Market Talk – December 6, 2019

ASIA:

More ups and downs regarding the US-China trade deal, with China suggesting they will remove tariffs on soybeans and pork as a gesture of goodwill. Meanwhile, US advisor to the White House Kudlow stated that the trade deal is in a better place than where they were mid-November, but also hinted that US President Trump is willing to walk away from the deal at any time.

Netflix plans to invest $420M to fight Disney in India. Netflix continues to bet heavily on India, one of the world’s largest entertainment markets, where it competes with more than three dozen rivals including Disney. Reed Hastings, the chief executive of Netflix, said at a conference in Delhi that Netflix is planning to spend about USD 450M on developing and licensing content into 2020.

While it remains unclear exactly how much capital other streaming services are pouring on content, a recent KPMG report estimated that Disney’s Hotstar was spending about $17 million on producing seven original shows this year, while Eros Now had pumped about $50 million into its India business to create 100 new original shows.

India has emerged as one of the last great growth markets for global technology and entertainment firms. About half of the nation’s 1.3 billion population is now online and the country’s on-demand video market is expected to grow to $5 billion in the next four years, according to Boston Consulting Group.

The major Asian stock markets had a mixed day today:

• Shanghai increased 12.55 points or 0.43% to 2,912.01
• Kospi increased 21.11 points or 1.02% to 2,081.85
• ASX 200 increased 24.00 points or 0.36% to 6,707.00
• NIKKEI 225 increased 54.31 points or 0.23% to 23,354.40
• Hang Seng increased 281.33 points or 1.07% to 26,498.37
• SENSEX decreased 334.44 points or -0.82% to 40,445.15

The major Asian currency markets had a mixed day today:

• AUDUSD increased 0.0008 or 0.12% to 0.6841
• NZDUSD increased 0.0029 or 0.45% to 0.6573
• USDJPY decreased 0.1460 or 0.13% to 108.6080
• USDCNY decreased 0.0111 or 0.16% to 7.0289

Precious Metals:

• Gold decreased 14.15 USD/t oz. or -0.96% to 1,461.31
• Silver decreased 0.3834 USD/t. oz or -2.26%% to 16.5505

Some economic news from last night:

Japan:

Average Cash Earnings (YoY) remain the same at 0.5%

Household Spending (MoM) (Oct) decreased from 5.5% to -11.5%

Household Spending (YoY) (Oct) decreased from 9.5% to -5.1%

Overall wage income of employees (Oct) remain the same at 0.5%

Overtime Pay (YoY) (Oct) increased from -0.20% to 0.00%

Foreign Reserves (USD) (Nov) decreased from 1,324.5B to 1,317.3B

Australia:

AIG Construction Index (Nov) decreased from 43.9 to 40.0

Indonesia:

FX Reserves (USD) (Nov) decreased from 126.70B to 126.60B

Some economic news from today:

India:

Bank Loan Growth decreased from 8.1% to 8.0%

Deposit Growth decreased from 9.9% to 9.7%

FX Reserves, USD increased from 448.60B to 451.08B

M3 Money Supply decreased from 9.9% to 9.8%

Japan:

Coincident Indicator (MoM) (Oct) decreased from 1.7% to -5.6%

Leading Index decreased from 92.2 to 91.8

Leading Index (MoM) (Oct) remain the same at -0.1%

Hong Kong:

Foreign Reserves (USD) (Nov) decreased from 440.60B to 434.30B

EUROPE:

Jeremy Corbyn announced that he will release evidence that “Johnson is deliberately misleading the people.” The document entitled “NI Protocol: Unfettered Access to the UK Internal Market” shows that a border with Northern Ireland would occur under Johnson’s Brexit plan, despite Johnson claiming that would not occur. According to the document, customs declarations would also be required when traveling between NI and Britain, which Corbyn called “highly disruptive.” Tonight, Corbyn and Johnson will face off in a final debate.

Former President of the European Council Donald Tusk called Brexit “one of the most spectacular mistakes” in EU history. Furthermore, Tusk said that pro-EU politicians have based their campaigns on “an unprecedented readiness to lie.” Tusk, who previously praised France’s Macron, criticized him for favoring France rather than the EU as a whole and cited his ideology as another reason why the EU is not working.

Italy may be the next EU member to request an exit. The Lega Nord per l’Indipendenza della Padania (Northern League for the Independence of Padania) Party under Matteo Salvini announced that they will carry out “Italexit” if they win the next election. Economic advisor Claudio Borghi stated that he is against the European Stability Mechanism (ESM) as it would create harsher financial aid terms for Italy. “We have informed [citizens] of the damage done by the single currency before anyone else and while we want to avoid unilateral actions, if other countries come up with inclusive projects to change the EU’s single currency, we will consider them,” Borgi announced.

