The consensus is for today's Nov final-demand PPI to rise slightly to +1.2% y/y from Oct's +1.1% and for the core PPICPI to edge higher to +1.7% y/y from Oct's +1.6%. Yesterday's Nov CPI rose to +2.1% from Oct's +1.8% and was slightly stronger than expectations of +2.0%, but the core CPI was in line with expectations at unchanged from Oct's +2.3%.
Is the Fed in neutral?
Big meeting in the White House today about tariffs.
Dimon expects a phase one deal.
ECB meet today and is expected to leave rates unchanged.
Wall Street is being hunted by the CFTC.
China unveils plans to make Macau a financial hub.
Warren's tax plan would raise much less revenue than she estimates.
Germany rejects US steps over Russia's Nord Stream 2.
The consensus is for today's Nov CPI to edge higher to +2.0% y/y from Oct's +1.8%, and for the Nov core CPI to be unchanged from Oct's +2.3%. The Oct core CPI of +2.3% y/y was somewhat elevated at only 0.1 point below the 11-year high of +2.4% posted in Aug-Sep. However, the PCE deflator, the Fed's preferred inflation measure, was in weaker shape at +1.3% y/y headline and +1.6% y/y core in October, comfortably below the Fed's +2.0% inflation target. Meanwhile, the current 10-year breakeven inflation expectations rate of 1.71% is also comfortably below the Fed's +2.0% inflation target, although that it is just mildly below Nov's 4-month high of 1.74%.
The FOMC at its 2-day meeting that concludes today is unanimously expected to leave interest rates unchanged with its funds-rate target at 1.50%/1.75% and the IOER rate at 1.55%. The probability of a rate cut today is zero, according to the federal funds futures market.
Will Trump or won't Trump up the tariff ante on December 15th.
Some think there will be a trade deal announcement before December 15th.
Gunlach sees 10 year rates at 2% by year end.
French Prime Minister Philippe is working on changing France's pension system.
Mexican business wants clarity on the USMCA.
The US Army will fund construction of a rare earths processing facility.
The FOMC at its 2-day meeting that begins today is unanimously expected to leave interest rates unchanged with its funds-rate target at 1.50%/1.75% and the IOER rate at 1.55%. The probability of a rate cut at this week's meeting is negligible at 3%, according to the federal funds futures market. After this week's meeting, the market is expecting an unchanged funds rate target for the first part of 2020 but is then discounting one rate cut in Q4-2020.
Trade, Trade and Trade
‘The markets this week are being buffeted by trade tensions on several fronts including the USMCA, WTO developments, and the US/Chinese trade talks.
A USMCA agreement among the U.S., Mexico, Canada, and House Democrats now appears to be essentially a done deal. The U.S. and Mexico wrapped up a deal over the weekend and forwarded it to House Speaker Pelosi, who conferred with her caucus and outside stakeholders such as unions. AFL-CIO President Richard Trumka yesterday said that there was a deal, according to the Washington Post. Ms. Pelosi seems to have given her blessing to the deal, but she said that final approval will have to wait until the implementing legislation is written.
Regarding the WTO, the organization's enforcement process will be crippled after today since the WTO's appellate panel will no longer have a quorum allowing it to operate. There are currently only three members on the 7-member panel, which is the minimum for a quorum. The terms of two of those three members expire today, meaning that as of tomorrow, there will be only one member on the panel and it will no longer be able to function to resolve trade disputes.
The Trump administration over the past several years has refused to allow the appointment of new members to the WTO appeals panel as it pushes for a major overhaul of the WTO. There are fears in the market that there will be a new outbreak of illegal tariff retaliation across the world now that there is no legal process for redressing trade violations.
Regarding US/Chinese trade talks, there was some optimism on Monday after U.S. Agriculture Secretary Perdue said that, "We have a deadline coming up on Dec 15 for another tranche of tariffs. I do not believe those will be implemented and I think we may see some backing away." However, Mr. Perdue has not been directly involved in the trade talks and he provided no evidence for his view, leading to some doubts about the predictive value of his comment.
The National Federation of Independent Business optimism rose 2.3 points in November.
Warren and Sanders going biblical.
The UK economy is flatling ahead of the December 12th elections.
Pork prices surged in China as the African swine fever continues to impact prices.
