Snap Elections in the UK, 3rd rate cut by the FED
Major events of last week:
- Saudi Arabia: Last week’s “Davos in the Desert” investment event did not produced any headlines.
- APEC Summit: The long awaited summit in Chile, where Trump and Xi where expected to sign the phase 1 US-China trade deal has been canceled due to political unrest.
- USA-EU-Turkey-Russia: On the same month, the USA essentially let Turkey invade Syria, and hypocritically recognized the Armenian genocide by Ottoman Turks between 1915 and 1923. Erdogan canceled his scheduled trip to the USA in two weeks.
- The ISIS leader Abu Bakr al-Baghdadi was shot dead by US special forces in Suria. President Trump thanked Russia-Turkey-Syria and Iraq
- UK: The new deadline for Brexit is January 31, 2020. The Boris Johnsons’s draft agreement with the EU (the only draft that was approved by the UK Parliament) is essentially dead as the UK is having snap general elections on December 12. Polls predict a majority for the Conservative Party of Boris Johnson.
- EU: Alternative for Germany won 2nd place in the Thuriggia elections and the Salvini’s League is set to win Umbria.
- US-China: A breaking news article published on Bloomberg on Thursday, 9.00 GMT (EU oppening) was argueing that the Chinese would not negotiate further unless all US tariffs are lifted. On 13.20GMT President Trump tweeted that the phase 1 deal will be signed by him and President Xi. On 18.00GMT the articles wording was revised and market returned to their risk on mode.
- USA: The House Democrats committed to their impeachment inquiry and made it formal via a vote.
- FED: Jerome Powell delivered a third rate cut in a row under the same justification; to sustain economic growth and provide insurance for ongoing risks. “We would need to see a significant move up of inflation, that is persistent, before we are even consider raising rates to address inflation concerns” was a clear response during the Q&A of the press conference.
- Protests : Protests in Hong Kong, Chile, Lebanon and Catalonia continue. China was thinking of replacing Carrie Lam, but the reports have been dismissed.
- Cryptos: Total market cap at $248bn ( +1% w/w, -32% from the 2019 high, -70% from the all time high of January 2018).
Major events of next week:
- Monetary meetings of the Australian Central Bank (RBA) on Tuesday and the Bank of England (BOE) on Thursday.
- US earnings: Uber on Monday, Coca Cola on Tuesday, Baidu on Wednesday, Goldman Sachs, Walt Disney and TiVo on Thursday.
Major events of November:
- President Trump and Presdident Xi are expected to sign the phase 1 US-China trade deal.
- The 6 month postponement of tariffs considerations on EU autos, expires
- The new president of the EU Commision, Ursula Von der Leyen, and the new ECB governor, Christine Lagarde, take office.
- The Italian budget and the German budget are set to absorb public’s attention. In particular, the size of the German Fiscal expansion is expected to determine the EUR strength.