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Finance Update – A New World Order?

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Asia – China centre stage

In a prepared speech ahead of the upcoming Asia-Pacific Economic Cooperation summit in Malaysia today (presumably to be attended by US President Trump), Chinese President Xi Jinping announced the reduction of tariffs and institutional costs, aimed at expanding imports.

Meanwhile, down under, Australian PM Scott Morrison said he wouldn’t compromise Australia’s national security and sovereignty in light of China’s criticism and warnings “against making China an enemy.”

Recently, a Chinese diplomat produced 14 grievances against Australia, including “poisoning bilateral relations by interfering in the situation in Hong Kong, the plight of Uyghur Muslims, Taiwan, the call for a COVID-Wuhan probe and the rejection of Chinese companies seeking to invest in Australia.

China has retaliated with trade sanctions and what Australia has called “economic coercion.” Morrison said, “we’ll continue to act in our own national interests… strengthen stability and peace in the Indo-Pacific”, according to Reuters.

Meanwhile, in Hong Kong, a new challenge rises to China’s puppet regime – this time from the judiciary, which yesterday ruled that the current mechanism handling complaints against police brutality were inadequate, contradicting Governor Lam’s assertion to the contrary.

Chinese markets are nevertheless up this morning led by the A50’s 1.23% increase. Both the Hang Seng and Nikkei are down by a half and third per cent, respectively.

The AUD is down a third per cent despite a not-as-bad-as-expected unemployment rise to 7% in October. Participation also increased by a per cent to 65.8%. Finally, tonight, elections in New Zealand and the G20 meeting in Riyadh.

Europe – UK to boost military

European indices were mainly up yesterday, the DAX gaining a half per cent and the FTSE a third.

The Euro remains flat after CPIs improved marginally in October. And the Pound remains relatively calm despite a Reuters report that the UK government is planning to add £16.5 bn to its defence budget pushing that to its highest level since the Cold War.

Americas – US economy slated to sink

Following ST Louis Fed Head Bullard’s remarks that the US economy would shrink 2.5% over this year, US indices all ended in the red yesterday, the DOW and S&P losing 1.16%.

The dollar has been gaining some tailwind thanks to improving housing start and mortgage application numbers and despite a disappointingly steady building permits count. In Canada, October consumer inflation improved slightly to 0.7% YoY.

Commodities – Japan commences crypto pilots

Oil shot up a dollar 30 after the EIA surprisingly pleased with a 768K crude stocks change – half what had been feared – before settling back half-way.

And Bitcoin surged at 18.267 before returning to 17.742 as over 30 Japanese firms announce launching digital currency experiments in response to the central bank’s planned issuance of a digital yen.

Corporate – Tesla shares “disappearing”

Tesla shares continue soaring, adding 10.2% yesterday, adding about $80 bn to the company’s market valuation and following its announced invitation to join the S&P500 index. Independent analyst Frank Peelen reports that 50 mn Tesla shares have “disappeared” into the hands of “unknown investors” based on 13F filings.

Amazon (-0.96%) is apparently planning to outsource its drone delivery plans, Reuters reporting the dismissal of drone R&D and manufacturing staff. And Fiat Chrysler (FCA +0.5%) has announced a shareholders meeting to approve the upcoming merger with Peugeot (PSA +2.2%).

In earnings, Nvidia (+0.05%) announced a 57% YoY surge in revenues to $4.73 bn with earnings up 114% QoQ and 46% YoY at $2.12 per share. And ThyssenKrupp (-2.8%) disappointed with a 15% YoY drop in revenues to €28.9 bn, but shares surging to €15.4 from €0.49 the year before.

Today, earnings from Kingfisher, Ross Stores and PZU, with a shareholders meeting for the Goodman Group.

Events

09:00 AM GMT EU Current Accounts. Also, construction output.
01:30 PM GMT US Jobless Claims & Philadelphia Fed Manufacturing Index. Home sales at 3
11:30 PM GMT Japan CPIs
01:30 AM GMT (+1) China Interest Rate

Analysis

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