The French are urging Lebanon to hold elections as soon as possible.
The consensus is for today's Nov payroll report to show an increase of +184,000, improving from October's weak report of +128,000. Today's payroll report is expected to be inflated by about +46,000 because of returning GM strikers, who subtracted about -46,000 from the weak Oct payroll report.
What others are saying about the payroll number.
China is in the process of waiving retaliatory tariffs.
The World Bank adopts 1 billion plus annual China lending plans.
Fed voters will turn less hawkish next year.
In China, the Caixin/Markit services purchasing managers’ index (PMI) rose to 53.5 last month, the quickest pace since April, from 51.1 in October.
US and China move closer to a trade deal. Tariffs are set to rise on December 15.
Wilbur Ross says a proper deal is more important than when the deal is struck.
US House ramps up China tensions with a Uighur human rights bill.
Europe is committing to cutting net greenhouse gas emissions to 0 by 2050.
Orsted signed a deal to sell 100 megawatts of power from a German wind farm in the North Sea.
Automakers are shedding 80k jobs in the next few years.
Hyundai is pivoting toward electric vehicles.
Free Tuition is exposing risks for low-income students.
How will Wednesday's House Judiciary panel hearing unfold?
EU trade commission seeks talks with the US.
UK PM Johnson backs the digital tax.
Trump says there is no deadline for a trade deal with China.
On the US/China trade front, there was mostly negative news on Monday. Axios quoted a source close to President Trump's negotiating team as saying that the US/China trade deal "is stalled because of Hong Kong legislation" and that time is needed to allow "Xi's domestic politics to calm." However, there are now only 12 days left until Dec 15 when Mr. Trump's tariff of 15% on the last $160 billion of Chinese goods is due to go into effect.
Also on European trade, the U.S. Trade Representative's office late Monday released its expected report on the French 3% digital tax. The USTR proposed a retaliatory tariff on $2.4 billion of French products. USTR Lighthizer said the U.S. may open similar digital tax investigations against Austria, Italy, and Turkey.
Trump says the we will retaliate against France for their digital tax.
French Finance Minister Le Maire said the threat is unacceptable and the French did not discriminate against US companies.
Time is running out to get the USMCA passed this year.
What some are saying about no trade deal and a tariff increase.
The U.S. markets this week will focus on (1) trade tensions including US/Chinese trade talks, today's results of the USTR investigation into France's digital tax, and the USMCA, (2) oil prices as OPEC+ meets this Thursday and Friday and is expected to reaffirm its 1.2 million bpd production cut through March 2020, (3) key U.S. economic reports this week including today's U.S. ISM manufacturing index and Friday's Nov payroll report (expected +188,000), (4) President Trump's visit today to London for the NATO summit, and (5) anticipation of next week's FOMC meeting where the market is discounting a negligible 4% chance for a Fed rate cut.
Washington politics will be in the news this week as the impeachment hearings begin in the House Judiciary Committee on Wednesday. Also, the House Intelligence Committee today will review its impeachment report and vote as soon as Tuesday to transmit that report to the House Judiciary Committee. House Speaker Pelosi has suggested that she is aiming for a House impeachment vote before the Christmas break, but that vote could easily slip into January if there are a substantial number of hearings or if there are new witnesses to be heard.
There is also the potential for a U.S. government shutdown in just 2-1/2 weeks when the current continuing resolution expires on Dec 20.
Russian opens gas line to China.
Chinese PMI numbers were a bit better than expected.
Hong Kong retail sales suffered a record contraction in October.
China suspends request for US military ships to Hong Kong and sanctions several US NGOs.
Japan and Korea relations are on the mend.
Trump said he will restore the tariffs on all steel & alminum on Brazil and Argentina.
The market consensus is for today's Nov Conference Board U.S. consumer confidence index to show a +1.1-point increase to 127.0, more than reversing Oct's -0.4 decline to 125.9. An increase in today's report would snap the 3-month (Aug-Oct) losing streak that totaled -9.9 points and produced a 4-month low for the index in October.
The consensus is for today's Oct new home sales report to show an increase of +1.0% to 708,000, which would more than reverse Sep's -0.7% decline to 701,000. New home sales in September were strong at 701,000 units, which is only 4% below June's 12-year high of 729,000. Last week's existing home sales for October rose by +1.9% to 5.46 million units, which bodes well for today's new home sales report.
