EUR 9.38 For Business Accounts Only

The Morning Track cyber-monday

- The Morning Track – Cyber Monday by Bob Savage
http://track.com/articles/the-morning-track-cyber-monday/

Computer light emits the wrong kind of frequencies to give us vitamin D, so add that to the list for buying today. This is the US version of singles day – where upon countless workers sneak around buying holiday presents on-line at work. Today is about determining if we are pausing in a larger Trump policy induced trend or something even bigger. A lower US dollar drives risk-off and starts the talk of a larger correction after 3 weeks of gains. The key question becomes what is different today to make this a “bigly” event. Here are a few headlines that seem to be important.

• ECB Stournaras – Tapering is “dangerous word” right now but suggests QE options including lesser for longer.
• Saudi Arabia offers 4.5% cut if Iran freezes production at 3.8mbd. This is according to FT reports – which also suggest Saudi requires Russian participation. Iran argues only Saudi and others that have increased production over the last 2 years should cut back. Mood for a Wednesday deal is pessimistic.
• Banca Monte dei Paschi di Siena shares remain suspended with debt-for-equity swap on E4.3bn this week – with fears about Italian referendum deterring the E5bn recapitalization plan leading to a bail-in. The Italian bank index is down 3.5% at the open with Renzi expected to resign and lose the Dec 4 referendum vote.
• French former PM Fillon wins conservative party Presidential Nomination. Fillon took 69.5% in second ballot against 30.5% for Juppe. The election pits National Front Le Pen and likely current President Hollande of the Socialist Party on April 23 and May 7. This brought the EUR bid at the Asia open.

• India RBI “temporarily” hikes cash reserve ratio – bonds and bank shares fall – INR off. The central bank will review increase Dec 9 – today’s action drains $47.3bn from market.
• China tries to stem capital outflows by limiting offshore mergers. The authorities will require more steps to approve M&A or other investments abroad by companies.

There is no free lunch today – it’s about buying on line and being clever about the discounts to get it delivered. The moves in the markets overnight suggest we are in a correction mode but its not as significant as some would like as the pain trade for a USD higher holding longer seems clear and that the concerns about Europe with Italy and France, China with the CNH and outflow coupled with bad debt, India and its Modi Demonetization and Saudi fighting with OPEC for a real deal – all that makes it complicated to give up on the USD as safe-haven. Expect the 99.50 level in US dollar index to remain in play but many are already ready to re-buy and shoot for 104 by year-end.