOLTS Job Openings, October (last 7,009k)
Tuesday, December 11
  • 06:00 AM NFIB small business optimism, November (last 107.4);
  • 08:30 AM PPI final demand, November (GS -0.1%, consensus flat, last +0.6%); PPI ex-food and energy, November (GS +0.1%, consensus +0.1%, last +0.5%); PPI ex-food, energy, and trade, November (GS +0.2%, consensus + 0.2%, last +0.2%): We estimate a 0.1% increase in headline PPI in November, reflecting relatively firmer core prices but a significant decline in energy prices. We expect a 0.1% increase in the core measure excluding food and energy, and a 0.2% increase in the core measure excluding food, energy, and trade, as mean-reversion is likely to weigh on the trade services category.
Wednesday, December 12
  • 08:30 AM CPI (mom), November (GS +0.04%, consensus flat, last +0.3%); Core CPI (mom), November (GS +0.17%, consensus +0.2%, last +0.2%); CPI (yoy), November (GS +2.22%, consensus +2.2%, last +2.5%); Core CPI (yoy), November (GS +2.19%, consensus +2.2%, last +2.1%): We estimate a 0.17% increase in November core CPI (mom sa), which would boost the year-over-year rate by one tenth to +2.2%. Our forecast reflects a sequentially smaller boost from higher used car and household furnishings prices (the latter of which relate to tariffs on Chinese imports). We also estimate a modest pullback in apparel prices—reflecting the trend towards earlier holiday promotions—and we expect another decline in medical care commodities prices due to continued prescription drug price freezes. We expect roughly 0.25% gains in the shelter categories, as alternative rent measures have continued to slow but vacancy rates remain low. We look for a 0.04% increase in headline CPI (mom sa), reflecting a drag from lower gasoline prices.
Thursday, December 13
  • 08:30 AM Import price index, November (consensus -1.0%, last +0.5%)
  • 08:30 AM Initial jobless claims, week ended December 8 (GS 235k, consensus 225k, last 231k); Continuing jobless claims, week ended December 1 (last 1,631k): We estimate jobless claims edged increased by 4k to 235k in the week ended December 8, following a 4k decline in the prior week. The uptrend in initial claims has continued (the current 4-week moving average is 228k), and we believe these increases reflect a legitimate sequential rise in layoff activity.
Friday, December 14
  • 08:30 AM Retail sales, November (GS +0.4%, consensus +0.1%, last +0.8%); Retail sales ex-auto, November (GS +0.5%, consensus +0.2%, last +0.7%); Retail sales ex-auto & gas, November (GS +0.7%, consensus +0.4%, +0.3%); Core retail sales, November (GS +0.7%, consensus +0.5%, last +0.3%): We estimate that core retail sales (ex-autos, gasoline, and building materials) rose at a solid pace in November (+0.7% mom sa), reflecting strong holiday sales trends, both online and at brick and mortar establishments. A post-hurricane rebound in restaurant sales is also likely to boost the ex-auto ex-gas category (GS +0.7%) and headline measures. We estimate a 0.4% increase in the headline measure and a 0.5% increase in the ex-auto measure.
  • 09:15 AM Industrial production, November (GS +0.7%, consensus +0.3%, last +0.1%); Manufacturing production, November (GS +0.3%, consensus +0.3%, last +0.3%); Capacity utilization, November (GS +78.8%, consensus +78.6%, last +78.4%): We estimate industrial production rose 0.7% in November, largely driven by rebounds in the utilities and auto manufacturing categories. We estimate capacity utilization rose four tenths to +78.8%.
  • 10:00 AM Business inventories, October (consensus +0.5%, last +0.3%)
Source: Goldman, DB, Morgan Stanley

https://www.zerohedge.com/news/2018...eek-ecb-brexit-vote-and-barrage-economic-data
 

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Sears Chairman Edward Lampert bids $4.6 billion to rescue iconic retailer from bankruptcy that would save 500 stores and 50,000 jobs, as creditors call for it to close for good

  • Lampert's ESL Investments Inc's offer calls for 500 stores to remain open and 50,000 workers employed
  • The 125-year-old retailer faces deadline this month to find a buyer to keep open
  • Lampert has been working on a bid since Sears filed for bankruptcy in October
  • Some of the company's creditors call for it to shut down to maximize repayment through going-out-of-business sales
https://www.dailymail.co.uk/news/ar...ampert-submits-bid-buy-bankrupt-retailer.html
 

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Ira Epstein's End of the Day Financial Video 12 10 2018
Ira Epstein


Published on Dec 10, 2018
 

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Ira Epstein's End of the Day Agriculture Video 12 10 2018
Ira Epstein


Published on Dec 10, 2018
 

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What's Bad for Goldman Sachs Is Good for America and the World.
maneco64


Published on Dec 11, 2018
 

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Share Talk Bulletin Board Heroes, Tuesday 11th December 2018
Share Talk


Published on Dec 11, 2018
A charting look at some of the most followed stocks on the London market, Zak Mir covers.

Allied Mind (ALM)
Amryt Pharma (AMYT)
Brave Bison Grp (BBSN)
Conroy Gld&nres (CGNR)
Earthport (EPO)
Forbidden Tech. (FBT)
Oilex (OEX)

@ZaksTradersCafe deductive reasoning as to what should happen next in terms of the newsflow regarding the companies listed in this video.

Zakmir.com is a purely journalistic website – Zak Mir is a member of the National Union of Journalists. There is no intention here of providing financial advice. It is recommended you seek an independent professional opinion before deciding whether or not to take any action with regard to anything written here.
 

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European Stocks, S&P Futures Surge On Fresh Trade War De-escalation Hopes


by Tyler Durden
Tue, 12/11/2018 - 07:23

After several days of precipitous market drops, and following yesterday's dramatic Apple-led intraday rebound, the biggest since February, S&P futures and European stock markets are sharply higher even as Asian shares slipped, as investor sentiment was boosted by fresh prospects of a thaw in the trade war following overnight news that Chinese Vice Premier Liu He discussed a timetable for trade talks with Treasury Secretary Steven Mnuchin, coupled with a report this morning from Bloomberg that China is moving toward cutting its trade-war tariffs on imported U.S.-made cars, a step which had previously been brandished by President Donald Trump as a concession won during trade talks in Argentina.



The big news overnight was a report according to China's Mofcom which said Vice Premier Liu He spoke by phone with US Treasury Secretary Mnuchin and Trade Representative Lighthizer in which both sides exchanged views on implementing consensus reached by their leaders, while they also exchanged views on pushing forward timetable and road map for next stage of trade discussions. The news - taken as a positive sign for trade war de-escalation - sent S&P futures as much as 20 points higher, shrugging off losses in the Asian benchmark and a drop in Japanese equities...



... while Europe's Stoxx 600 was trading at session highs, up over 1.5% as a result of a late catch up with yesterday's S&P rebound, led by THE construction, basic resources, builders and telecom sectors even with today's rebound it was still heading for its worst year since 2008.



European automakers also surged following the Bloomberg report that China is said to be moving on the US auto tariffs reduction that US President Trump has previously tweeted on. The proposal has been submitted for review, however, the decision has not been finalised and still could change.



Yet investors also have an eye on the continuing flap over Canada’s arrest of the chief financial officer of Huawei Technologies Co. And among a plethora of political risks, the U.K. is seeking reassurances from European partners over Brexit and fears linger over the possibility a French protest movement could escalate further.

After crashing on Monday to a 21 month low as Theresa May postponed a key Brexit vote in parliament, the pound staged a rally, trimming some of Monday's tumble as the UK Prime Minister tried to convince EU leaders to renegotiate the current Brexit deal.

The broader risk-on sentiment weakened the dollar weakened while Treasuries and European sovereign bonds fell.

With market having been gripped by a growing sense of panic, some - like Nomura's Charlie McElligott - have warned that the next move could be a furious rally higher as hedge funds scramble to recover some of their YTD losses in the last few days of 2018.

“Markets are highly volatile,” said hedge-fund pioneer Paul Tudor Jones at a conference in New York. “I can easily see a situation in 2019 where all the deleveraging that we’ve experienced in the last month and a half -- really, the last four or five months -- all that deleveraging gets reinvested back into the market.”

Meanwhile in India’s assets saw a choppy session, with stocks initially roiled by a surprise resignation of the central bank governor on Monday, before posting a recovery as traders mulled the implications for Prime Minister Narendra Modi of regional election results. Emerging-market currencies and shares edged higher. Oil climbed with most metals.

The dollar dropped versus most of its G-10 peers as concerns over a possible deterioration in U.S.-China trade talks persisted, while short-term positioning and U.K. wage data helped lift the pound from a 20-month low. The pound headed for its first gain in three days versus the dollar, having tumbled Monday to its lowest level since April 2017 after the U.K. Prime Minister opted to delay a key vote on her Brexit deal. The yen climbed against major global currencies as U.K. Prime Minister Theresa May’s Brexit vote deferral and weakness in equity markets deterred risk-taking

Brent (+0.9%) and WTI (+1.0%) prices rebounded, despite drifting lower at the start of the session following comments from Russian Energy Minister Novak that Russia plans to cut oil output by 50k-60k BPD in January which is significantly below the 228,000 BPD figure targeted as part of the latest OPEC deal. Novak adds that they will gradually reduce oil output. Separately, high level internal reports are to cut output by 139k BPD following the OPEC deal. Looking ahead today sees the API weekly data release, which saw a crude stocks build of 5.6mln last week. Gold has strengthened on a softer dollar, although the yellow metal is still off of the 5-month high of USD 1250.55/oz reached in the previous session. Separately, exploration by Rio Tinto in Australia has yet to find any economically viable copper ore veins; the site had been touted as being potentially rich in copper.

Expected data include PPIs and small-business optimism index. American Eagle and Pivotal Software are among companies reporting earnings.

Market Snapshot
  • S&P 500 futures up 0.7% to 2,662.00
  • MXAP down 0.3% to 147.99
  • MXAPJ up 0.1% to 477.40
  • Nikkei down 0.3% to 21,148.02
  • Topix down 0.9% to 1,575.31
  • Hang Seng Index up 0.07% to 25,771.67
  • Shanghai Composite up 0.4% to 2,594.09
  • Sensex up 0.2% to 35,044.71
  • Australia S&P/ASX 200 up 0.4% to 5,575.88
  • Kospi down 0.04% to 2,052.97
  • STOXX Europe 600 up 1.4% to 343.77
  • German 10Y yield rose 2.6 bps to 0.272%
  • Euro up 0.2% to $1.1383
  • Italian 10Y yield fell 2.6 bps to 2.74%
  • Spanish 10Y yield rose 1.7 bps to 1.46%
  • Brent futures up 0.5% to $60.45/bbl
  • Gold spot up 0.3% to $1,248.54
  • U.S. Dollar Index down 0.3% to 96.97
Top Overnight News from Bloomberg
  • Top Chinese and American trade officials spoke by phone, signaling that dialog between the two nations on trade issues is at least continuing despite a diplomatic row over the arrest of a senior Chinese businesswoman
  • Faced with a Brexit vote she can’t win, Theresa May appears to be gambling that running down the clock to a no-deal departure might change the arithmetic in Parliament
  • The European Union won’t allow U.K. Prime Minister Theresa May to reopen negotiations over the Brexit divorce deal -- but it could offer some of the reassurances she says she wants, officials said.
  • In India, Urjit Patel’s shock exit as governor of the central bank roiled financial markets already nervous about early election results showing Prime Minister Narendra Modi’s ruling party losing support in key states.
  • OPEC’s surprise output reduction has wrong-footed short-sellers. Hedge funds increased wagers against rising Brent crude prices for a 10th straight week in the period that ended last Tuesday and cut bullish bets on West Texas Intermediate oil to the lowest in almost six years
  • Allies of Republican Representative Mark Meadows are pressing for him to be Donald Trump’s new chief of staff as the White House weighed other serious contenders, including U.S. Trade Representative Robert Lighthizer, for the vital leadership post
  • Jerome Powell is ramping up Federal Reserve communication to build public trust and help insulate it from political attack
  • Indian assets swung as investors weighed Modi’s performance in the polls in states which are key to his reelection bid in 2019
Asian equity markets were mixed as sentiment in the region only found mild solace from the tech-led recovery on Wall St. ASX 200 (+0.4%) was firmer at the open in which outperformance in the tech sector helped the index pick itself up from around 2-year lows although this later stalled amid weakness in energy and financials, while Nikkei 225 (-0.3%) swung between gains and losses due to a lack of fresh drivers and an indecisive currency. Shanghai Comp. (+0.4) and Hang Seng (unch.) were also choppy on trade uncertainty amid lingering concerns the Huawei situation could spill-over to US-China trade talks, although there were reports that Vice Premier Liu spoke with US Treasury Secretary Mnuchin and US Trade Representative Lighthizer in which they exchanged views on pushing forward the timetable and road map for the next stages of trade discussions. Meanwhile, India markets were initially pressured following the shock resignation by RBI Governor Patel which many viewed to be in protest for government meddling, while the state assembly elections added to the woes for the government with the ruling BJP party on track to lose some states to the main opposition ahead of next year’s general election. Finally, 10yr JGBs were uneventful amid the indecisive risk tone and with participants following mixed results at the 30yr JGB auction.

Top Asian News
  • Macau Casino Stocks Jump as Analysts Flag December Revenue Hopes
  • Tencent Music Guides Pricing Around Midpoint in $1.2 Billion IPO
  • HNA Is Said to Tap Credit Suisse to Revive Sale of Pactera Unit
  • Goldman Sachs Buys Minority Stake in Turkey’s Hurriyet Emlak
  • India Rupee, Stocks, Bonds Drop as RBI Chief’s Exit Roils Market
Major European Indices are in the green [Euro Stoxx 50 +1.6%], with some outperformance seen in the SMI (+1.6%) bolstered by strong performance in index heavyweight Novartis (+1.6%) after the FDA approved Pear Therapeutics mobile application, which their Sandoz unit will be rolling out in the US. The SMI is also bolstered by LafargeHolcim (+3.6%), which is benefitting from outperformance in the materials sector seen today on the back of US and Chinese representatives planning the next steps in trade discussions. FTSE 100 (+1.3%) is lagging its peers, amidst currency effects from ongoing Brexit developments. Other notable equity movers are WPP (+6.5%) after an update to guidance, and Ashtead Group (+4.2%) after they announced full year expected results to be ahead of expectations.

Top European News
  • Amsterdam Brothels to Get a Review by City’s First Female Mayor
  • Danske to Sell Swedish Pension Assets to Polaris, Acathia
  • Vivendi Urges Telecom Italia to Hold Shareholders Meeting
  • Future of ‘Macronomics’ Tested by Violence on French Streets
  • Casino Debt Swaps Rise to Record as French Protests Add Pressure
In FX, the GBP is ahead of the pack in terms of broad G10 currency advances vs the Greenback as the DXY ducks back under the 97.000 level. Cable has bounced further from yesterday’s new 2018 low circa 1.2507, through the pre-official cancellation of the Brexit vote base around a big figure higher and just shy of 1.2640, mainly on short covering and consolidation, but also with the aid of strong UK average earnings.

