• Dr Akela

Markets Rise but Trouble Looms

What's New

. Asian stocks jumped today, propelled by the S&P 500 reaching new all-time highs and comments by White House adviser Larry Kudlow that the US and China were close to striking a trade deal. China has also ended a nearly five-year ban on imports of US poultry meat, which could lead to more than $1 billion in annual shipments to China.

. As a result, the Aussie and the Kiwi rose.

. On the other hand, most experts remain skeptical about the possibility of a trade deal: a Reuters poll of more than 100 economists showed that while few believe that a US recession would take place, most feel that a trade truce is unlikely in the coming year.

. The economists views are not without justification: the US Senate brought the Hong Kong Human Rights and Democracy Act under an expedited process that could pass the bill as early as next week - the Chinese Foreign Ministry on Thursday warned of retaliation if the measure passes Congress. In the meantime, Hong Kong remained paralyzed this week.

. In the meantime, Trump apparently has admitted to "grant or withhold military assistance in return of a public statement of a fake investigation", as Nancy Pelosi said, an impeachable offense under the US Constitution.

. Yesterday, the Wolf was correct on the prediction made for data releases: Germany has avoided recession as q3 GDP growth was positive. At the same time, UK retail sales were lower than expected, while overall Euro Area GDP was also improved.

. In the US, initial jobless claims were better than expected, while inventories, both for oil and natural gas, were higher than forecasted.

. Korea is still in trouble as exports and imports have been confirmed to have experienced a double-digit y/y contraction in October, the sixth consecutive month of double-digit drop.

Up and Coming

. The US is in focus on the data release front today, with retail sales flirting with m/m contraction, as forecasts suggest a 0.1% growth rate. On the other hand, Empire State Manufacturing Index is expected to come out better than the previous month, while capacity utilization should decrease. Importantly, industrial production is forecast to contract again, at a -0.4% m/m rate.

. In the Euro Area, not much is expected, with just the CPI for October standing out.

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