The major Europe stock markets had a green day today:

• CAC 40 increased 70.37 points or 1.21% to 5,871.91
• FTSE 100 increased 101.81 points, or 1.43% to 7,239.66
• DAX 30 increased 111.78 points or 0.86% to 13,166.58

The major Europe currency markets had a mixed day today:

• EURUSD decreased 0.0053 or 0.47% to 1.1052
• GBPUSD decreased 0.0032 or 0.24% to 1.3126
• USDCHF increased 0.0035 or 0.35% to 0.9907

Some economic news from Europe today:

Germany:

German Industrial Production (MoM) (Oct) decreased from -0.6% to -1.7%

Norway:

Manufacturing Production (MoM) (Oct) decreased from 0.8% to 0.0%

France:

French Current Account (Oct) increased from -2.90B to -2.40B

French Exports (Oct) increased from 47.0B to 47.7B

French Imports (Oct) increased from 41.6B to 43.0B

French Reserve Assets Total (Nov) decreased from 176,831.0M to 174,711.0M

French Trade Balance (Oct) increased from -5.4B to -4.7B

UK:

Halifax House Price Index (YoY) increased from 0.9% to 2.1%

Halifax House Price Index (MoM) (Nov) increased from -0.1% to 1.0%

Italy:

Italian Retail Sales (YoY) (Oct) increased from 0.8% to 1.0%

Italian Retail Sales (MoM) (Oct) decreased from 0.6% to -0.2%

US/AMERICAS:

Stocks soared this Friday after the Labor Department released a strong jobs report for November. The US economy added 266,000 nonfarm jobs last month, exceeding analysts’ expectations of 180,000. Additionally, unemployment sank to 3.5% — a 50-year low.

White House National Economic Council Director Larry Kudlow said today that a trade deal with China is close, however, President Trump is prepared to walk away if his terms are not met. “The president has said many times if the deal is no good, if the assurances with respect to preventing future thefts, if the enforcement procedure is no good he has said we will not go for it. We will walk away,” Kudlow told reporters at CNBC. This week, Trump hinted that the deal may have to wait until after the 2020 presidential elections. As of now, the US is prepared to impose a 15% tariff on $165 billion worth of Chinese goods on December 15.

Next week, the Federal Open Market Committee (FOMC) will make its final policy decision of 2019. Based on recent comments from Fed Chairman Jerome Powell, it appears that the Fed may choose to maintain rates for the remainder of the year. “We would need to see a really significant move up in inflation that’s persistent before we would consider raising rates to address inflation concerns,” Powell stated after the last policy meeting.

Bank of Canada Governor Stephen Poloz will step down from his position after serving seven years. His term will end in June of 2020. “It has been a privilege to serve as the ninth Governor of the Bank of Canada,” Poloz said in a statement released this Friday. It is unknown who his replacement will be, although there is much speculation.

US Market Closings:

• Dow advanced 337.27 points or 1.22% to 28,015.06
• S&P 500 advanced 28.48 points or 0.91% to 3,145.91
• Nasdaq advanced 85.83 points or 1% to 8,656.53
• Russell 2000 advanced 19 points or 1.18% to 1,633.84

Canada Market Closings:

• TSX Composite advanced 142.05 points or 0.84% to 16,996.97
• TSX 60 advanced 10.22 points or 1.02% to 1,015.09

Brazil Market Closing:

• Bovespa advanced 503.48 points or 0.46% to 111,125.75

ENERGY:

The price of oil fell today after OPEC+ announced an agreement to reduce production by 500,000 barrels per day for the next three months.

The oil markets had a mixed day today:

• Crude Oil increased 0.7911 USD/BBL or 1.36% to 59.0598
• Brent increased 0.9197 USD/BBL or  1.45% to 64.3379
• Natural gas decreased 0.0628 USD/MMBtu or -2.59% to 2.3573
• Gasoline increased 0.0212USD/GAL or 1.31% to 1.6436
• Heating oil increased 0.0134 USD/GAL or 0.69% to 1.9437
• Top commodity gainers: Ethanol(2.11%),Copper(2.44%),Brent(1.45%), and Palm Oil(1.38%)
• Top commodity losers: Steel(-5.03%), Natural Gas(-2.59%), Silver (-2.26%), and Cocoa(-1.40%)

The above data was collected around 12:36 pm EST on Friday.

BONDS:

Japan -0.01%(+3bp), US 2’s 1.61% (+2bps), US 10’s 1.83%(+3bps)US 30’s 2.27%(+3bps), Bunds -0.29% (+2bp), France -0.04% (-7bp), Italy 1.46% (+6bp), Turkey 12.04% (+15bp), Greece 1.56% (-51bp), Portugal 0.43% (+2bp), Spain 0.51% (+0bp) and UK Gilts 0.77% (-1bp).