Meanwhile, Eur/Gbp has retreated towards 0.9000 having cleared 0.9050 and topped out not too far from 0.9100.
  • EUR/CHF/SEK/NOK - The next best majors, with the single currency maintaining its recovery momentum off 1.1350 lows vs the Usd, but capped ahead of 1.1400 and perhaps conscious of hefty option interest between 1.1390 and the bog figure (2 bn). The Franc remains relatively firm within a 0.9905-0.9865 range and above 1.1250 vs the Eur, while the Scandi crowns have clawed back recent losses amidst an improvement in risk sentiment, and with the Sek awaiting Swedish inflation data on Wednesday after significantly stronger than forecast Norwegian CPI metrics yesterday. Eur/Nok is around 9.7000 and Eur/Sek back below 10.3000.
  • JPY - Also trying to pare losses vs the Dollar after extending its downturn from 112.25 to 113.35 and extremely close to a Fib level, but unable to rebound through 113.00 where heavy supply is touted and a 1.5 bn option expiry resides.
  • AUD/CAD/NZD - Mixed fortunes once again as the Aud reclaims 0.7200+ status vs its US counterpart, albeit just, on more promising vibes regarding US-China trade, which have also nudged the Aud/Nzd cross back up towards 1.0500, as the Kiwi losses sight of 0.6900 vs the Usd. Meanwhile, the Loonie is back on the 1.3400 handle and regaining some composure alongside crude prices.
  • EM - The Try continues to underperform on bearish technical rather than fresh fundamental impulses, but did glean support from another upbeat snapshot of Turkey’s current account to trade back near 5.3500 vs the Dollar from 5.4000+ at one stage.

In commodities, Brent (+0.9%) and WTI (+1.0%) prices have strengthened, despite drifting lower at the start of the session following comments from Russian Energy Minister Novak that Russia plans to cut oil output by 50k-60k BPD in January; which is significantly below the 228,000 BPD figure targeted as part of the latest OPEC deal. Novak adds that they will gradually reduce oil output. Separately, high level internal reports are to cut output by 139k BPD following the OPEC deal. Looking ahead today sees the API weekly data release, which saw a crude stocks build of 5.6mln last week. Gold has strengthened on a softer dollar, although the yellow metal is still off of the 5-month high of USD 1250.55/oz reached in the previous session. Separately, exploration by Rio Tinto in Australia has yet to find any economically viable copper ore veins; the site had been touted as being potentially rich in copper.

US Event Calendar
  • 8:30am: PPI Final Demand MoM, est. 0.0%, prior 0.6%; PPI Ex Food and Energy MoM, est. 0.1%, prior 0.5%
  • 8:30am: PPI Final Demand YoY, est. 2.5%, prior 2.9%; PPI Ex Food and Energy YoY, est. 2.5%, prior 2.6%
DB's Jim Reid concludes the overnight wrap
What I learnt about yesterday was that it seems easier to leave the solar system than the EU. Yes Voyager 2, which left the earth in 1977, has now waved goodbye to our solar system and entered interstellar space some 18 billion miles away. Ironically, at around the same time this was announced we discovered that the UK, which joined the EEC in 1973, is still struggling to pull away from the EU. With today’s long anticipated vote now postponed, it takes an intergalactic sized mind to work out the end game from here. Feel free to tell me if you have one.

To be fair, space debris was being flung at markets from all angles yesterday until the Starship US recovered from a difficult take-off and rallied to find a higher orbit to settle in. The S&P 500 closed +0.18%, while the DOW and NASDAQ gained +0.14% and +0.74% respectively. These three were down -1.89%, -2.08%, and -1.30% at the lows for the session. Brent crude oil fell -2.89% to $59.89 per barrel, just about erasing Friday’s post-Opec rally. There wasn’t a clear catalyst, though the softer Chinese import data we highlighted yesterday might have been a factor weighing on demand expectations. This also helped the dollar to gain +0.72% for its best session in a month. The energy sector led S&P 500 losses, trading down -1.62%, while the aerospace sector paced gains (+1.98%) as media outlets reported that President Trump will seek $750 billion in defence spending for next year’s budget, notably above the expected $700bn. Credit wasn’t immune with US HY credit spreads another +7bps wider while 10yr Treasuries finished +1.3bps higher. The 2s10s yield curve flattened by another -0.8bps, and back within one bp of its cyclical closing low. The recent moves continue to weigh on financials (-1.40%), which took the four-day move to -8.81% and the biggest since August 2015. The banks sub-index dropped -2.33% and is also now down -21.6% from the January highs and therefore has entered the definition of a bear market.

To be fair, all this really played second fiddle headlines wise to a dizzying day of merry-go-round and quite remarkable Brexit developments. Early yesterday morning we finally got confirmation just before 11.30am BST that the Parliament vote was being postponed with the PM telling Cabinet Tories that she would suffer a ‘notable’ loss should they go ahead with the vote on the current deal. This set the stage for PM May’s statement in the House of Commons. The PM confirmed that the vote had been deferred indefinitely, and said she would go back to Brussels to ask EU leaders for more assurances including some kind of power over the Irish backstop. It’s hard to see this as anything but stalling for time, given that the PM didn’t really offer any new information. Ultimately, the PM seems to be insisting on her own deal without offering an alternative. European Council President Tusk tweeted that “we will not renegotiate the deal, including the backstop,” so it’s quite difficult to see how this circle can be squared in the immediate term. Things got worse for the PM when House of Commons speaker Bercow suggested that the PM’s decision to delay the vote is “discourteous” and that the vote could still go ahead. Quite incredible scenes, and the odds of a no-confidence vote have certainly risen substantially. There will be an emergency debate in the House on Brexit today but with May travelling to the continent to see Merkel and Rutte, this will likely be a point scoring one rather than a gathering of much substance.

Sterling looked helplessly on as the PM spoke and ultimately ended up falling -1.30% and to the lowest since April 2017. Though overshadowed by the drama in Parliament, it’s worth noting that earlier in the day the ECJ confirmed that the UK can unilaterally reverse the Brexit process if it so chooses. Gilts rallied with that move for Sterling with 10-year and 30-year yields dropping -6.6bps and -12.3bps respectively. The FTSE 100 (-0.83%) outperformed other European markets (STOXX 600 -1.87%) thanks to the Sterling move while other bond markets in Europe were slightly stronger, with bund yields -0.4bps lower. Meanwhile IG and HY cash credit spreads in Europe finished +1.0bps and +8bps wider respectively.

This morning in Asia markets are trading mixed with the Nikkei (-0.41%) and the Hang Seng (-0.08%) trading lower while the Kospi (+0.07%) and Shanghai Comp (+0.28%) are up. However, the markets are off their lows as sentiment seems to have been aided to an extent by the overnight statement from China’s Ministry of Commerce that China’s Vice Premier Liu He, US Treasury Secretary Steven Mnuchin and US Trade Representative Robert Lighthizer spoke overnight on the phone exchanging views on the timetable and road map of future trade talks. No further details were provided. However, this should be slightly reassuring for markets as it shows that the US-China trade talks haven't fallen apart in the aftermath of the Huawei CFO’s arrest. Meanwhile, it’s worth adding that the Indian equity market is down c. -1% this morning following the resignation yesterday of Central Bank governor Urjit Patel. There was some talk a few weeks ago about Patel potentially resigning, however this appeared to die down with the RBI board meeting last month and a shift in stance to a slightly more dovish leaning last week. The news yesterday therefore was a bit of a surprise. The Indian Rupee is down -1.2% this morning and the benchmark 10y sovereign bond yield is up by c. +10bps. However, sentiment in Indian markets also seems to be impacted by the election results in key states where the ruling party is seeing losses ahead of next year’s national elections. Elsewhere, futures on S&P 500 are down -0.28%.

As we go to print we have our usual daily Italian headlines. Repubblica are reporting that PM Conte is aiming for a 2.1% deficit and the EU is demanding 1.95%. However, Messaggero is reporting that Salvini and Di Maio are refusing to go below 2.2%. It seems like there is still work to be done here ahead of the planned EU council meeting on 13-14 December, where Italy is expected to table its fresh budget.

After the European close yesterday our European economists published their 2019 outlook yesterday (available here ). They downgraded their growth and inflation forecasts by 0.3pp and 0.2pp to 1.4% and 1.3%, respectively. The moves reflect weaker external and domestic conditions, though the real key will be the big risks around Brexit, Italy, and the trade war. If any of these events resolve negatively, they could weigh further on growth, though they also have the scope to provide upside to the forecast if they end up reaching positive conclusions. Politics will remain a focus, with European Parliament elections, and possibly also elections in Germany, Spain, and perhaps even Italy. As a result of all this, they now expect the first ECB policy rate hike to be delayed to the first quarter of 2020.

Staying with Europe, also after the close yesterday, French President Macron gave a public address to placate the “yellow vest” groups who have protested his policies in recent weeks. He announced a tax exemption to incentivise employers to give year-end bonuses, ended taxes on overtime and small pensions, and raised the minimum wage to be financed with public funds.

The measures represent an acceleration of plans already scheduled to be implemented over the next few years, though it presents downside risks to the country’s 2.8% deficit target for next year. Our economists already thought the target would slip, so these measures ratify their view. The wave of populism continues to roil economic policies, resulting in looser fiscal policies, and the trend looks set to continue.

Coming back to the UK, while the Pound didn’t immediately react a great deal to it, yesterday’s data releases in the UK did little to improve the mood. That was particularly the case with the October industrial production (-0.6% mom vs. +0.1% expected) and manufacturing (-0.9% mom vs. 0.0% expected) production prints. There was better news at least with the October monthly GDP reading, which rose +0.1% mom as expected, putting the 3M/3M monthly GDP change at +0.4%.

As for the other data that was out yesterday, the Sentix investor confidence for the Euro Area declined 9.1pts and far more than expected to -0.3 (vs. +8.3 expected). That’s actually the lowest reading since December 2014 and the fourth consecutive monthly decline. In the US, the only data release yesterday was the October JOLTS report, which showed job openings rising slightly to 7.079m and more or less in line with the consensus.

In terms of the day ahead, data releases in Europe this morning include Q3 payrolls in France, October and November employment stats in the UK (average weekly earnings and the unemployment rate expected to hold steady at +3.0% yoy and +4.1% respectively) and the December ZEW survey in Germany. In the US we’ve got the November NFIB small business optimism reading followed by the November PPI report (headline PPI expected to be flat mom and ex food and energy rise +0.1% mom). Away from that the ECB’s Guindos is due to speak this morning in Frankfurt before Italian Finance Minister Tria speaks at a conference in Rome. Worth flagging also are election results in India for five states which will likely be seen as an important test for PM Modi ahead of next year’s election. Also of note is Google CEO Pichai testifying before the US House Judiciary Committee. It’s expected that election meddling and privacy issues will be top of the agenda.

https://www.zerohedge.com/news/2018...res-surge-fresh-trade-war-de-escalation-hopes
 

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More than 10,000 Verizon employees leave the company after agreeing voluntary buyouts of up to 60 weeks' pay as the telecomm giant prepares for 5G technology to take center stage

  • The US telecomm group said it has accepted 10,400 employees for the buyout
  • They get up to 60 weeks' pay and benefits depending on their length of service
  • The company is striving to better position itself for the coming of 5G technology
https://www.dailymail.co.uk/news/ar...uts-10-000-workers-buyouts-restructuring.html
 

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'F*** management, f*** this job and f*** Walmart.' Teen employee is CHEERED by shoppers as he hijacks the intercom to announce his resignation in an expletive-filled rant

  • This is the moment a Canadian teen quits his Walmart job over the intercom
  • Jackson Racicot, 17, said 'Attention all shoppers' before airing his grievances
  • An audible cheer rang out across the store as he sounded off on the microphone
  • His video has since gone viral and many have commended his attitude
https://www.dailymail.co.uk/news/ar...cks-intercom-announcing-resignation-rant.html
 

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2019 Gold, Recession Talk and Peace
Junius Maltby


Published on Dec 11, 2018
Greetings my friends! Lets discuss some current events and please stay until the end. I hope you are all well!
 

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Ira Epstein's End of the Day Financial Video 12 11 2018
Ira Epstein


Published on Dec 11, 2018
 

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Ira Epstein's End of the Day Agriculture Video 12 11 2018
Ira Epstein


Published on Dec 11, 2018
 

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The Truth About Inflation and Who Is Really Behind It.
maneco64


Published on Dec 12, 2018
 

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Share Talk Bulletin Board Heroes, Wednesday 12th December 2018
Share Talk


Published on Dec 12, 2018
A charting look at some of the most followed stocks on the London market, Zak Mir covers.

Anglesey Mining (AYM)
Eurasia Mining (EUA)
GCM Resources (GCM)
Obtala (OBT)
Rose Petroleum (ROSE)
Rockrose Energy (RRE)
Salvarx Grp Plc (SALV)

@ZaksTradersCafe deductive reasoning as to what should happen next in terms of the newsflow regarding the companies listed in this video.

Zakmir.com is a purely journalistic website – Zak Mir is a member of the National Union of Journalists. There is no intention here of providing financial advice. It is recommended you seek an independent professional opinion before deciding whether or not to take any action with regard to anything written here.
 

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Global Markets, US Futures Surge On Renewed Trade Hopes


by Tyler Durden
Wed, 12/12/2018 - 07:04


In a carbon copy of yesterday's early session, global stocks and US equity futures rallied amid renewed optimism of a thawing in U.S.-China trade relations after President Trump said he would intervene in Huawei case to get a trade deal with China and was ready to meet with Xi for a second time. The question now is whether the early rally will once again fizzle as it did 24 hours ago.



The pound strengthened as traders took news that Theresa May will face a vote of confidence from the Conservative Party she leads in stride, with sterling gaining as several ministers rushed to back her and she vowed to contest the vote “with everything I’ve got", prompting analysts to conclude she may prevail.



Global markets were solidly in the green, with Asian and European shares enjoying big gains after Trump said talks were taking place with Beijing by phone and he would not raise tariffs on Chinese imports until he was sure about a deal. Trump also said he would intervene in the Justice Department’s case against a top executive at China’s Huawei Technologies if it would serve national security interests or help close a trade deal, after a Canadian court on Tuesday granted bail to the executive in a move that could help placate Chinese officials angered by her arrest.

S&P futures were 0.7% higher in a rerun of Tuesday's morning session, buoyed by more Trump rhetoric after the president told Reuters that it would be a mistake if the Federal Reserve raises interest rates when it meets next week, as it is expected to do, continuing his criticism of the U.S. central bank. “I think that would be foolish, but what can I say?” Trump told Reuters in an interview. Trump said he needed the flexibility of lower interest rates to support the broader U.S. economy as he fights a growing trade battle against China, and potentially other countries.

“You have to understand, we’re fighting some trade battles and we’re winning. But I need accommodation too,” he said.



In Asia, Japan’s Nikkei led the way in Asia with a jump of 2.2% while Shanghai blue chips rose a more modest 0.3%. London, Frankfurt and Paris then gained between 0.4 and 0.8 percent to push Europe higher.

“We are seeing risk sentiment stabilizing a bit,” said Societe Generale strategist Alvin Tan. “Firstly we had news that China was considering reducing tariffs on us car, then the Huawei CFO was released on bail and then Trump said could he intervene in the case if it helped secure a trade deal.”

Of course, having been repeatedly disappointed before, analysts were still being careful to not get too optimistic about prospects of a trade agreement. ING said the Huawei case made it increasingly obvious that the China-US trade war is about the exchange of technology, and there were also reports the United States would release evidence this week detailing Chinese hacking and economic espionage.

“Even if this (auto) step is taken it just removes what was a retaliatory measure to begin with,” noted ANZ economist David Plank. “Whatever the case, market price action is somewhat of a chop-fest, right now, as it swings around on each new headline."

On Tuesday, markets had also been jolted when Trump threatened to shut down the government over funding for a wall he has promised to build on the southern border with Mexico; look for more drama out of the White House.

Meanwhile the Brexit drama may be approaching an endgame of sorts, when as noted above, the pound fell to 20-month lows overnight after lawmakers in May’s Conservative party gathered enough support to trigger a no-confidence vote in her leadership. But it stabilized as some investors bet that May would win Wednesday’s vote and in the process isolate opponents in her party who want a clean, sudden break from the EU. Nevertheless, uncertainty over the secret ballot capped gains, keeping the pound only just above $1.25, having shed 1.9 percent in the previous two sessions to a trough of $1.2483.

