Daily Comments

As Asian markets traded there was still no formal confirmation regarding a U.S./China trade deal. These markets though were optimistic that at least a truce would be reached. The Nikkei 225 powered up +2.55% and the Shanghai Composite soared +1.78%. Boris Johnson and his Tory party handily won the U.K. election, and now an orderly Brexit will likely soon ensue. With the wind at its back, the British Pound gained over 1.2% vs the US$ index.      The Europe Stoxx 600 jumped +1.22% to 412.34 The German DAX gained +0.57% to 13221.64.      In the U.S. Oct. Business Inventories were up 0.2% in Oct. Nov. Retail Sales were weak, up +0.2% (ex-autos +0.1%), Import prices rose +0.2% and export prices rose +0.2%. For 12/06, Baker-Hughes reported a drop of 3 oil rigs, to 799.      Yields on 10-year Notes slipped to 1.819%. The March US$ Index lost 0.19% to 96.770. Feb. gold jumped 0.56% to $1,480.50. Feb. crude gained 1.10% to $59.71. With China confirming a phase one trade deal, the scheduled Dec. 15 tariffs off the table, and the U.K. election in the rear-view mirror, U.S. stocks initially posted a wide range. However, as the day wore on, equities were in knots near unchanged.


In Nov., Apple’s China iPhone shipments fell by 35%, and this after a double-digit decline in Oct. Besides a delay in tariff increases between the U.S. and China, observers had expected little substantive progress on trade before Sunday’s tariff “deadline.” The Nikkei 225 rose +0.14% but the Shanghai Composite slipped -0.30%.      The ECB kept its deposit rate at -0.5%, as well as its QE efforts of 20B Euros/month. The FTSE 100 jumped +0.79% to 7273.47. The German DAX gained +0.57% to 13221.64.      Initial Claims for 12/06 spiked to 252K. Nov. PPI was unchanged (ex-food and energy, it fell -0.2%).      Yields on 10-year Notes moved up to 1.896%. The March US$ Index jumped 0.29% to 96.895. Feb. gold lost $1.1 to $1,473.90. Jan. crude rallied 59-cents to $59.35. President Trump Tweeted… "Getting VERY close to a BIG DEAL with China. They want it, and so do we!" Stocks had opened lower, but Trump’s Tweet sent major indices to fresh all-time highs. After initially spiking to fresh highs, stocks gave back about half their gains. Then, news of a phase one trade deal in “principle” surfaced, and this brought fresh bullish enthusiasm. Stocks surged upwards again, just shy of new highs.


Consensus seems to be that China and the U.S. will find an excuse to delay the tariff increases currently scheduled for Sunday. Asian markets were mixed. The Nikkei 225 edged down -0.08% but the Shanghai Composite gained +0.24%.      The Stoxx Europe 600 gained +0.88%, closing at 406.22. The FTSE 100 edged up +0.03% to 7216.25. The German DAX gained +0.58% to 13146.74.      November CPI at +0.3% (ex-food and energy +0.2%) was just above expectations. The November Treasury Deficit was up 2% to $209B. Last night, the API reported a surprise build in crude inventories for 12/6 of +1.4M barrels, and the EIA reported an inventory gain of 822,000 bbl vs. expectations of a 2.8M decline. As expected, the Fed left the federal funds rate unchanged, with a target of 1.50% to 1.75%. They appear content with the level of economic growth, labor and inflation numbers.      Yields on 10-year Notes lost -0.033, to 1.798%. The Dec. US$ Index sank to 97.090. Feb. gold soared $11.3 to $1,479.40. Feb. crude fell -0.69% to $58.73. Stock bulls found today’s data cause to press prices firmly higher by the close.