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Daily Briefing –Monday, November 20, 2017


The Euro this morning is plunging after Angela Merkel’s attempts to create a 4-party coalition failed. Not helping was this morning’s Producer Price index, which was down to 2.7% YoY in October. A weak German government or renewed elections could shift the center of EU power towards Paris on issues such as tighter union, the ESM reform and QE. The effect was felt overnight in Asian indexes, that fell as the Yen gained strength over the Euro. In London, on the other hand, Theresa May this morning announced a £4bn R&D budget for new technologies to ward of the Brexit Blues.



In hopes, perhaps, of luring the Aramco IPO to Hong Kong, Chinese President Xi JingPing has pledged to strengthen the relationship with Saudi Arabia in the face of internal Saudi shakeups and tensions with Iran. In return, the Saudi king has promised to assist in China’s Belt & Road initiative. Japanese exports rose 14% in October, their 11th straight month of gains, but the nation’s trade surplus fell to a worrying ¥285.4B – less than half of September’s. And India’s credit rating has been upgraded by Moody’s from Baa3 to Baa2 as an approval of institutional and economic reforms, including boosting productivity, reforming bankruptcy codes, removing inter-state trade barriers and uniting the nation’s 29 states under a single customs union. India’s Sensex share index added 1.1% on the announcement, bringing the yearly rate to 25%.



Numbers are in describing where America’s trillion dollars of debt are buried. 30% of African-American and 27% of Latino households are in debt. If Trump’s tax cuts are legislated, income will rise by 7% for the $1mil-per-year segment, by 2% for the $50K and above segment and less than 1% for those earning less than $50K per year. Meanwhile, most FOMC members have expressed their support for a December rate hike, helping push up the USD overnight, following positive housing and industrial data as last week ended. Continuing jobless claims were down, but initial claims were up by 10K to 249,000. Finally Canada’s consumer inflation slowed to 1.4% YoY in October.



The week begins with gold relaxing from its pre-weekend surge, as the USD strengthens on positive data. Gold broke through its 50-day moving average and settled just under 1295. Overnight, it began a return towards the 1290 mark – its former resistance level. And oil regained its losses dramatically, now trending near 56.70 for a barrel of WTI, after a level Baker-Hughes rig count came in level Friday, and Saudi oil minister Khalid Al-Falih said that the OPEC freeze should continue..


Today’s Events

2 PM GMT EU Draghi Speech
0:30 AM GMT Australia: RBA meeting minutes.

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