The vote of no-confidence will be held between 18.00GMT and 20.00GMT tonight, with results are to be announced at 21.00GMT. UK PM May said a new leader would have to extend or rescind Article 50, while adding she believes a deal with EU is attainable and within UK’s grasp after meeting with EU leaders yesterday. Chairman of 1922 committee Brady says that if a leadership contest were to occur, they would want to finish the parliamentary stage before Christmas. Meanwhile, ITV's Peston tweeted that MP George Freeman appears to be saying that PM May is over, but that Tories have to find a way to replace her temporarily without a leadership election. Elsewhere, UK Shadow Brexit Minister Starmer said the opposition Labour party will call a no-confidence vote “before Christmas”.

“The market is concerned that May could be replaced by a Brexit-supporter, increasing the chance of a no-deal scenario,” said Rodrigo Catril, a senior FX strategist at NAB.

The dollar weakened versus most of its G-10 peers, as the yen slipped as demand for havens waned on signs the U.S.-China trade dispute may be easing. The recent slide in U.S. yields means that the prospect for “broad- based” yen appreciation appears to be increasing every day, Morgan Stanley strategists wrote in a note. The Aussie rose a second day as the offshore yuan climbed with Asian and European equities and U.S. stock futures.

Investors are also looking ahead to the U.S CPI later on Wednesday where an expected slowdown in headline inflation would only reinforce speculation of fewer rate hikes from the Federal Reserve.

Meanwhile, in France, the spread between government bond yields and those in Germany were about the highest since the 2017 election. France’s Prime Minister Edouard Philippe confirmed that President Emmanuel Macron’s efforts to meet protester demands will have an impact on the country’s deficit, with the situation causing a new headache for the EU in its talks over the Italian budget.

Elsewhere, oil jumped on the easing trade war rhetoric and after the API oil report signaled a far greater than expected, 10 million draw in crude inventories. Treasuries edged lower after Trump warned the Federal Reserve against hiking interest rates this month. India’s bonds rallied after an ally of Prime Minister Narendra Modi was named as the new central bank chief. In terms of metals, spot gold (+0.1%) remains steady as the dollar index remains within a tight range while copper traded sideways near weekly highs in light of the improvement in risk sentiment.

Elsewhere, Shanghai steel snapped a three-day losing streak amid talks of production cuts at the top steelmaking city, Tangshan.

Expected data include mortgage applications and inflation. Nordson is reporting earnings

Market Snapshot

  • S&P 500 futures up 0.8% to 2,662.00
  • STOXX Europe 600 up 0.9% to 347.15
  • MXAP up 1.5% to 150.16
  • MXAPJ up 1.3% to 483.90
  • Nikkei up 2.2% to 21,602.75
  • Topix up 2% to 1,606.61
  • Hang Seng Index up 1.6% to 26,186.71
  • Shanghai Composite up 0.3% to 2,602.15
  • Sensex up 1.8% to 35,769.11
  • Australia S&P/ASX 200 up 1.4% to 5,653.50
  • Kospi up 1.4% to 2,082.57
  • German 10Y yield rose 0.9 bps to 0.241%
  • Euro up 0.1% to $1.1329
  • Italian 10Y yield rose 1.6 bps to 2.756%
  • Spanish 10Y yield fell 1.3 bps to 1.424%
  • Brent futures up 1.7% to $61.22/bbl
  • Gold spot up 0.1% to $1,244.11
  • U.S. Dollar Index unchanged at 97.38

Top Overnight News
  • Theresa May is fighting for her job as British prime minister after being told she will face a vote of no confidence in her leadership, throwing the U.K. into fresh turmoil and Brexit into disarray
  • Progress toward easing the steep tariffs China imposed on U.S. vehicle imports this year lifted carmaker stocks across the globe. President Trump says he’s willing to meet China’s leader Xi again as he hailed the country for resuming soybean purchases
  • President Trump said he would intervene in the case of Huawei CFO Meng if it would help win a trade deal with China
  • The European Commission took a step toward meeting the financial industry’s demands for a so-called equivalence decision that would help prevent a derivatives-market rupture in a no-deal Brexit
  • President Trump tells Reuters it would be a mistake if the Fed increases interest rates when it meets next week, with the flexibility of lower rates needed to support the U.S. economy amid the trade war with China
  • Trump staged a confrontation Tuesday with the two top congressional Democrats before television cameras in the Oval Office as the dispute over funding for his border wall turned publicly acrimonious
  • As Italian Prime Minister Giuseppe Conte prepares to present his budget in Brussels on Wednesday, one of the main powers behind Italy’s government, League leader Matteo Salvini, may be looking beyond the crisis a failed spending plan could trigger and toward new elections early next year, la Repubblica reported; Salvini said the report on early elections was fake news, according to newswire Ansa
  • France’s government will face a no-confidence vote in parliament Thursday, according to AFP
  • Sovereign bonds and stocks rallied in India on optimism of a more dovish monetary policy after the government named former bureaucrat Shaktikanta Das as the central bank chief. The rupee weakened amid investor concerns about central bank independence.
Asian stocks traded higher across the board with sentiment underpinned as news flow spurred optimism regarding US-China trade relations, including reports that China submitted a proposal for review that would cut tariffs on imports of US autos to 15% from 40%. ASX 200 (+1.4%) and Nikkei 225 (+2.2%) gained from the open with energy and tech the front-runners in Australia, while the Japanese benchmark outperformed as it benefitted from USD/JPY’s slipstream and with the BoJ said to have purchased a record JPY 6tln of ETFs so far this year.

Elsewhere, Hang Seng (+1.6%) and Shanghai Comp. (+0.3%) were positive on hopes of a potential tariff cut on US autos and encouraging comments from US President Trump, while news that Huawei’s CFO was released on bail and the recent better than expected lending data from China also added to the optimism. Finally, 10yr JGBs are subdued with demand dampened by the gains in stocks and amid spill-over weakness from T-notes.

Top Asian News
  • Tencent Music Sets $1.1 Billion IPO at Bottom as Markets Gyrate
  • China Said to Near Megamerger of ChemChina, Sinochem Group
  • Citi Hires HSBC Veteran to Head Thai Corporate, Investment Bank
  • Hitachi to Buy ABB’s Power-Grid Unit for $7 Billion, Nikkei Says
  • Vietnam Is Coming Out on Top in the U.S.-China Trade War
European equities are higher across the board (Euro Stoxx 50 +1.3%) following the strong performance experienced in Asia overnight after sentiment was underpinned as news flow spurred optimism regarding a US-China trade deal. France’s CAC 40 (+1.6%) outperforms its peers on the back of shares in Kering (+2.0%) amid an upgrade at Deutsche Bank and Pernod Ricard (+3.6%) after upbeat comments from activist investor Elliott on the Co. Meanwhile, Spain’s IBEX 35 (+0.80%) marginally lags peers as the index is weighed on by shares in heavyweight Inditex (-4.0%) following disappointing earnings. Moving on, sectors are experiencing broad-based gains with marginal outperformance in utility names. In terms of notable movers, auto names are performing particularly well (Stoxx 600 Auto & Parts +1.5%) in a continuation of the positive momentum from potential Chinese tariffs cuts on US autos from 40% to 15%. Meanwhile, Dixons Carphone (-8.2%) shares fell in excess of 10% at one point after the company downgraded interim dividend guidance alongside expectations for higher net debt.

Top European News
  • Italy’s Salvini May Seek New Election as Budget Fuels Crisis
  • Inditex Resists Discount Pressure, Making Sales Target Harder
  • Sainsbury, Asda Seek More Time to Handle Regulator’s Review
  • Siemens, Alstom to Sell Signaling, Trains for Rail Merger
  • Thyssenkrupp Supervisory Board Said to Favor Merz as Chair
In FX, GBP is not just the most volatile major, but displaying considerable resilience (or complacency?) in the face of perhaps the biggest Brexit hurdle in the form of a challenge to UK PM May’s leadership, not to mention all the political uncertainty if she fails to survive. However, Cable has recovered well from new ytd lows circa 1.2478 and almost reached 1.2550 before waning again as a number of high profile Cabinet members voiced public support for the current Conservative head in the run up to tonight’s confidence vote. A hefty 1 bn option expiry at the 1.2500 strike may be exerting a gravitational pull, while Eur/Gbp is pivoting 0.9950, as the single currency continues to weather its own storm via Italian and French budget excesses.

  • EUR/AUD/CAD/CHF/JPY:All narrowly mixed vs a generally firmer Greenback (DXY just off a fresh 97.500 recent peak) and the ongoing revival in broad risk sentiment amidst heightened hopes of a tangible improvement in US-China trade relations. Eur/Usd has survived another, deeper test of 1.1300 support where a massive 2.4 bn expiries reside and are perhaps helping to keep the headline pair cushioned against Italian/French deficit issues ahead of Thursday’s ECB policy meeting. Meanwhile, the Aud and Loonie are feeding off the aforementioned improved risk appetite, with the former holding above 0.7200 and latter rebounding a bit further from 1.3400+ lows with the added incentive of rebounding crude prices. The Franc is meandering in a tight range between 0.9950-20 and encircling 1.1250 vs the Eur awaiting the final 2018 SNB Quarterly review tomorrow, while Usd/Jpy is equally restrained within 113.50-30 trading parameters with the topside said to be laden with Japanese offers.
  • EM: In contrast to the Sek, firmer than expected SA CPI has underpinned the Zar around 14.3100 vs the Dollar, but the Rand may also be drawing momentum from option-related flows alongside bullish technical impulses as 1 bn expiries roll off at the 14.5000 strike today

In commodities, WTI (+1.8%) and Brent (+1.7%) trade with firm gains amid the improvement in the risk sentiment as US-Sino trade discussion seem to be on track, with US President Trump expressing optimism via Twitter yesterday. Furthermore, prices may be underpinned in light of last night’s API crude inventories which showed a much wider-than-expected draw of 10.18mln barrels vs. the expected draw of 3.0mln barrels. Traders will be eyeing this afternoon’s weekly DoE inventory release for a fresh catalyst (alongside production numbers) in which crude inventories are expected to decrease by 3.0mln barrels. In terms of metals, spot gold (+0.1%) remains steady as the dollar index remains within a tight range while copper traded sideways near weekly highs in light of the improvement in risk sentiment. Elsewhere, Shanghai steel snapped a three-day losing streak amid talks of production cuts at the top steelmaking city, Tangshan.

Looking at the day ahead, in the US it’s all eyes on the aforementioned November CPI report. Also due out is the November monthly budget statement. Away from all that we’re expecting to hear Italian PM Conte today when he speaks to Italy’s lower house of parliament. The European Parliament is also due to vote on the draft free-trade agreement between the US and Japan, German Chancellor Merkel answers questions from members of the Bundestag and the WTO general council two-day meeting begins. OPEC’s monthly oil market report is probably also worth a close watch.

US Event Calendar
  • 7am: MBA Mortgage Applications, prior 2.0%
  • 8:30am: US CPI MoM, est. 0.0%, prior 0.3%; Ex Food and Energy MoM, est. 0.2%, prior 0.2%
  • 8:30am: US CPI YoY, est. 2.2%, prior 2.5%; CPI Ex Food and Energy YoY, est. 2.2%, prior 2.1%
  • 8:30am: Real Avg Weekly Earnings YoY, prior 0.88%; Real Avg Hourly Earning YoY, prior 0.7%
  • 2pm: Monthly Budget Statement, est. $199.0b deficit, prior $100.5b deficit

DB's Jim Reid concludes the overnight wrap
I’m in Paris for a couple of days where I last night nervously watched a make or break Liverpool game (make thankfully) in the Champions League in my hotel room. It was stressful enough but half way through the first half a member of the hotel staff knocked on the door and came in and said “turn down, turn down”. I said “sorry, sorry” and ushered him out of my room as it was too tense to have my eyes averted for long. I figured that because both my ears are blocked with infections I’d been watching it unintentionally loud and annoyed my neighbour.

So I carried on watching it at low volume, barely able to hear the commentary or the atmosphere. It wasn’t until I went to bed after the match that I realised my bed had about 15 pillows on it and hadn’t been “turned down”. It then dawned on me that the guy wanted to do my bed and that because I’d misunderstood and tried to get rid of him ASAP, I’d ended up watching more than half the game at an inaudible volume. At least I think that’s why!!

From vol(ume) to vol(altility) with yesterday seeing another notable swing in the US after Monday’s large intra-day recovery. Markets closed flatish but early strong momentum faded fast after a confrontational meeting in the White House between President Trump and congressional Democrats. The S&P 500 and NASDAQ opened up +1.37% and 1.56%, but fell around noon in New York (down just over -0.5% at the lows) and ultimately closed -0.04% and +0.16% respectively. The eventful meeting at the White House ended in acrimony, with both sides positioning ahead of an increasingly-likely shutdown when the federal budget lapses later this month. Such rancour does not look positive for the odds of economically-positive legislation next year, whether via infrastructure, further tax reform, or something else.

This morning in Asia markets are largely trading higher with the Nikkei (+2.02%), Hang Seng (+1.54%), Shanghai Comp (+0.20%) and Kospi (+1.33%) all up as US President Trump expressed optimism over the US-China trade talks in an overnight interview with Reuters. He said that China is buying a "tremendous amount" of US soybeans and trade discussions with Beijing are underway by telephone, with more meetings likely between US and Chinese officials while adding that he’s also willing to meet with China’s Xi Jinping again on trade if needed. Sentiment is also being aided to some extent by the overnight granting of bail to Huawei’s CFO by the Canadian court and President Trump’s suggesting, in the same interview with Reuters, that he might consider intervening in Huawei case if it would serve national security and help with a China trade deal. Elsewhere, futures on the S&P 500 are up +0.27% and the 2s10s treasury curve has flattened further to +10.8. In commodities, Chicago board Soybean futures are up +0.38%, back to the levels last seen in August.

Earlier yesterday, European markets were playing catch up with the US from Monday, however broader sentiment was helped by the news that a proposal had been submitted to China’s Cabinet – which is to be reviewed over the next couple of days – to reduce tariffs on US made cars to 15% from 40% currently.

It’s worth noting that the 40% tariff was a retaliatory move – so this is just a move back to the original tariff rate, but automakers nevertheless rallied strongly. The autos indexes in Europe and the US gained +2.34% and +0.61% respectively. Anyhow EM equities also climbed on the news, with the MSCI EM index ending +0.21%. Gold (-0.12%) nudged lower while WTI Oil (+1.88%) climbed back to around$52/bbl. Credit also had a better day with US HY cash spreads finishing -6bps tighter. Meanwhile 10-yearTreasuries yields rose +2.0bps with the 2s10s curve another -1.7bps flatter and at 11.1bps is now at a new closing low for this cycle (the intraday low is still 9.7bps from last Tuesday).

As for Brexit, well it was always going to be hard to top Monday for headlines, however constant speculation from various reputable sources suggesting that 48 letters had been submitted and therefore triggering a no confidence vote in PM May kept the story alive. This still hasn’t been confirmed as it requires the chairman of the 1922 Committee of backbenchers Graham Brady to officially announce that enough letters have been submitted. The BBC and ITV reported that Mr. Brady has asked to see Mrs. May after PMQs at lunchtime today which sounds ominous. However, this was subsequently contradicted by the City AM’s politics reporter on Twitter citing a source. So, still a lot of uncertainty over this. The pound quickly sold off after speculation spread to end last night -0.57% (and down -1.18% from the day’s highs) and is up +0.17% in early trade this morning.

DB’s Oliver Harvey highlighted in his note ( link ) yesterday that the probability of a vote of no confidence had risen following Monday’s debacle. Oliver views this as a negative for markets. Due to a lack of internal consensus within the parliamentary Conservative Party on a future leader, a vote by the party membership on two candidates is still likely to follow, with a hard or no deal Brexit MP the probable winner. It may be possible for parliament to block a no deal outcome in these circumstances but the political process is far from straightforward.