The consensus is for today's Sep FHFA home price index and the S&P CoreLogic Composite 20 home prices index to each show an increase of +0.3% m/m after Aug's respective reports of +0.2% and -0.2%. The FHFA index has shown steady monthly increases averaging +0.3% since March.
Dallas Fed President Kaplan says the Q4 economy is weak.
Fed Chair Powell sees the economy in generally good condition.
China signals the trade talks are on track.
Are the WTO's days numbered?
China faces the biggest stae firm offshore debt failure in 20 years.
The curve from 2 to 10 years , will probably be steeper in most places.
Approximately 2m Brits have regestered to vote in the De. 12 election.
Thirteen French soldiers were killed in Mali fighting Islamic terrorists.
The U.S. markets this week will focus on (1) any fallout for the US/Chinese trade talks if President Trump signs the Hong Kong bill passed by Congress last week, (2) comments by Fed Chair Powell this evening at the Greater Providence Chamber of Commerce dinner, (3) whether U.S. consumers will continue to support the economy as the all-important holiday shopping season unofficially begins this week with Black Friday, (4) the Treasury's sale of $131 billion of T-notes today through Wednesday, and (5) a very busy U.S. economic calendar on Tuesday and Wednesday.
In Europe, the markets this week will focus on (1) a series of speaking engagements by ECB members, (2) several confidence reports that are expected to stabilize after the recent declines, and (3) Friday's Eurozone Nov. CPI, which is expected to show a small increase to +0.9% y/y headline and +1.2% y/y core from Oct's +0.7% and +1.1%, respectively.
Washington politics will remain in the news this week even though Congress has recessed for the Thanksgiving holiday. A U.S. District Court judge is expected to rule today on whether former White House lawyer Don McGahn can be compelled by subpoena to testify to Congress, although the decision is likely to be appealed. The House Intelligence Committee's impeachment hearings are over for now and that Committee is expected to deliver a report to the House Judiciary Committee, which will then consider whether to draft articles of impeachment. House Speaker Pelosi seems to be aiming for a House impeachment vote before the end of the year, although that deadline could easily slip into the New Year, particularly if there are more hearings.
Separately, Congressional negotiators on Saturday took a big step forward and reached a bipartisan agreement on spending levels for each of the 12 appropriation bills needed to fund the government. That agreement makes a government shutdown less likely when the current continuing resolution expires on Dec 20. However, negotiators sidestepped for now the contentious issues involved with President Trump's wall funding.
China said it would raise the penalty on IP theft.
China plans a record sale of dollar denominated bonds.
Hong Kong Democrats rout pro Beining candidates.
British University Professors go on strike.
Schiff says he doesn't "foreclose the possibility of" other public hearings.
Bloomberg will try to do something no one else has ever done.
How a Russia/China gas line changes things.
The Iranian attack on Saudi/Aramco.
Chinese importers scoop up Brazilian soybeans.
Today's release of the minutes from the last FOMC meeting on Oct 29-30 is expected to underscore that meeting's message that the Fed, after its Oct 30 rate cut, now believes that monetary policy is in a "good place" and that no more rate cuts are therefore necessary unless the outlook substantially deteriorates.
Bloomberg on Tuesday reported in more granular detail on the status of tariff rollbacks in the US/Chinese trade talks. Bloomberg reported that U.S. negotiators are willing, as part of a phase-one trade deal, to scrap the upcoming Dec 15 tariff, roll back the Sep 1 tariff on $110 billion of Chinese goods, and set up a process for rolling back the 25% tariff on the initial $250 billion batch of Chinese goods.
Senate and House have both passes legislation backing Hong Kong protestors. They will attempt to reconcile the bills and send it on to the White House.
A new CR that will fund the government through December 20th, is making its way through Congress and on to the White House. It is largely expected to pass. Getting an omnibus spending deal done by December 20th is another issues as there are only about 12 legislative sessions remaining until Congress is done for the year.
MMT makes an appearance in front of the House Budget Committee.
Israel launces air stikes into Syria.
Over 100 protestors were killed in Iranian unrest.
The US is providing Vietnam a second coast guard cutter for its growing fleet of ships.
Will the United Kingdom be around in 10 years?
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