#96 Turkey Upgraded

Issued by Labis Michalopoulos, CFA

email: labis@quantomental.com

Last week:

  • Nato Summit: Turkey’s position seems upgraded. It’s invasion in Syria, the joined patrols with Russia, and the S400 implementation has not been vetoed by NATO members. No insights have been published from the meeting of the the above quartet. The smiles seem to seal the new status quo. Few day’s before the NATO summit, Turkey agreed with Libya on new sea borders neglecting the existence of Greek islands. Greece expelled the Libyan ambassador, over the Turkey-Libya accord
  • US bill on Hong Kong has been signed. Sunday’s December 8 rally, that was approved by the Hong Kong police, was attended by tens of thousands of protesters.
  • The US House voted the Uighur Act of 2019 that includes sanctions against Chinese officials and export bans of Chinese surveillance technology.
  • US-EU: is considering to impose tariffs on France, in response to the French taxes on US technology giants.
  • OPEC+: The 1.7MBpd production cap that would last on March 2020 was extended in size, not in duration. The new production cap would be 2.1MBpd and any extension will be agreed on March 2020. The additional cut will be shouldered by OPEC (372KBpd) and the rest (131KBpd). Iran, Libya and Venezuela are exempt from the cap.
  • Both RBA and BOC kept interest rates unchanged.
  • Japanese fiscal expansion plan could add anything from 0.2% to 0.8% to its GDP. The 4Q19 GDP growth is expected to be negative.
  • Cryptos: Total market cap at $205bn ( +3.0% w/w, -45% from the 2019 high, -76% from the all time high of January 2018).

The weeks before:

  • The Arab League disprove US’s approval on Israels moves, Uyghurs treatment goes public, Germany’s SPD have new leaders, negotiations with the Talibans restarted. (25Nov-01Dec)
  • G20 ministerial meeting, Germany escaping technical recession, EU-Singapore trade deal, US and China not reaching phase 1 deal, Apple’s suppliers except from tariffs, district elections in Hong Kong, Israel stroke Iranian targets in Syria, US and South Korea failed to agree on the cost of US troops in the peninsula, Russia returned 3 seized vessels to Ukraine.(18-24 November)


Next week:

  • EU is about to commit towards a net zero emission economy by 2050 and possibly update its 2030 target. Companies like VW, Daimler, EasyJet, Airbus are on board.
  • France-Germany-Russia and Ukraine are scheduled to meet in Paris on Monday, to talk on Ukraine.
  • The FED and the ECB are having their last monetary meetings of the year. No policy change expected from both Central Banks. Nevertheless, I am expecting some misunderstanding and market over-reaction during the Christine Lagarde’s first press conference as the head of the ECB. For a woman with a political background, being able to communicate like a Central Banker will not come easy. Nomura was expecting a further -10bps cut for deposits at the ECB.
  • UK’s general snap elections will take place on Thursday.

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