There’s plenty going on across the Channel too, where French government ministers spent much of yesterday defending President Macron’s new spending measures and tax cuts. The suggestion is that the measures could bring France’s headline deficit to 3.5% of GDP. For context, France’s government had previously expected the deficit to hit 2.8% next year versus 2.6% this year. As we know from the ongoing Italy saga the limit imposed on countries in the Eurozone is 3%. The stimulative impacts of the measures may however put the deficit in the 3-3.5% range. French assets were fairly well behaved all things considered. The CAC closed +2.35% and rose in line with other European markets while 10y OAT yields rose +1.9bps – a fairly modest move. Bunds finished-1.4bps lower at 0.23% and a new 18-month low.

In other news, yesterday’s November PPI report was one for the hawks with the core reading of +0.3% mom coming in well ahead of the +0.1% expected. More importantly, the health care component printed at +0.27% mom which in turn lifted the annual rate just over three-tenths to +1.71% yoy and so unwinding some of the post-September decline. This is important as the health care component from the PPI report feeds into core PCE. So it would appear that there are now upside risks to the November PCE report.

The above dovetails nicely into today’s big data highlight – the November CPI report in the US. As we go to print, the consensus for the core measure is for +0.2% mom which should be enough to nudge up the annual rate by one-tenth to +2.2% yoy. The headline – where the consensus is at 0.0% mom – should be depressed by the impact of a big move in energy prices in November. Retail automotive gas prices are down -16.6% since their recent October peak. Our US economists are forecasting an unrounded +0.22% mom core CPI reading and assuming this is close to the mark, then the annual rate would rise to +2.25% yoy, and therefore undo about half of the slide since the July post-recession peak of +2.33%.

As for the other data that was out yesterday, in the UK the October unemployment rate was confirmed as holding steady at 4.1%, however there was a nice surprise for the pound with basic weekly earnings growth coming in at +3.3% yoy (vs. +3.2% expected) for the three months to October. That’s the fastest pace of wage growth in over ten years. Sterling climbed to as high as +0.60% mid-morning but gave all that up in the afternoon session seemingly as the focused turned back to the May/Brexit debacle as mentioned above. In Germany, the ZEW survey was mixed, as the current situation assessment fell around 13pts to 45.3 and the forward-looking expectations index rose 6.6pts to -17.5. Still, that’s the ninth consecutive negative print for the expectations index, which is the longest such stretch since 2008-2009.

As for the day ahead, it’s fairly quiet for data this morning in Europe with only the Euro Area industrial production print for October due. This afternoon in the US it’s all eyes on the aforementioned November CPI report. Also due out is the November monthly budget statement. Away from all that we’re expecting to hear Italian PM Conte today when he speaks to Italy’s lower house of parliament. The European Parliament is also due to vote on the draft free-trade agreement between the US and Japan, German Chancellor Merkel answers questions from members of the Bundestag and the WTO general council two-day meeting begins. OPEC’s monthly oil market report is probably also worth a close watch.

https://www.zerohedge.com/news/2018-12-12/global-markets-us-futures-surge-renewed-trade-hopes
 

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Ira Epstein's End of the Day Agriculture Video 12 12 2018
Ira Epstein


Published on Dec 12, 2018
 

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The Bank of England Promises to Indebt the Public in Perpetuity.
maneco64


Published on Dec 13, 2018
 

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Share Talk Bulletin Board Heroes, Thursday 13th December 2018
Share Talk


Published on Dec 13, 2018
A charting look at some of the most followed stocks on the London market, Zak Mir covers.

Angus Energy (ANGS)
Lonmin (LMI)
Oilex (OEX)
Predator Oil (PRD)
Sound Energy (SOU)
Thomas Cook (TCG)

@ZaksTradersCafe deductive reasoning as to what should happen next in terms of the newsflow regarding the companies listed in this video.

Zakmir.com is a purely journalistic website – Zak Mir is a member of the National Union of Journalists. There is no intention here of providing financial advice. It is recommended you seek an independent professional opinion before deciding whether or not to take any action with regard to anything written here.
 

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Rally Fizzles: Europe, US Turn Red After Warnings From ECB, PBOC


by Tyler Durden
Thu, 12/13/2018 - 07:17


With algos trying to force a rally for the third day in a row, the "STFR" crowd arrived early as stocks in Europe and S&P futures surrendered early gains as investors initially bought on the latest optimistic developments in America-China trade relations, which however turned into selling after a BBG report that the ECB - as everyone had already expected - will lower its inflation forecast for 2019 when it publishes an updated outlook on Thursday.



Europe's Stoxx 600 declines were led by energy shares as oil slide back under $51, offsetting gains in raw materials as the index erased an early advance to turn lower. Hong Kong and Chinese stocks outperformed as equities across Asia continued their rebound ignoring news that a second Canadian citizen had "disappeared" in China.



In the U.K., gilts climbed and the FTSE 100 edged lower after May won a vote of confidence in her leadership of the Conservative Party, though it’s likely to be only a temporary reprieve as the embattled premier faces hardened opposition to her Brexit deal.

Earlier, the Nikkei and other Asian stocks had pushed roughly 1 percent higher ahead of several central bank meetings including a landmark one for the ECB which was set to end its quantitative easing program. Gains were concentrated in Chinese shares, with Chinese blue-chips up 1.5 percent and Hong Kong’s Hang Seng index gaining 1.1 percent. Japan’s Nikkei stock index ended 1 percent higher, while Australian shares gained 0.1 percent.

“All eyes will be on the ECB,” said Morgan Stanley FX strategist Hans Redeker. “It may revise its growth projections lower but continue to prepare the markets for allowing QE to end.”

Futures on the S&P 500 initially rose after news broke that Chinese importers have bought U.S. soybeans, though they since hit an air pocket and dropped after US traders got to their desks and after PBOC Governor Yi Gang warned that China's economy faces rising downward pressure. And since the market is entirely controlled by algos, spoos hit yesterday's lows before rebounding.



Investor optimism was boosted on Wednesday after China resumed purchases of American soybeans and reiterated its officials were in close contact with U.S. counterparts on negotiating details of a broader deal, while considering revising the controversial "Made in China 2025" strategy. Still, worries for global relations remain after China detained a second citizen of Canada for questioning, further heightening tensions between those two countries. Also on Wednesday, Trump administration officials signaled that Beijing will have to do more to end the tariff war.

Yoshinori Shigemi, a global market strategist at JPMorgan Asset Management, cautioned against reading too much into trade headlines: “U.S.-China trade negotiations are subject to very high uncertainty. So lots of headlines come and go, and markets come and go also,” he said.

“We have to see the evolution of this negotiation.”

US Treasuries popped higher as NBC suggested that Trump is increasingly concerned about impeachment, while in Europe Italy's BTPs resume their upward trend, breaking through 126.00 after PM Conte confirmed that Italy's proposed budget deficit has been cut to just the laughably precise 2.04% in Italy's latest concession to the European Commission.

Two-year Italian bond yields tumbled to 0.51 percent which took them back to where they were before a late May eruption of tensions triggered the worst day for short-term Italian debt in 25 years. Italy’s five-year and 10-year government bond yields dropped to their lowest level in 2 1/2 months and the closely watched Italy/Germany 10-year bond yield spread improved to its tightest since the start of October.



“I think the momentum can carry on in the near term as we have a number of supportive factors for Italian debt beyond just the hopes the budget deal can be reached,” said Commerzbank rates strategist Christoph Rieger.

The euro was steady as the ECB was said to be lowering its inflation forecast for 2019 in an outlook due Thursday, while the dollar was little changed. The pound added to its advance after May survived an attempted ouster, although little has changed on the ongoing Brexit impasse.

The Norwegian krone was the biggest gainer versus the dollar as the central bank maintained its key rate but said it sees a hike “most likely” in March 2019. The yen weakened against all of its major peers as demand for haven assets waned amid signs of a further thaw in U.S.-China trade ties.

On Brexit UK Prime Minister May was heading to an EU summit in Brussels following her confidence vote win to try and get some additional concessions on the controversial Irish border aspect of the agreement to placate rebels within her own party and Ulster unionist allies. Markets reckon May’s continued premiership for now makes a ‘no deal’ Brexit less likely at the margins and her survival takes at least some of the immediate headline risk out of the market – even if the Brexit impasse is really no clearer.

Elsewhere, WTI oil slipped below $51 a barrel as a smaller-than-expected decline in U.S. crude stockpiles renewed fears a global glut. In terms of recent newsflow, the latest IEA’s monthly report saw the agency cut non-OPEC oil supply growth forecasts by 415,000 BPD to 1.5mln BPD vs. 2.4mln BPD in 2018. The IEA also left global oil demand growth unchanged at 1.3mln BPD and 1.4mln BPD for 2018 and 2019 respectively. This follows yesterday’s monthly OPEC report where demand estimates were left unchanged. Gold is trading flat within a slim USD 2/oz range, as the dollar steadies with the DXY unchanged on the day. Base metals continue to see support after yesterday's news that China are preparing to increase access for overseas companies with sentiment also bolstered this morning after the Chinese Commerce Ministry stated that they would welcome a US trade delegation visit.

Market Snapshot
  • S&P 500 futures down 0.1% to 2,653.5.50
  • STOXX Europe 600 down 0.2% to 349.21
  • MXAP up 0.6% to 151.37
  • MXAPJ up 0.8% to 488.58
  • Nikkei up 1% to 21,816.19
  • Topix up 0.6% to 1,616.65
  • Hang Seng Index up 1.3% to 26,524.35
  • Shanghai Composite up 1.2% to 2,634.05
  • Sensex up 0.3% to 35,901.53
  • Australia S&P/ASX 200 up 0.1% to 5,661.61
  • Kospi up 0.6% to 2,095.55
  • German 10Y yield unchanged at 0.28%
  • Euro up 0.09% to $1.1379
  • Italian 10Y yield fell 11.9 bps to 2.637%
  • Spanish 10Y yield fell 0.8 bps to 1.421%
  • Brent futures down 0.6% to $59.79/bbl
  • Gold spot little changed at $1,245.01
  • U.S. Dollar Index down 0.1% to 96.96
Top Overnight News from BBG:
  • The European Central Bank is set to lower its inflation forecast for 2019 when it publishes an updated outlook on Thursday, according to people familiar with the matter
  • Theresa May heads for Brussels Thursday to plead for a lifeline after her Brexit plans provoked a revolt from her Conservative Party. “I will be seeking legal and political assurances that will assuage the concern that Members of Parliament have” on the backstop, May said
  • EU27 leaders will affirm after dinner at their meeting in Brussels that the EU stands by the withdrawal agreement “and intends to proceed with its ratification,” Politico reported, citing draft summit conclusions
  • Mario Draghi is about to end an era by halting the European Central Bank’s flagship stimulus program even with an economic outlook that is murky at best
  • China is considering plans to delay some targets in its strategy to dominate high-end technologies as it tries to ease trade tensions with America. Beijing may postpone some aspects of its ambitious industrial program by a decade to 2035, according to people familiar with the matter
  • Chinese importers have purchased 1.5m to 2m metric tons of American soy over the past 24 hours, the U.S. Soybean Export Council said, citing industry sources
  • President Recep Tayyip Erdogan put Turkey on course for another clash with the U.S. by threatening to start a military operation within a few days targeting America’s Kurdish allies in northeastern Syria
  • Italian Prime Minister Giuseppe Conte proposed to cut the deficit target to 2.04% of output for next year in a significant concession to the European Commission
  • Global funds snapped up a record amount of Japanese bonds last week in a trend that threatens to complicate the central bank’s yield-curve-control policy
Asian equity markets traded positively as the region followed suit to the gains on Wall St amid trade-related hopes after news of further potential concessions by China. As such, ASX 200 (+0.1%) and Nikkei 225 (+1.0%) were higher but with gains in Australia capped by losses in the telecoms sector after the competition regulator expressed preliminary concerns regarding proposed TPG Telecom - Vodafone Hutchison Australia merger which resulted to a near-17% drop in TPG shares, while property-related weakness also restricted upside. Hang Seng (+1.3%) and Shanghai Comp. (+1.4%) were lifted amid the encouraging trade-related developments with China preparing to increase access for overseas companies and is working to replace its Made in China 2025 plan with one that tones down its bid to dominate manufacturing, while Chinese importers have also resumed purchases of US soybeans and are said to purchase as much as 2mln tons of US soybeans vs. earlier reports of 500k tons. Finally, 10yr JGBs traded lacklustre amid gains in stocks and similar subdued price action in T-notes, with a mixed 5yr auction result adding to the drab mood.

Top Asian News
  • Philippines Puts Rate Hikes on Pause as Inflation Eases
  • Nissan Said to Be Repatriating Cash as Renault Tensions Brew
  • Air China Is Said to Have Held Talks to Buy HNA’s Airlines
  • Qinghai Provincial Says in Talks With SOEs on Restructuring
Major European Indices are mixed with the FTSE MIB (+1.0%) outperforming due to the indices banks outperforming on Italian PM Conte stating the nations deficit goal is now 2.04%; while the EC comments that good progress has been made on this. FTSE 100 (U/C) is trading flat, with Associated British Foods (-0.6%) and 3I group (-2.1%) trading ex-dividends towards the bottom of the index. At the top of the index are TUI (+5.0%) expecting 10% underlying earnings growth at constant currencies for 2019. In terms of other notable movers G4S (+9.0%) are reviewing separation options for their cash solution business and Sainsbury’s (+1.3%) are up as they are challenging a refusal for additional time by the regulator regarding their merger with Asda. Sectors are broadly in the red with some underperformance seen in Energy while Utilities are the outperforming sector.

Top European News
  • ECB Is Said to Lower 2019 Inflation Forecast as Bond-Buying Ends
  • Italy Offers 2.04% Budget Deficit Target in EU Peace Gesture
  • France’s Yellow Vests Are Starting to Enjoy the Radical Life
  • Ukraine’s Renewed Privatization Drive Falls at First Hurdle
  • SNB Sees Downside Risks as It Keeps Crisis Policy Settings
In currencies, GBP, EUR – Sterling the major G10 outperformer in the aftermath of PM May’s confidence vote victory last night, with some support also provided by the a draft document including the possibility that the EU are to look into giving more backstop assurances. As such cable remains firmly above 1.2600, albeit off highs of 1.2685 with large options around 1.2650-60 (1.2bln) perhaps hampering further attempts towards 1.2700. Meanwhile, the EUR also feels some benefit from the softer dollar, but is lagging vs. the Pound as EUR/GBP slips below 0.9000 ahead of the ECB policy decision. Note: please refer to the research suite for a full preview.
  • NOK, CHF – Staying with the Central Bank theme, two out of the four end of year meetings have already passed and the Norwegian Crown strengthened in light of the Norges Bank’s current assessment reaffirming that rates will “most likely” be raised in March 2019. This, alongside upgrades to core CPI pulled EUR/NOK to lows of 9.7071 (vs. high of 9.7531). Conversely, the CHF was largely docile in wake of the SNB keeping its key rate and corridor unchanged, as expected. The Swiss Central Bank also maintained that the Franc is “highly valued” alongside reiterating its preparedness to intervene if required and utilise the balance sheet to react in the event of shocks. Note, SNB Head Jordan stressed the risk of major and sudden exchange rate movements which would significantly alter monetary conditions. As such EUR/CHF remains within a the bottom of a 1.1301-1.1281 range.
  • AUD, NZD – The high-beta currencies continue to prosper in the more positive US-China trade environment, with the with AUD/USD building on gains above 0.7200 to just shy of 0.7250 at one stage, but also wary of big option interest at 0.7200 (1.3bln). Meanwhile NZD/USD remains sub-0.6900, albeit near the top of a 0.6880-42 range despite the downward revisions in the New Zealand HY economic and fiscal updates.
  • JPY – Rangebound trade for the Yen ahead of tonight’s Tankan Survey release with USD/JPY hovering sub-113.50 (with resistance around the figure). In terms of technical, a key fib level sits at 113.61, with 750mln between 113.60-65. In terms of noteworthy option expiries to the downside, 113.00-10 (1.1bln) and 113.30-40 (1bln)
  • TRY – Back to Central Banks, CBRT left its key one-week repo on hold as widely expected and maintained a tightened bias until the inflation outlook displays a significant improvement, though the Bank did acknowledge the recent sub-forecast CPI release, along with import prices and domestic demand condition. As such USD/TRY fell to lows just shy of 5.3000 vs. highs of 5.3837
In commodities, Brent (-0.3%) and WTI (-0.4%) are down on the session in a continuation of yesterday's price action. In terms of recent newsflow, the latest IEA’s monthly report saw the agency cut non-OPEC oil supply growth forecasts by 415,000 BPD to 1.5mln BPD vs. 2.4mln BPD in 2018. The IEA also left global oil demand growth unchanged at 1.3mln BPD and 1.4mln BPD for 2018 and 2019 respectively. This follows yesterday’s monthly OPEC report where demand estimates were left unchanged. Whereas, non-OPEC oil supply in 2018 is forecast to grow by 2.5mln BPD, which was an upward revision of 190k BPD; with this in mind, some suggest that OPEC will need to make further cuts over the second half of 2019. Gold is trading flat within a slim USD 2/oz range, as the dollar steadies with the DXY unchanged on the day. Base metals continue to see support after yesterday's news that China are preparing to increase access for overseas companies with sentiment also bolstered this morning after the Chinese Commerce Ministry stated that they would welcome a US trade delegation visit. Copper prices have hit a 1-week high on these trade developments. Separately, steel prices have risen on a potential boost to demand arising from expectations that China are to launch more infrastructure products next year.

US Event Calendar
  • 8:30am: Import Price Index MoM, est. -1.0%, prior 0.5%; YoY, est. 1.3%, prior 3.5%
  • 8:30am: Export Price Index MoM, est. -0.3%, prior 0.4%; YoY, prior 3.1%
  • 8:30am: Initial Jobless Claims, est. 226,495, prior 231,000; Continuing Claims, est. 1.65m, prior 1.63m
  • 9:45am: Bloomberg Consumer Comfort, prior 60.3
  • 2pm: Monthly Budget Statement, est. $199.0b deficit, prior $100.5b deficit
DB's Jim Reid concludes the overnight wrap
There were high emotions last night as UK PM May now has to write 117 fewer Xmas cards after winning her leadership battle by a vote of 200-117. That result is enough to insulate May from another leadership challenge within the next 12 months from within her party. However, more than a third of her party and likely more than half of her backbenchers voted against her and the result was less supportive than most thought beforehand.

The pound had already gained as much as +1.47% to above $1.265 in advance of the vote, as it became clearer that May would have sufficient support to win the confidence vote. However, with the actual margin less than expected the currency surrendered around a third of its gains at one stage before closing up +1.14% on the day after the vote. Overnight, it held that advance and is trading around $1.262 as we go to print.

So after all the noise, we’re left where we started. As before, the eventual outcome and the implications for UK assets will depend on May’s approach. Will she allow for modifications to her deal, or press ahead as-is? In her brief speech after the result she acknowledged the opposition in the leadership results and to the deal but didn’t immediately appear inclined to change tact. Her tactic at the moment still seems to get concessions out of Europe. Problem is, it seems quite clear that her European partners will not offer any of note. Basically, it all boils down to the backstop on the Irish situation. On this it’s worth noting that EU leaders are due to meet later today to discuss their position. Let’s see if a rabbit is pulled out of a hat. Seems unlikely. Where this ends is still highly uncertain. If a solution to the backstop can’t be found, we will probably have to pivot to a totally different tactic. Either a much softer Brexit (EEA type arrangement) or maybe a second referendum.

Aside from the Sterling move, this morning in Asia markets are off to a solid start with the Nikkei (+1.08%), Hang Seng (+1.22%), Shanghai Comp (+1.47%) and Kospi (+0.76%) all up. More signs of diffusing trade tensions seem to be the driver. The US Soybean export council said late yesterday night that Chinese importers have purchased 1.5mn to 2mn tons of US soybeans over the last 24 hours thus providing further evidence that the talks are moving in the right direction. Meanwhile, yesterday’s story in the WSJ about China working on a replacement for its ‘Made in China 2025’ plan with one that plays down its bid to dominate manufacturing has also aided sentiment. The article is noteworthy as it is the first sign that we’ve seen on a compromise on issues between the US and China that go beyond the bilateral deficit and focus on specifics. Futures on S&P 500 are also up +0.35% overnight while the CNY is +0.20% stronger.

Those moves overnight come after an impressive first half to the session on Wall Street yesterday but one that saw intra-day gains fade yet again. US markets still rallied +0.5 to +1% but gains of over +1.8% to +3% were seen earlier depending on the indices. Before this we saw another strong day for risk in Europe. Indeed, it felt like you could take your pick from a number of riskfriendly catalysts yesterday. Hopes that Brexit can have a softer bias with a May win, further signs of softening on the budget in Italy, a steady as she goes US CPI print, the WSJ story about China above, and talk of President Trump intervening on the Huawei case to push through a trade deal with China, all played a part. In the end, the S&P 500 (+0.54%), DOW (+0.64%) and NASDAQ (+0.95%) stayed higher after the blip while in Europe the STOXX 600 closed +1.69% to clock up its best two-day run since July 2016. European banks also bounced +2.99%. Treasuries were well offered with 10y yields climbing +3.1bps, while the 2s10s curve finished +2.2bps steeper. Elsewhere, the FTSE 100 (+1.08%) lagged a bit, which was understandable with the Sterling move, however, the more domestic focused FTSE 250 did rise +1.90%, while the FTSE MIB climbed +1.91% and CAC +2.15% – the latter seemingly still reacting to the budget measures announced by Macron. HY cash spreads in the US and Europe were also -8bps and -11bps tighter respectively.

The more notable moves in Italy yesterday were for Italian Banks, which rallied +3.0% while 2y and 10y BTP yields fell -7.7bps and -11.9bps, respectively. The latter closed back under 3% (at 2.996% to be exact) for the first time since September with the catalyst being the reports about Italian Premier Conte potentially proposing a 2% deficit target for next year. After Europe closed it was confirmed by Conte that the revised budget would be 2.04% of GDP. The euro also gained +0.46% on the day on the news while other bond markets in Europe were more mixed, however 10y Bunds did climb back up +4.6bps to 0.276%. Elsewhere, as noted above, yesterday’s US CPI print didn’t do much to move the dial with the unrounded core reading of 0.2093% for November more or less bang on expectations. That did, however, confirm a move higher in the year-on-year rate to +2.21%, which puts it at the highest since July. Both the three-month and six-month annualised rates also ticked higher to +2.1% and +2.0%, respectively.

That should alleviate concerns over the slight recent slowdown in core inflation, which had seen the 3m annualized rate dip to 1.6% last month. As markets continue to debate the fallout from last night’s confidence vote, there is at least the distraction of an ECB meeting to look forward to today. As a reminder, our economists expect the ECB to confirm that net asset purchases will cease at year-end. However, they also expect the ECB and Draghi to argue that the policy stance is not tightening. Indeed, they expect a classic ‘dovish tightening’ bias to the event. The team expects Draghi to say that “the market understands the guidance”, meaning the delayed pricing of the first hike is broadly appropriate. They also expect Draghi to hint that the TLTRO2 liquidity will be replaced in 2019. Overall, the risks today are balanced to a more dovish outcome. It is not just that the ECB staff forecasts are likely to be downgraded, the balance of risks could also shift to the downside. At the softer end of options, the ECB could make a dovish revision to the forward guidance on the timing of reinvestment tapering and among the stronger responses are a twist of the asset portfolio. This could come within the details of the reinvestment programme, which are due. We’ll know for certain later with the decision due at 12.45pm BST and Draghi’s press conference shortly after.

Back to yesterday, where, not to be outdone, emerging markets were also back in vogue following the headlines that hit in the morning quoting Turkey President Erdogan as saying that Turkey will “start an operation in Syria within days”. The Turkish Lira immediately sold off as much as -0.54% on the news, but the move appeared to be more kneejerk in reaction than anything else as it ultimately closed slightly stronger, up +0.37% on the day. EM FX more broadly was +0.58% while the MSCI EM equity index ended +1.46%. This came despite another slip in oil prices, with WTI down -0.97% as data showed that US oil inventories fell only -1.2 million barrels last week compared to the expected -3.5 million barrels. That’s the 12th time the inventories data has shown a smaller drawdown than expected over the last three months, the longest such stretch since April 2015.

As for the other economic data that was out yesterday, in the US, mortgage applications data showed a +1.6% week-on-week increase. That’s the third consecutive monthly increase, the best streak since March, and maybe a sign that recent housing sector weakness may be bottoming out. In Europe, October’s industrial production ended up being a bit of a wash with the stronger than expected October reading (+0.2% mom vs. +0.1% expected) offset by a downward revision to September to a sharper -0.6% mom decline (versus -0.3% previously). In Italy, the unemployment rate dipped to 10.2%, a new cycle low and the best print since Q1 2012.

In terms of the day ahead, a combination of the follow through from last night’s confidence vote on UK PM May and the aforementioned ECB meeting later today will no doubt be front and centre. Aside from that we’ve also got the final November CPI revisions due in Germany and France this morning while this afternoon in the US we get the November import price index print and latest weekly initial jobless claims reading. The latter is well worth keeping an eye on in light of the recent uptick in claims. Indeed, the four-week moving average has risen from a multi-decade low of 206k in the middle of September to 228k as of December 1st. Away from all that, EU leaders are also due to meet today in Brussels to discuss the EU budget and Brexit amongst other topics.

https://www.zerohedge.com/news/2018-12-13/rally-fizzles-europe-us-turn-red-after-warnings-ecb-pboc
 

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Take this on fwiw and dyodd.

HAS PEAK DIESEL ARRIVED?? The Data Doesn’t Look Good

by SRSrocco
Wed, 12/12/2018 - 16:45




By the SRSrocco Report,



Has Peaked Diesel arrived? Well, if so, it is terrible news for the automobile and trucking industry as well as the overall economy. I came across this information from an article written by Antonio Turiel on his The Oil Crash website. The article provides some sobering data suggesting that the global production of diesel fuel may have peaked.

Furthermore, due to the peak of conventional oil in 2005 and the considerable increase of U.S. shale light tight oil, the production of heavy fuel oil (not diesel, rather bunker fuel for ships, etc.) has also declined. Turiel explains in the article The Peak of the Diesel: 2018 Edition, that the refineries cannot make as much diesel from the U.S. light tight shale oil, so they are forced to crack the heavier fuel oil to make diesel. If true, what we have here is the cannibalization of the refinery system to continue to produce diesel at the expense of the heavier fuel oils.
If Peak Diesel has arrived, Peak Gasoline isn't too far behind.

The Peak of the Diesel: 2018 edition
By Antonio Turiel (translated from CrashOil.blogspot.com)

Six years ago we commented on this same blog that, of all the fuels derived from oil, diesel was the one that would probably see its production decline first. The reason why diesel production was likely to recede before that of, for example, gasoline had to do with the fall in conventional crude oil production since 2005 and the increasing weight of the so-called "unconventional oils," bad substitutes not always suitable to produce diesel. With the data of that 2012, I wrote "The Peak of Diesel". At that time, there was a certain stagnation of diesel production, but it seemed to be too soon to venture if it was final or if it could still be overcome. I reviewed the issue in 2015, in the post "The Peak of Diesel: Edition of 2015." The new data from 2015 showed that in 2012 there had really been no peaking, although diesel production had grown less strongly if we compared it with the previous historical rate, and even the last 18 months of the period studied at that time showed a certain stagnation. Now it has been another three years, and it is a good time to look at the data and see what happened.

Before starting, I would like to thank Rafael Fernández Díez for having the patience to download the JODI data, for having elaborated the graphs I show here, slightly retouched, and for having made me notice the problem that is being raised with the refining of heavy oils (We'll see more below). He hasn't had time to finish this post and that's why I'm the one who wrote it, but what follows is actually his work.

As in the previous two posts, we will use the database of the Joint Oil Data Initiative (JODI). This database provides information about most of the world's oil and refined products, but not all of them. The countries not included are countries with serious internal problems and a great lack of transparency, either because of wars or because they are very tight dictatorships. For this reason, the figures that I will show are around 10% lower than they should be if they were representing the whole world. However, given the characteristics of the excluded countries, it is most likely that their data did not change the observed trends, only the total amounts.

All the graphs that I will show are seasonally adjusted, that is, the points are the average of the previous 12 months. In this way, the effects of the variation due to the season are avoided, the graphic is less noisy and trends are better seen. The graphs will always be expressed in millions of barrels per day (Mb/d). First of all, I show you the graph of the evolution of diesel production over the past years:

Global Production Of Diesel Fuel


As seen in the graph, the year 2015 marked the maximum so far. There had not been such a marked drop in production since the crisis of 2008-2009, but in the case of the fall of 2015 we find that 1) there has not been a serious global economic recession; 2) the descent is lasting longer and 3) the levels of diesel production show no sign of recovery. Although it is still a little early to ensure that the peak of diesel has occurred, stagnation - even falling - is starting to drag on for too long to be ignored.

Looking at the data of JODI, two other very interesting things are observed. On the one hand, if one analyzes the production of all the fuel oil that is not diesel (fuel oil) it is found that its production has been in decline for years.

Global Production Fuel Oil (Minus Diesel)


As the graph shows, since 2007 (and therefore before the official start of the economic crisis) the production of fuel oils is in decline and it seems to be a perfectly consolidated trend. The diehard economist interpretation is to consider that there is simply no demand for these fuels (which, although of the same family, are heavier than diesel). When oil is refined, it is subjected to a process called cracking, in which the long molecular chains present in the oil are broken (by means of heat and other processes) and then the molecules are separated by their different properties of fluidity and density. The fact is that if you have made changes in the refineries to crack more oil molecules and get other lighter products (and that is why less heavy fuel oil is produced), those molecules that used to go to heavy fuel oil now go to other products. By logic, taking into account the added value of fuels with longer molecules, it is normal that these heavy fuel oils are undergoing cracking, especially to generate diesel and possibly more kerosene for airplanes and eventually more gasoline. We must not forget that from 2010 the fracking in the USA began to take off, flooding the market with light oil, which is not easy to refine to make diesel. It is therefore quite likely that the refineries have adapted to convert an increasing amount of heavy fuel oil into light fuel oil (diesel). It reinforces this idea that, if we add the volumes of the two previous graphs we have, there is a certain compensation for the trends of diesel production, increasing until 2015, and the long-term trend of decrease of the rest of the fuel oils.

Global Production Of Diesel & Fuel Oil


This figure shows that, after the 2008-2009 slump, it has been very hard to raise the total production of fuel oils, which peaked in 2014 and have remained there for almost a year; and at the moment it is suffering a resounding fall (about 2,5 Mb/d from the levels of 2014).

This last observation is quite relevant because if, as you can guess, the industry is cracking less heavy fuel oil to ensure that the production of diesel does not go down too much, the rapid fall of heavy fuel oil will quickly drag down the diesel production. In fact, the graph shows that, after falling in 2015 and 2016, in 2017, it was possible to stabilize the production of all fuel oils, but it is also seen that in recent months there was a quite rapid fall. Surely, in this shortage, we can start noting the absence of some 2.5 Mb/d of conventional oil (more versatile for refining and therefore more suitable for the production of fuel oil), as we were told by the International Energy Agency in his last annual report. This explains the urgency to get rid of the diesel that has lately shaken the chancelleries of Europe: they hide behind real environmental problems (which have always troubled diesel, but which were always given less than a hoot) to try to make a quick adaptation to a situation of scarcity. A shortage that can be brutal, since no prevention was performed for a situation that has long been seen coming.

The followers of that religion called economic liberalism will insist with all their strength that what is being observed here is a peak of demand, that old argumentative fallacy that does not agree with the data (who can think that people are stopping to consume oil because they want? Maybe because they have better alternatives? Which ones?). They will argue that there is a lower demand for diesel and that this is why production stagnates and that the production of fuel oils drops because, as they are more polluting fuels, the new environmental regulations do not allow their use. It's a bit of the old problem of who came first, the chicken or the egg. With regard to the fact that the demand for diesel does not increase, prices have a considerable influence: this is how shortages are regulated in a market economy. And, as for the environmental reasons, the production of heavy gas oil has been dropping from 2007, when there was not as much regulatory interest as there seems to be now. There is one aspect of the new regulations that I think is interesting to highlight here: from 2020 onwards, all ships will have to use fuel with a lower sulfur content. Since, typically, the large freighters use very heavy fuel oils, that requirement, they say, makes one fear that a shortage of diesel will occur. In fact, from what we have discussed in this post, what seems to be happening is that heavy fuel oils are declining very fast and ships will have no choice but to switch to diesel. That this is going to cause problems of diesel shortage is more than evident. It is an imminent problem, even more than the peaks in oil prices that, according to what the IEA announces, will appear by 2025.

The second of the interesting things that the JODI data shows us is how the volume produced of all petroleum products has evolved.

Total Global Production Of All Petroleum Products


The volume produced has been able to continue increasing during these years thanks to the energy subsidy that the US is giving to the world by means of fracking. However, fracking oil only serves to make gasoline and that is why the diesel problem remains. But you can also note how the end of the graph above shows the same trend in the production of diesel, with a drop of more than 2 Mb/d. What does that mean? That the contribution of fracking to the whole volume is also hitting the ceiling, it does not get any higher. It is a further indication that we are already reaching the peak oil of all petroleum liquids.

That is why, dear reader, when you are told that the taxes on your diesel car will be raised in a brutal way, now you know why. Because it is preferred to adjust these imbalances with a mechanism that seems to be a market (although this is actually less free and more adjusted) rather than telling the truth. The fact is that, from now on, what can be expected is a real persecution against cars with an internal combustion engine (gasoline will be next, a few years after diesel). Do not say that you were not notified (and I was not even the first to do it in this blog). And if it does not seem right, maybe what you should do is to demand that your representatives explain the truth.

Full article here: The Peak Of The Diesel: 2018 Edition


Hello, this is Steve from the SRSrocco Report. I believe Turiel is on to something here about the peaking of global diesel production. I have heard from a few other sources that the refineries are indeed having difficulty in producing quality fuels from combining of tar sands and light-tight shale oil. The industry thought by combining the heavy tar sands oil and U.S. light shale oil, it would make an average oil blend, similar to good ole fashion medium grade API conventional oil.

However, it has turned out to be a real nightmare as this Tar Sands-Shale Oil blend creates a lot of difficulties for the refineries. So, it will be interesting to see how the situation unfolds in the global refinery market when U.S. shale oil finally peaks.

If you are new to the SRSrocco Report, please consider subscribing to my: SRSrocco Report Youtube Channel.

Check back for new articles and updates at the SRSrocco Report.

https://www.zerohedge.com/news/2018-12-12/has-peak-diesel-arrived-data-doesnt-look-good
 

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Why You Should be Demanding as a Nomad
Nomad Capitalist



Published on Dec 13, 2018
https://www.nomadcapitalist.com/

At Nomad Capitalist, we preach to "go where you're treated best".

Beyond legal tax reduction or wealth creation, global citizens should also demand the best from the daily interactions.

Being self-aware of the cities you want to live in, the service you expect, how your employees should work, and what you want out of life is important. Many digital nomads and perpetual travelers often ignore this, choosing to believe that ignorance is bliss.

By demanding the best in life, you're more likely to get it... and that's what the Nomad Capitalist lifestyle is all about.

-------
ABOUT NOMAD CAPITALIST

Andrew Henderson is the world's most sought-after consultant on legal offshore tax reduction, investment immigration, and global citizenship. He works exclusively with six- and seven-figure entrepreneurs and investors who want to "go where they're treated best".

Work with Andrew: https://bit.ly/Nomad-Capitalist-Appli...

Andrew has spent the last 11 years studying and personally implementing the Nomad Capitalist lifestyle, and has started offshore companies, opened offshore bank accounts, obtained multiple second passports, and purchased real estate in a total of 20 countries.

He has also spent years creating a behavior-based system that helps people get the results they want faster and with less resistance. Andrew believes that everyone can use offshore strategies to keep more of their own money, live a life of freedom, and grow their wealth faster.

About Andrew: https://nomadcapitalist.com/about/and...
Our website: https://www.nomadcapitalist.com
Subscribe: https://www.youtube.com/subscription_...
Buy Andrew's book: https://amzn.to/2QKQqR0

DISCLAIMER: The information in this video should not be considered tax, financial, investment, or any kind of professional advice. Only a professional diagnosis of your specific situation can determine which strategies are appropriate for your needs. Nomad Capitalist can and does not provide advice unless/until engaged by you.
 

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Ira Epstein's End of the Day Financial Video 12 13 2018
Ira Epstein


Published on Dec 13, 2018
 

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Yellen Admits She is Worried About Another Financial Crisis
Silver Fortune


Published on Dec 13, 2018
Janet Yellen is back, to remind us that the Fed and regulation is the solution to everything, including the problems created by the Fed and U.S. government policies.

Support Silver Fortune, shop at SD Bullion! Free shipping over $99, and a 1 oz. round for new customers! sdbullion.com/sf
(I am compensated by SD Bullion when the at spot round is claimed by new customers)

Support Silver Fortune through Patreon: https://www.patreon.com/silverfortune

International Silver Syndicate poured silver, featuring various popular YouTube silver and gold channels, including your's truly: https://mkbarzandbullion.com/pages/in...
(MK Barz does offer a small share of profits to channels featured on the ISS bars)

Any content within this video or any other video by the Silver Fortune channel is merely one man's opinion, commentary, and analysis, or actual information obtained from elsewhere, and should not be constituted as legal, investment, or financial advice. Make your own financial decisions, or consult a professional if you'd prefer to go that route. The Silver Fortune channel disclaims any liability for legal, financial, or investment decisions made.
 

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Ira Epstein's End of the Day Agriculture Video 12 13 2018
Ira Epstein


Published on Dec 13, 2018
 

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Piketty vs Bastiat: Fallacy vs Common Sense.
maneco64


Published on Dec 14, 2018
 

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Share Talk Bulletin Board Heroes, Friday 14th December 2018
Share Talk


Published on Dec 14, 2018
A charting look at some of the most followed stocks on the London market, Zak Mir covers.

Bushveld Minerals (BMN)
Kefi Minerals (KEFI)
Lonmin (LMI)
Ormonde Mining (ORM)
Opg Power (OPG)
Oilex (OEX)
Vr Education H. (VRE)

@ZaksTradersCafe deductive reasoning as to what should happen next in terms of the newsflow regarding the companies listed in this video.

Zakmir.com is a purely journalistic website – Zak Mir is a member of the National Union of Journalists. There is no intention here of providing financial advice. It is recommended you seek an independent professional opinion before deciding whether or not to take any action with regard to anything written here.
 

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Global Stocks Tumble On Poor Econ Data From China To Europe


by Tyler Durden
Fri, 12/14/2018 - 07:32

It's a sea of red to end the week as world stocks and US futures tumbled on Friday after weak economic data from China to Europe raised global recession fears and left investors nervous over the impact of a still-unresolved Sino-U.S. trade dispute even as China announced it would roll back retaliatory auto tariffs by 3 months; Treasuries and the dollar jumped amid a renewed flight to safety.




Growth concerns came back into focus after European Central Bank President Mario Draghi said economic risks were moving to the downside, while in China retail sales and industrial production figures for November fell significantly short of estimates. The lackluster readings from Europe on car sales and manufacturing simply added to the gloom.

The MSCI All-Country World Index was down half a percent, with all major markets deep in the red. Europe's Stoxx 600 Index headed for a weekly loss, dragged lower by automakers after regional sales slumped in November for the third month in a row.

Euro zone business ended the year on a weak note, expanding at the slowest pace in over four years as new order growth all but dried up, hurt by trade tensions and the Yellow Vests” movement. The France PMI survey showed French business activity plunged unexpectedly into contraction this month, retreating at the fastest pace in over four years with the slowdown largely blamed on the recent violent anti-government protests.



Elsewhere, Germany’s private sector expansion slowed to a four-year low, suggesting growth in Europe’s largest economy may be weak in the final quarter as Mfg PMI declined from 51.8 to 51.5 (exp. 52.0) while the Services PMI dropped from 53.3 to 52.2, also missing expectations for a rebound to 53.4.

Adding to the ECB's gloomy outlook, the Bundesbank lowered German growth projections, warning of downside risks: the German central bank today revelaed its updated growth projections, which cut back the GDP forecast to just 1.5% this year from 2.0% expected previously, hardly a surprise after the -0.2% q/q contraction in Q3. The forecast for 2019 was cut to 1.6% from 1.9% and for 2020 and 2021 the Bundesbank expects rowth of 1.6% and 1.5% respectively.

Stock markets in Europe opened sharply lower, with Germany’s DAX index falling 1.5% while the pan-European STOXX 600 index was down 0.9%, paring some losses as European automakers saw their losses cut in half on the China tariff news.



The data out of Europe added to weak readings from China, where November retail sales grew at the weakest pace since 2003 and industrial output rose the least in nearly three years, underlining risks to the world’s second-largest economy as Beijing works to defuse a trade dispute with the United States.



A Chinese statistics bureau spokesman said the November data showed downward pressure on the economy is increasing.

The data “means that the worst is yet to come and policymakers will be very worried, particularly with consumption growth falling off a cliff,” said Sue Trinh, head of Asia FX strategy at RBC Capital Markets in Hong Kong. “So I expect further support measures including rate cuts will come in coming weeks, although these data would indicate measures to date aren’t really working.”

The Chinese yuan weakened 0.4% to 6.9063 per dollar in offshore trade following the data.

As a result, equities slumped across Asia, with shares in Hong Kong and Japan leading the retreat. MSCI’s index of Asia-Pacific shares ex Japan fell 1.5%. Japan’s Nikkei, also dragged down by the country’s weak tankan sentiment index, dropped 2.0%. China’s benchmark Shanghai Composite and the blue-chip CSI 300 closed down 1.5 percent and 1.7 percent, respectively, and Hong Kong’s Hang Seng was off 1.5 percent.

"The data this morning out of France really hasn’t helped the mood. You look at China data, you look at the flash PMIs out of France and Germany and they’ve really sort of reinforced concerns that the global economy is slowing down," said CMC Markets chief markets analyst Michael Hewson. "Ultimately, I think it rather questions the wisdom of the ECB ending its asset purchase program at the end of this month. You’ve got Mario Draghi basically tightening into a downturn."

Over in the US, S&P 500 futures also pointed to a drop at the open, though both declines were tempered somewhat on news that China will temporarily remove a retaliatory duty on U.S.-imported automobiles.



“Although hopes of progress in U.S.-China talks and cheap valuations are supporting the market for now, we have lots of potential pitfalls,” said Mizuho's Nobuhiko Kuramochi. "If U.S. shares fall below their triple bottoms hit recently, that would be a very weak technical sign.”

In the currency market, the euro was down 0.7 percent after the weak PMIs, last changing hands at $1.1288. The Bloomberg Dollar Spot Index headed for its best week in four months, rising to 1,215 and just shy of 2018 highs. Antipodean currencies led losses in the Group-of-10 basket.

Sterling’s rally fizzled as signs that the British parliament was headed towards a deadlock over Brexit prompted traders to take profits from its gains made after Prime Minister Theresa May had survived a no-confidence vote.



The European Union has said the agreed Brexit deal is not open for renegotiation even though its leaders on Thursday gave May assurances that they would seek to agree a new pact with Britain by 2021 so that the contentious Irish “backstop” is never triggered.

In overnight Trump-related news, Federal prosecutors are investigating whether US President Trump's inaugural committee misspent some of the record amount of funds it raised, while there were later comments from White House Press Secretary Sanders that President Trump had limited engagement with the inauguration committee. President Trump is also said to be considering Kushner for Chief of Staff, while there were separate reports that US President Trump is said to have met with Chris Christie to discuss Chief of Staff position. Axios reported that US President Trump sees Chris Christie as a top contender to replace John Kelly as Chief of Staff

Oil prices gave up some of their Thursday’s gains following inventory declines in the United States and expectations that the global oil market could have a deficit sooner than they had previously thought. U.S. crude futures edged down 0.5% to $52.32 per barrel and Brent crude slipped 0.6 percent to $61.09, after both gained more than 2.5 percent on Thursday. Gold (-0.3%) is set for is biggest weekly fall in five weeks due to a firmer USD as traders focus on next week’s tabled Fed rate hike. Looking at base metals, copper is on track for a third consecutive weekly drop with downside exacerbated by the downbeat Chinese industrial production translating into weaker demand as the red metal faces a 15% yearly decline.

Expected data include retail sales, industrial production, and PMIs. No major companies are reporting earnings

Market Snapshot
  • S&P 500 futures down 0.9% to 2,626.25
  • STOXX Europe 600 down 1.4% to 344.61
  • MXAP down 1.4% to 149.12
  • MXAPJ down 1.5% to 481.32
  • Nikkei down 2% to 21,374.83
  • Topix down 1.5% to 1,592.16
  • Hang Seng Index down 1.6% to 26,094.79
  • Shanghai Composite down 1.5% to 2,593.74
  • Sensex up 0.03% to 35,940.82
  • Australia S&P/ASX 200 down 1.1% to 5,602.00
  • Kospi down 1.3% to 2,069.38
  • German 10Y yield fell 3.4 bps to 0.251%
  • Euro down 0.6% to $1.1292
  • Italian 10Y yield fell 4.3 bps to 2.594%
  • Spanish 10Y yield fell 0.8 bps to 1.416%
  • Brent futures little changed at $61.42/bbl
  • Gold spot down 0.2% to $1,239.08
  • U.S. Dollar Index up 0.5% to 97.53
Top Overnight News
  • European leaders rebuffed Theresa May’s pleas to help her sell the Brexit agreement to a skeptical U.K. Parliament, toughening their stance as they stepped up planning for a chaotic no-deal divorce
  • The euro-area economy is closing out 2018 on a gloomy note, with a measure of activity unexpectedly dropping to its lowest in just over four years
  • China’s economy slowed again in November as retail sales and industrial production weakened, creating a challenging backdrop for policy makers who gather next week to set the tone for the year at their annual Economic Work Conference in Beijing
  • As Japanese government bond yields slide, some Bank of Japan officials see no problem with them dropping to zero or even below, according to people familiar with the matter
  • In Washington and Beijing, the idea that China is willing to water down its plans for high-tech industrial dominance to appease President Donald Trump is already meeting with skepticism
Asian equity markets were negative across the board as sentiment in the region soured following the lacklustre lead from Wall St and as region digested disappointing data from China. ASX 200 (-1.1%) and Nikkei 225 (-2.0%) both declined from the open with Australia led lower by tech, telecoms and the largest weighted financials sector, while the Japanese benchmark was subdued amid a firmer JPY and mixed Tankan data despite the headline Large Manufacturers Index and Large All Industry Capex topping estimates. Elsewhere, Hang Seng (-1.6%) and Shanghai Comp. (-1.5%) were also pressured after Chinese Industrial Production and Retail Sales data both fell short of estimates, with underperformance seen in Hong Kong as this year’s run of lacklustre stock market debuts continued in the domestic exchange. Finally, 10yr JGBs were higher as they tracked gains in T-notes and with prices underpinned by safe-haven demand which saw 10yr JGBs print the highest since November 2016.

Top Asian News
  • Some at BOJ Are Said to Be Fine With Yields Going to Zero
  • Thailand’s Richest Man Said to Tap BofA, UBS for $1.5b AWC IPO
  • SoftBank IPO Said to See 2-3 Times Demand From Big Investors
  • Not Such a Happy Friday for Asia’s Beleaguered Stock Traders
  • Japan Post Is in Talks to Buy Minority Stake in Aflac
European equities are poised to finish the week on the backfoot (Eurostoxx 50 -0.9%) following the weak lead from Asia as sentiment turned sour amid the release of disappointing Chinese industrial production and retail sales, highlighting weakness in the Chinese economy. As such, around 75% of the Stoxx 600 (-0.9%) are in the red, Switzerland’s SMI (-1.4%) marginally lags peers with all 20 stocks in negative territory. In terms of sectors, IT names underperform alongside auto names (seen as trade proxies due to heavy exports) as a result of the aforementioned Chinese retail sales signalling an impact from ongoing trade disputes. However, European auto names spiked higher following reports that China are to lift retaliatory tariffs on US autos for 3-months from January 1st next year (i.e. suspending the 40% tariff plan and sticking to 15%). In terms of individual movers GVC Holdings (+8.8%) shares rose to the top of the UK benchmark with Citi citing next week’s Parliament vote on FOBT stakes being “significantly positive” as shareholders will be paid out GBP 676mln if the legislation is not passed by 28th March 2019.

Top European News
  • Sweden Moves Step Closer to New Election as Lofven Loses PM Vote
  • How Ireland Outmaneuvered Britain on Brexit
  • Italian Bonds Get No Favors From Draghi’s Reinvestment Plans
  • European Car Sales Slump in November With No Sign of Rebound
In currencies, The Antipodean Dollars have derived some scant support from reports that China will freeze and backtrack on a proposed increase in US auto tariffs w/e January 1 next year, in line with recent speculation, but the Aussie and Kiwi remain on the backfoot and significantly weaker than their G10 counterparts following sub-forecast Chinese data overnight and RBNZ consultations about lifting high grade bank capital requirements by 100%. Aud/Usd is holding just off a fresh December low around 0.7155 after breaching 0.7200 and tech supports below the figure at 0.7186 (55 DMA) and 0.7163 (Fib), while Nzd/Usd has lost grip of 0.6800 as the Aud/Nzd cross pivots 1.0550.
  • EUR/GBP: Also major underperformers, as the single currency extended post-ECB losses on the back of further declines in EZ PMIs (French readings especially dire as manufacturing, services and composite all tumbled into sub-50 contractionary territory) and through recent support just ahead of 1.1300 vs the Greenback to 1.1286 before finding some bids. Note, a decent 1 bn option expiry at the 1.1300 strike may provide some traction. Meanwhile, Brexit remains the big bane for Sterling and given the ongoing impasse between UK PM May and EU leaders on the back-stop, Cable has retreated sharply towards 1.2570 and chart-wise back below the 10 DMA circa 1.2660.
  • JPY: As usual, demand for the safe-haven Yen is just keeping Usd/Jpy depressed within a tight 113.70-40 range, along with 1.4 bn expiries at 113.75.
  • EM: An unexpected, though far from total surprise ¼ point CBR rate hike has underpinned the Rub against the grain of overall regional currency weakness on risk-off flows, with the Rouble comfortably above 66.5000 vs the Usd.
In commodities, WTI (-0.7%) and Brent (-0.9%) swings between gains and losses following an uneventful overnight session as prices consolidated after yesterday’s rally. The complex saw some upside in recent trade after Libya’s NOC chairman was pessimistic about reopening its 300k BPD El-Sharara after an armed group halted production at the oilfield. Traders will be eyeing this evening’s Baker Hughes rig count as fresh catalyst. Note, WTI Jan’19 options expire today at 19.30GMT. Elsewhere, gold (-0.3%) is set for is biggest weekly fall in five weeks due to a firmer USD as traders focus on next week’s tabled Fed rate hike. Looking at base metals, copper is on track for a third consecutive weekly drop with downside exacerbated by the downbeat Chinese industrial production translating into weaker demand as the red metal faces a 15% yearly decline. Finally, Shanghai steel extended gains for a third day in a row after two major steelmaking cities (Tangshan and Xuzhou) demanded mills to curtail production amid worries that they will not meet pollution reduction targets this year. For context, Tangshan accounts for 10% of China’s total steel output while Xuzhou is in the number two steelmaking province.

Looking at the day ahead, in the US there should be plenty of focus on the November retail sales report where expectations is for a +0.4% mom ex auto and gas print and +0.5% mom control group reading. A reminder that the latter is a direct input into the GDP accounts. Also due out across the pond is the November industrial production print (+0.3% mom expected) and October business inventories. Meanwhile we’re due to get comments from the ECB’s Guindos and Lautenschlaeger this morning before Angeloni speaks this afternoon.

US Event Calendar
  • 8:30am: Retail Sales Advance MoM, est. 0.1%, prior 0.8%; Retail Sales Ex Auto MoM, est. 0.2%, prior 0.7%
    • Retail Sales Ex Auto and Gas, est. 0.4%, prior 0.3%; Retail Sales Control Group, est. 0.4%, prior 0.3%
  • 9:15am: Industrial Production MoM, est. 0.3%, prior 0.1%; Manufacturing (SIC) Production, est. 0.3%, prior 0.3%
  • 9:45am: Bloomberg Dec. United States Economic Survey
  • Markit US Composite PMI, prior 54.7
    • Markit US Manufacturing PMI, est. 55, prior 55.3;
    • Markit US Services PMI, est. 54.6, prior 54.7
  • 10am: Business Inventories, est. 0.6%, prior 0.3%
DB's Jim Reid concludes the overnight wrap
With just ten business days left in 2019 now, after the Brexit shenanigans earlier this week markets were always hoping that the ECB would be a less eventful affair. Indeed, luckily there was no sign of a scrooge surprise from Mario Draghi in what proved to be a fairly non-eventful policy meeting yesterday.

As expected we got confirmation that net asset purchases were to cease by the end of the year while the dovish tightening that we expected was affirmed with an endorsement of the short end rally and a hint that a replacement for TLTRO2 is in the pipeline. In line with the views of our economists (link here ), the reinvestment programme retains a lot of flexibility over the purchases. There was no twist of the portfolio, and the ECB’s preference was for a revision to the guidance on the period of full reinvestment, implying this could last longer. “Continuing confidence with increasing caution” was Draghi’s new mantra our colleagues highlight. That said there was one surprise and that was the suggestion that the ECB is starting to rethink the structural impact of negative deposit rates on the banking system. This increases the possibility of a technical deposit rate hike – a hike for non-cyclical/non-monetary policy purposes – in 2019. Draghi said the reductions to the staff GDP growth forecasts take the economy on a path “closer to potential”. This could be an admission that the window to raise rates to address structural bank profitability is getting narrower.

So where does that leave us? In their 2019 outlook our economists delayed the timing of lift-off of the policy rate tightening cycle from September 2019 to March 2020 given the deteriorating expectations for growth and inflation. However they also mentioned the risk of a technical, one-off deposit hike and the team believe that March 2019 is perhaps the best time for the technical hike now.This is arguably when the replacement for TLTRO2 will be due. It is also six months before the current time commitment to unchanged policy rates expires, meaning March is the appropriate time to consider an extension of the commitment if they are right about the outlook for the economy. Something to consider then.

The market also seemingly viewed the meeting as a bit of a non-event. The euro initially declined and hit as low as -0.33% versus the dollar intraday but ended up closing -0.07%. The STOXX 600 flipped between gains and losses with no real conviction and eventually closed a shade in the red with a -0.17% decline. Meanwhile, 10y Bund yields did nudge to an intraday low of 0.254% at one stage but also reversed into the close to finish at 0.281% and +0.5bps on the day. A remarkable statistic about Bund yields is that they are currently lower than they were when QE started in March 2015, when Draghi supersized QE and cut the depo rate in March 2016, and when Draghi outlined plans to end QE this December and set guidance for a rate hike at the June meeting earlier this year.

Also keep in mind that the ECB’s balance sheet has increased by €2.5tn since QE started. In that time it has cost the ECB about €119bn for each one-tenth of a percent to get the year-on-year headline CPI number to where it is now although Eurozone CPI hasn’t risen by that different an amount to US CPI over the same period. More startling is the fact that it has cost the ECB €625bn for each tenth of a percent increase in core CPI which has been in a fairly narrow range over the whole period. The gap between Eurozone and US core CPI has also stayed pretty constant.

In addition, while Bund yields have in essence moved sideways, 10y BTP yields are 171bps higher and eurozone banks have lost €152bn in market cap. We will never know the counterfactual but there’s been a huge financial cost to the program but with inconclusive evidence about its success.

As for Wall Street yesterday, well there wasn’t really much to write home about however once again we saw a fairly familiar story with a solid open quickly giving way to a more lacklustre finish in the afternoon. Indeed the S&P 500, DOW and NASDAQ ended -0.02%, +0.29% and -0.39%, respectively, while US HY cash spreads also closed little changed. Treasuries were +0.4bps higher in yield at the 10y point while the 2s10s curve steepened +1.2bps. More exciting was WTI oil climbing off the day’s lows to end +2.80% following the reports about Saudi Arabia slashing supply on shipments to the US.

To be fair there wasn’t a great deal of newsflow outside of the ECB so maybe headline fatigue played a bit of a factor. There wasn’t much of a reaction to the news that China had detained a second citizen from Canada while advisors to President Trump warned the President to stay out of the Huawei case according to the WSJ.

That being said, overnight sentiment in Asia has turned decidedly more negative following a slew of soft data in China. The the Nikkei (-1.83%), Hang Seng (-1.55%), Shanghai Comp (-0.68%) and Kospi (-1.35%) all down along with S&P 500 futures (-0.69%). China’s November retail sales came at +8.1% yoy (vs. +8.8% yoy expected) while November industrial production stood at +5.4% yoy (vs. +5.9% yoy expected). There was better news for YtD November fixed assets ex. rural which came at +5.9% yoy (vs. +5.8% yoy expected) however the focus has been on the former two big misses with retail sales actually now growing at the slowest rate since 2003. You’d have to assume that this data would up the stimulus talk again and interestingly, it comes after PBoC Governor Yi Gang said yesterday that monetary policy will remain supportive in the face of China’s economy faltering. In other news Japan’s preliminary December manufacturing PMI came in at 52.4 (vs. 52.2 in last month) while this morning the BoJ trimmed purchases of 5-10yr (JPY 430bn today vs. JPY 450bn in previous operation) at a regular operation today for the first time since June. JGBs are actually slightly stronger despite that.

Moving on. With the ECB out the way we can now turn over to the flash December PMIs which are out in both Europe and the US today. With the Italian budget situation stabilising and the ECB keeping to the script for the most part yesterday, will today’s PMIs in Europe help cement a festive cheer into year-end for European risk assets? The good news is that expectations are now fairly low following three consecutive monthly declines in the Euro Area composite to 52.7 in November. As a result the consensus is for a very modest 0.1pt increase to 52.8 with no real deviation from the manufacturing (51.8) or services (53.4) prints expected. In terms of timing we’ll get the data for Germany and France just after 8am GMT this morning followed by the broader Euro Area prints at 9am GMT.

In other news, with UK PM May boarding a plane for Brussels yesterday there wasn’t a great deal of Brexit newsflow to follow the confidence vote. There were some headlines on Bloomberg suggesting that EU leaders were mulling publishing a new declaration on the Irish backstop issue which helped Sterling (+0.11%) to climb slightly but it’s hard to know how substantial this was. DB’s Oliver Harvey, in a report published yesterday, noted that although there was no clear direction from the PM about her Brexit strategy in her statement on Tuesday night, reports have suggested that the UK government is now seeking legally binding commitments from the EU27 over the Temporary Customs Arrangement in the Withdrawal Agreement.

In Oliver’s view, the prospect of substantively changing the existing Withdrawal Agreement is limited, other than by replacing a whole UK backstop with a Northern Ireland specific one. As May has ruled out any Brexit deal that does not gain the support of the DUP, the latter seems unlikely. In summary, should the UK stance continue to centre on iterations of the current agreement, it is unlikely to pass a parliamentary vote late this year or, more likely, in January with the UK government now committed to a vote by January 21st. On the basis of May surviving the confidence vote, Oli’s view was that May would pivot towards a cross party approach to Brexit, in particular softening the stance on the future relationship to gain Labour Party support however this thesis is now about to be tested. So it should be an interesting and long few week ahead.

Before we look at the day ahead, quickly wrapping up the data that was out yesterday. In Europe there were no revision changes in the final November CPI prints for Germany (+0.1% mom/+2.2% yoy) and France (-0.2% mom /+2.2% yoy). Across the pond there was a bit of focus going into the latest weekly claims print but in the end it fell back towards the record lows at 206k (vs. 227k expected). Assuming it’s not a one-off, that suggests then that the noise around Thanksgiving and also perhaps the Hurricanes in the US were the reason for the move higher.

Meanwhile, we also learned that import prices fell 1.6% mom in November, largely reflecting a drop in energy prices, lowering annual inflation to just 0.7% yoy from 3.3% yoy previously, while a federal budget deficit of USD204.9bn was recorded in November – USD66.4bn larger than in the same month last year and rising the 12-month running deficit to USD883bn.

As for the day ahead,the aforementioned PMIs out in Europe and the US will almost certainly be the main data highlight. Away from that in Europe we also get the November wholesale price index for Germany, November new car registrations for the EU, Italy’s final November CPI revisions and QE labour costs data for the Euro Area. This afternoon in the US there should be plenty of focus on the November retail sales report where expectations is for a +0.4% mom ex auto and gas print and +0.5% mom control group reading. A reminder that the latter is a direct input into the GDP accounts. Also due out across the pond is the November industrial production print (+0.3% mom expected) and October business inventories. Meanwhile we’re due to get comments from the ECB’s Guindos and Lautenschlaeger this morning before Angeloni speaks this afternoon.

https://www.zerohedge.com/news/2018-12-14/global-stocks-tumble-poor-econ-data-china-europe
 

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FMC Commissioner Issues Final Report on Demurrage and Detention Practices at U.S. ports.
December 12, 2018 by Editorial



File Photo: Federico Rostagno / Shutterstock

By J. Michael Cavanaugh (Holland & Knight) – Commissioner Rebecca F. Dye has issued her Final Report for the Federal Maritime Commission’s (FMC) fact finding investigation into demurrage and detention practices at U.S. ports (i.e., FMC Fact Finding 28). In the Final Report issued on Dec. 7, 2018, Commissioner Dye concluded that demurrage and detention practices at U.S. ports would benefit from greater transparency and consistency in notice, billing practices, dispute resolution and terminology. The Final Report proposes to address these issues through the creation of “FMC Innovation Teams” comprised of industry leaders that would suggest commercially viable refinements to demurrage and detention management. In an effort to avoid additional future issues, Commissioner Dye also recommended that the FMC create a Shipper Advisory Board to provide the FMC insight and information into emerging maritime issues. The FMC will now consider whether to adopt the Final Report’s recommendations.

Background
The FMC’s investigation into port demurrage and detention practices originated with the filing of a formal petition on Dec. 7, 2016, by the Coalition for Fair Port Practices. The petition requested that the FMC adopt an interpretative rule pertaining to demurrage and detention practices. The Coalition filed its petition in response to port disruption in 2015 resulting from labor disputes and other port congestion events on the U.S. West Coast. The FMC received more than 110 comments to the petition and held public hearings on Jan. 18 and Jan. 19, 2018. On March 5, 2018, the FMC voted to commence a fact finding regarding demurrage and detention practices, selecting Commissioner Dye to lead the study.

The FMC issued questions and requests for documents to 23 ocean carriers and 44 marine terminal operators (MTOs) concerning demurrage and detention practices. Commissioner Dye issued an interim report on Sept 5, 2018 (Interim Report), detailing preliminary findings. The Interim Report focused on billing practices, cargo retrieval notification and terminology.

During the second phase of the investigation, her team conducted field interviews with maritime stakeholders, including shipping companies, port officials, MTOs, ocean transport intermediaries (OTIs), drayage truckers, and importers and exporters at ports in Southern California, New York and New Jersey, and Florida. According to the Final Report, these interviews revealed important details that informed many of the recommendations contained in the Final Report.

Summary of Fact Finding 28 Final Report
The Final Report highlighted the primary issues Commissioner Dye and her team discovered during their investigation into demurrage and detention practices. It initially noted the complex web of contractual and non-contractual relationships contributing to the issues at the heart of the investigation. However, it also noted that these circumstances are unlikely to change due to longstanding commercial practices in the maritime industry. Therefore, the Final Report focused on important areas of change that the investigators believe would not cause major disruption to maritime commerce, including:

  • notice of cargo availability
  • billing practices
  • dispute resolution processes and procedures
  • terminology

The Final Report encourages MTOs to establish notification policies that tailor the demurrage and detention practices to the particular circumstances of each cargo interest or trucker, and provides crucial points for carriers and MTOs to consider, including a) whether carriers and MTOs gave reasonable opportunity to make an appointment to pick up cargo following notice of availability; b) whether carriers and MTOs extended free time when shipments are subjected to government inspections and holds; and c) whether carriers and MTOs took into account terminal closures after notice of availability is given.

The Final Report also discusses billing practices for demurrage and detention, noting that there are many unique billing circumstances due to the complex nature of maritime commercial relationships. However, the Final Report notes that the most meaningful practice, in terms of billing, would be for the institution of public billing portals on the MTOs’ websites that contain explanations of charges.

Dispute resolution processes and procedures are another issue Commissioner Dye highlighted. The Final Report recommends that all dispute resolution processes and procedures be clearly established, made available on public websites, and include contact information and the identity of the individual that can assist with resolution of any demurrage or detention dispute.

Further, the Final Report discusses the standardization of demurrage and detention terminology. The Report notes the existence of challenges with this issue, starting with the differing definitions of “demurrage” and “detention,” which cause much confusion among cargo interests and truckers. The Report recommends that, where possible, a definition of each term should be created and applied across the industry.

The Final Report concludes by recommending that the FMC create “Innovation Teams” to discuss and suggest ways to standardize solutions for the issues identified in the Final Report. The Final Report also recommends the creation of a Shipper Advisory Board to anticipate and avoid future investigations resulting from disruptions in the maritime industry. The anticipation is that the Shipper Advisory Board will be closer to industry trends and provide effective warning to the FMC of any future issues.

Considerations and Takeaways
The Final Report identifies key areas where the maritime industry’s demurrage and detention practices would benefit from additional clarity, including notice of cargo availability, billing practices, dispute resolution processes and procedures, and terminology. Importantly, the Final Report does not attempt to initiate rulemaking on these subjects. The FMC will now accept or reject the recommendations of the Fact Finding 28 Final Report.

Most likely, the FMC will eventually issue a manual or other publication suggesting the best practices for handling each demurrage and detention issue. Such guidance could be used as persuasive evidence in any demurrage or detention dispute. However, it is not clear what the final impact may be. In the history of the FMC, there is no instance of a shipper initiating a formal complaint case regarding demurrage or detention practices of a carrier or MTO.

Read more on the Holland & Knight website.

This article was originally published by Holland & Knight and is republished with permission.

https://gcaptain.com/fmc-commission...murrage-and-detention-practices-at-u-s-ports/
 

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Blackstone, KKR Said to Pursue $1 Billion Container Terminal in Long Beach
December 13, 2018 by Bloomberg


By Sheila Fitzgerald / Shutterstock

By Gillian Tan and Vinicy Chan (Bloomberg) — Cosco Shipping Holdings Co.’s sale of a container terminal in Long Beach, California has drawn interest from potential buyers including Blackstone Group LP and KKR & Co., people familiar with the matter said.

EQT Partners and an arm of Macquarie Group Ltd. have also been studying a deal for the asset, the people said, asking not to be identified because the information is private. The facility could be valued at $1 billion or more, depending on the structure of a deal, the people said.

Suitors for the terminal were asked to submit their interest last week, according to the people. Cosco, the Chinese state-owned shipping giant, agreed to sell it to obtain U.S. regulators’ approval for its acquisition of rival container-shipping line Orient Overseas International Ltd.

The Port of Long Beach describes itself as a U.S. gateway for trans-Pacific trade and the second-busiest container seaport in the U.S., according to its website.

Deliberations are at an early stage, and there’s no certainty they will result in a transaction, the people said. Representatives for Blackstone, EQT, KKR and Macquarie declined to comment. A representative for Cosco referred Bloomberg queries to OOIL, which didn’t immediately respond to requests for comment.

It’s unclear whether Blackstone’s infrastructure fund is pursuing a deal with or without the involvement of its largest investor, Saudi Arabia’s Public Investment Fund. Bloomberg News reported in October that the kingdom may abstain from transactions or be excused by Blackstone if its participation would impede deals from receiving U.S. regulatory approval.

Other institutional investors have exposure to the region. Last year, EQT acquired 90 percent of Global Gateway South, a terminal in the adjoining Port of Los Angeles, from CMA CGM SA. Canada’s Brookfield Asset Management partially owns TraPac, which operates container terminals in the ports of Los Angeles and Oakland.

Infrastructure investors, including pension funds, have targeted port assets partly due to the steady returns they can provide. In June, British Columbia Investment Management Corp. and IFM Investors agreed to buy stakes in GCT Global Container Terminals Inc. — an operator of facilities in New York, New Jersey, Vancouver and British Columbia — from Ontario Teachers’ Pension Plan, which remains an investor.

© 2018 Bloomberg L.P

https://gcaptain.com/blackstone-kkr-said-to-pursue-1-billion-container-terminal-in-long-beach/
 

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Trade War Pushes Port of Long Beach Towards New Cargo Record
December 13, 2018 by gCaptain


OOCL Malaysia, largest ship at 13,000 teu to make its maiden call at LBCT

Cargo volume at the Port of Long Beach continued to rise in November, setting the stage for a second consecutive calendar year record.
The Port handled 621,835 twenty-foot equivalent units (TEUs) of container cargo during the month, a 1.5 percent increase compared to November 2017. Last month’s performance pushed 2018’s total TEU count to 7,349,377, making it virtually certain the Port will eclipse its record of 7,544,507 TEUs set last year.

For the year to date, volumes have risen 7.3 percent.

Imports continued to outpace goods shipped overseas. Inbound cargo hit 319,877 TEUs, an increase of 0.2 percent, while exports shrank 8.4 percent to 115,774 TEUs. Empties returned to Asia swelled 11.4 percent to 186,183 TEUs.

According to Port of Long Beach Executive Director Mario Cordero, recent container trends, such as the growth of imports relative to exports, the large number of unloaded containers, illustrate how the higher tariffs imposed this year by the United States and China have impacted the flow of commerce.

“American retailers are stocking up on goods made in China to avoid anticipated higher tariffs,” said Cordero. “You’re seeing the opposite effect on the other side of the ocean. Chinese businesses seem to be already looking to other countries for goods and raw materials, meaning there’s less demand for American exports and more empty containers are being shipped.”

“Business has been good in 2018, and we appreciate our customers for choosing the Port of Long Beach,” said Long Beach Harbor Commission President Tracy Egoscue. “While the new year may bring challenges, we remain hopeful that trade will grow, bringing more jobs and economic opportunity to this region.”

https://gcaptain.com/trade-war-pushes-port-of-long-beach-towards-new-cargo-record/
 

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U.S. Confirms China Soybean Purchase, But No Clarity Over More Sales
December 13, 2018 by Reuters



FILE PHOTO – Workers transport imported soybeans at a port in Nantong, Jiangsu province, China April 9, 2018. REUTERS/Stringer/File Photo




By Julie Ingwersen and Humeyra Pamuk CHICAGO/WASHINGTON Dec 13 (Reuters) – U.S. government officials on Thursday hailed China’s first meager purchase of U.S. soybeans since its trade war with the United States began in July and said they hoped for, but could not guarantee, more to come.

The U.S. Department of Agriculture (USDA) announced private sales of 1.13 million tonnes of U.S. soybeans to China, a figure that farmers and grain traders said was not large enough on its own to lift slumping prices or absorb a huge surplus that has accumulated across the farm belt.

The sale was first reported by Reuters on Wednesday, a day after U.S. President Donald Trump told Reuters in an exclusive interview that China was buying a “tremendous amount” of U.S. soybeans.

“Having a million, million-and-a-half tonnes is great, it’s wonderful, it’s a great step,” USDA Deputy Secretary Steve Censky said at an Iowa Soybean Association annual meeting on Thursday. “But there needs to be a lot more as well, especially if you consider it in a normal, typical year, we’ll be selling 30 to 35 million metric tonnes to China.”

“We think it is a good start, it is promising,” Secretary of Agriculture Sonny Perdue told reporters in Washington. “We are certainly hopeful and expecting that it’ll come through,” he said, in reference to further sales.

Asked if there had been any talks with China for further purchases, Perdue said: “No. Not that we’ve had, but as you know, the U.S. Trade Representative is in charge of that.”

Soybean prices fell on Thursday as grain traders eyed a massive U.S. soybean surplus in storage, and what is expected to be a record-large harvest from the world’s biggest soybean exporter, Brazil, just weeks away.

The U.S. soybean sales to China came after Trump and China’s President Xi Jinping agreed to a 90-day detente in their tit-for-tat tariff war to negotiate a trade deal after meeting at the Group of 20 summit in Buenos Aires.

The purchases, which traders said were made by state-owned companies in China, were viewed as the most concrete evidence yet that Beijing is making good on pledges the U.S. government said Xi made when the two leaders met on Dec. 1.

While it was the ninth largest single-day U.S. soybean sale on record, it amounted to just 3.5 percent of China’s U.S. soy purchases last year and 2 percent of U.S. shipments to all foreign buyers.

“If further activity and amounts aren’t confirmed, the trade could soon be ready to settle in for a long, cold, fundamentally bearish winter,” said Matt Zeller, market intelligence analyst with INTL FCStone.

With exports to China drying up, U.S. soybean prices have traded around their lowest levels in a decade in recent months. The actively traded Chicago Board of Trade March soybean contract fell more than 1 percent on Thursday to the lowest in a week, in the steepest drop in 2-1/2 weeks.

TRADE AID DELAYED
The White House this week delayed additional payments from a promised $12 billion aid package for farmers stung by the trade war because it expected Beijing to resume buying U.S. soybeans.

“We’ve been arm wrestling with our folks from the OMB,” Censky said, in reference to the White House Office of Management and Budget, which must sign off on the payouts.

Perdue said he would be meeting with the White House on the issue on Friday and expected that the second tranche would eventually be paid.
“OMB … is always looking to hold onto money. I think this is a commitment the president had made. … We hope to have it resolved very soon,” he said.

He said he believed that trade issues remained damaging enough to U.S. agricultural export markets to warrant the second tranche of payments, despite the buying from China.

The 25 percent tariff Beijing imposed on U.S. soy shipments in July in retaliation for American duties on Chinese goods remains in place.

China last year bought about 60 percent of U.S. soybean exports in deals valued at more than $12 billion. The purchases confirmed on Thursday were less than $500 million.

U.S. exports to China dropped to 8.2 million tonnes in the first 10 months of the year, with the vast majority of that shipped before the tariffs took effect in July.

(Reporting by Karl Plume and Julie Ingwersen in Chicago and Humeyra Pamuk in Washington; editing by Caroline Stauffer, Jonathan Oatis and Richard Chang)

(c) Copyright Thomson Reuters 2018.

https://gcaptain.com/u-s-confirms-china-soybean-purchase-but-no-clarity-over-more-sales/
 

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U.S. Offshore Wind Lease Bids at $285 Million, Bidding to Continue Friday
December 13, 2018 by Reuters


Opened in 2016, Deepwater Wind LLC’s Block Island Wind Farm is the first and currently only offshore wind farm in the United States. Photo: Deepwater Wind LLC





By Nichola Groom Dec 13 (Reuters) – A U.S. government auction for three wind leases off the coast of Massachusetts was on track to blow through a previous sale record on Thursday, with bids standing at combined $285 million after 24 rounds.

The bidding, which took place over nine hours on Thursday, will continue on Friday morning, the U.S. Bureau of Ocean Energy Management said.

The highly competitive lease sale will give the winner or winners the right to develop nearly 390,000 acres, divided into three leases near the Massachusetts islands of Martha’s Vineyard and Nantucket and Rhode Island’s Block Island. The same areas failed to sell at a 2015 auction, underscoring the industry’s nascent view of the United States as the next major market for offshore wind.

The auction attracted 19 companies as potential bidders, including Avangrid Renewables, EDF Renewables Development and Norway’s Equinor, according to a government auction notice published in October. The Bureau of Ocean Energy Management, which conducted the auction, said Thursday it would not disclose which companies were involved in the bidding until the sale’s completion.

The Trump administration is streamlining permitting and carving out new areas off the coast for leasing as part of its America First policy to boost domestic energy production and jobs. This effort dovetails with recent mandates in northeast states like New Jersey, Massachusetts and New York requiring utilities to procure energy from offshore wind.

That government support, combined with falling prices for the renewable energy source, has intensified interest from European developers with years of success building offshore wind farms in the North Sea. Denmark’s Orsted, the world’s largest offshore wind developer, announced in October that it would buy the top U.S. offshore wind player, Deepwater Wind LLC, for $510 million. Deepwater Wind was listed among the potential bidders in Thursday’s auction.

Bidding in an auction last year for nearly 80,000 acres off the coast of New York lasted 33 rounds with Norway’s Equinor, formerly known as Statoil, eventually winning the lease for a record $42.5 million. An individual lease had never before sold for more than $5 million, according to public records.

(Reporting by Nichola Groom; Editing by Cynthia Osterman)

(c) Copyright Thomson Reuters 2018.

https://gcaptain.com/u-s-offshore-wind-lease-bids-at-285-million-bidding-to-continue-friday/
 

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Naked Capitalism Links 12/14
https://www.nakedcapitalism.com/2018/12/links-12-14-18.html

TBP - 10 Friday AM Reads 12/14
https://ritholtz.com/2018/12/10-friday-am-reads-208/

SA - Market News Live Feed 12/14
https://seekingalpha.com/market-news

CWS Morning News: December 14, 2018
http://www.crossingwallstreet.com/archives/2018/12/morning-news-december-14-2018.html

CWS Market Review – December 14, 2018
http://www.crossingwallstreet.com/archives/2018/12/cws-market-review-december-14-2018.html

AR - Podcast links: doing capitalism 12/14
http://abnormalreturns.com/2018/12/14/podcast-links-doing-capitalism/

MtM - Week Closing on a Disappointing Note 12/14
http://www.marctomarket.com/#!/2018/12/week-closing-on-disappointing-note.html

SA - Wall Street Breakfast: Markets Lose Steam Amid Growth Jitters 12/14
https://seekingalpha.com/article/42...akfast-markets-lose-steam-amid-growth-jitters

TCS - US Financial Markets Stress Index Ticks Up To 2-1/2 Year High 12/14
http://www.capitalspectator.com/us-financial-markets-stress-index-ticks-up-to-2-1-2-year-high/

FC - Forex Weekly Outlook Dec. 17-21 – Fed and fears determine the dollar’s close of the year 12/14
https://www.forexcrunch.com/forex-w...utm_campaign=Feed:+ForexCrunch+(Forex+Crunch)