Tag: finance

Via S&P Global Platts Insight blog,

As COP25 kicks off in Madrid, S&P Global Platts editors take a look at the CO2 impact from OPEC oil production. European gas and nuclear, and IMO 2020’s impact on commodities as diverse as fuel oil and iron ore, are also on the agenda in this week’s pick of charts.

1. OPEC oil-only CO2 output dwarfs EU total emissions

Click to enlarge

What’s happening? OPEC is meeting this week to decide on output quotas, but climate change isn’t on the agenda for the group of 15 major oil producers. OPEC’s total crude output for 2018 would have been responsible for carbon dioxide pollution equal to 5 billion mt, calculated based on average emissions figures for oil from the US Environmental Protection Agency (EPA). That exceeds Europe’s total emissions of the greenhouse gas, from all sources, last year. The cartel currently has no plan in place to mitigate the impact its oil has on global warming despite the growing pressure from consuming nations and business to cut back investment in fossil fuels.

How did we get to these numbers? A barrel of crude weighs about 300 lb, or 136 kg. The CO2 from fuel weighs more than the fuel itself because the carbon element combines with oxygen in the air to form CO2 gas. Carbon-based fuels derived from oil give off CO2 which is on average 3.15 times the weight of the fuel. A standard barrel is 159 liters, and in the US gets refined into 44.1% gasoline, 20.8% distillate fuel oil, 9.3% kerosene-type jet fuel and 5.2% residual fuel oil. So an average barrel of oil will produce at least 317 kg CO2 for just the above four fuels, making the EPA’s average figure of 430 kg seem quite sensible.

What’s next? OPEC and its allies, which pump more than 45% of the world’s crude, are scheduled to meet on December 5 and December 6 in Vienna where a decision on a possible extension to the production cut deal could be taken. The gathering coincides with the 25th Conference of the Parties, or COP, held in Madrid where 200 countries will discuss climate change action as new figures released by the World Meteorological Organization show that green house gas levels reached their highest recorded levels last year.

2. European gas spot prices have risen but December turns bearish

What’s happening? Europe’s benchmark prompt gas contract, the Dutch TTF Day-ahead, crept to a seven-month high last week despite healthy supply. Lower temperatures, reduced storage withdrawals and continued buying combined to tighten the market. The contract has risen Eur6/MWh since October 31, when it dipped below Eur10/MWh. Utility traders are holding onto stocks in anticipation of a greater premium in Q1 2020.

What’s next? While Q1 2020 TTF gas remains over Eur16/MWh, front month December is coming under pressure as Europe’s gas glut looks set to continue. A deluge of LNG is expected to complement already comfortable Russian and Norwegian supply, while gas is seen by market participants as detaching from carbon, and temperatures forecasts have ticked up. Q1 2020 has been more resistant to bearish sentiment because of the risk that transit talks will fail between Russia and Ukraine.

3. French nuclear at record-low lifts December power prices

What’s happening? French nuclear generation is set for a record-low fourth quarter due to maintenance delays and safety inspections at the Cruas nuclear plant following an earthquake. November output averaged 40 GW, down 11% on year, the third month in a row with a double-digit on year decline.

What’s next?  17 of France’s 58 reactors won’t be available at the start of December. French spot power prices are set to hit their highest so far this winter this week despite a generally bearish market, characterized by cheap gas and growing wind output. Colder weather is set to boost demand above 80 GW on Tuesday for the first time this winter with a strike looming as well on Thursday. French gas and coal plants are poised to fill the nuclear shortfall, while stronger hydro and reduced exports should act to ease French price.

4. IMO 2020 sends high sulfur fuel oil cracks tumbling…

What’s happening? Global cracks for high sulfur fuel oil have weakened sharply over the past two months after a year of abnormal strength, reflecting the drastic change in oil products demand due to the International Maritime Organization‘s impending sulfur limit on marine fuels. This month regional prices for HSFO in Asia, Europe, Africa, and the Americas have all reached record discounts to crude as demand falls in the run-up to the IMO 2020 rule limiting sulfur content to 0.5% from January 1, although in some regions they have rebounded somewhat in the past two weeks.

What’s next? Most market watchers believe HSFO prices have now largely bottomed out and are set for a recovery next year. Uncertainty persists, however, over the extent of recovery as pricing economics and uptake of exhaust gas scrubbers – which allow ships to continue burning HSFO – will play a key role in determining HSFO demand.  Looking ahead to 2020, the HSFO crack forward curve in Europe is in contango, suggesting regional prices are already set for a recovery.

5. …and complicates shipping costs for iron ore buyers

What’s happening? Iron ore contract buyers this year may be paying as much as $10/dmt more for FOB cargos using industry freight formulas, rather than pricing off spot freight rates. Freight rates are used for invoicing FOB iron ore prices based on benchmark China CFR indices such as Platts IODEX 62% Fe, and Platts 65% Fe fines index. Greater comparative volatility has emerged between spot and long-term industry freight formulas, for Brazil-China Capesize dry bulk rates used to reference contract FOB iron ore prices. Agreeing formulas rather than spot rates may be becoming more complex as bunker oil, a key component in determining long term freight rates under formulas, switches to use lower sulfur marine fuel under IMO 2020 fuel regulations.

What’s next? The extent to which IMO 2020 affects bunker fuel prices and demand for grades consumed, and continued use of industry longer-term freight formulas, remains to be seen. The changes in fuel oil and shipping rates may be discussed by iron ore buyers as they move into new iron ore pricing contracts for 2020 calendar year and fiscal 2020-2021 terms. Some suppliers are already moving contract pricing terms away from formulas to reference spot freight rates, to simplify pricing comparisons with iron ore delivered to markets in China and the rest of the world.

6. Corn prices shoot up in Brazil’s Mato Grosso

 

What’s happening? Corn prices in Mato Grosso, Brazil’s largest producer, are surging as supplies dwindle and domestic consumption rises, according to Mato Grosso Institute of Agricultural Economics. The state accounts for over 42% of second corn crop, or safrinha, produced in the country. Last week, corn prices in the state hit Reais 29.51 per 60 kg ($116.39/mt), up 53% from the same period a year ago. Strong domestic demand is mainly coming from the ethanol and animal protein industries.

What’s next? As Brazil is the world’s second-largest corn exporter, markets will be closely watching the price movements, as higher corn prices may encourage farmers to expand the crop area for second corn. The second corn planting in the state begins in February. Any increase in domestic consumption is also expected to reduce the supply for exports. The state exported 18.8 million mt of corn in January-October, 54% of Brazil’s total exports of the crop, up from 17.7 million mt in the full calendar year of 2018.

Joe Biden is reinventing himself as he embarks on an eight-day bus tour of Iowa, a key state which he’s largely failed to impress – unlike many of his Democratic competitors angling for the White House in 2020.

Fired up and ready to go for the #NoMalarkey barnstorm! pic.twitter.com/4lpU7waqzh

— Joe Biden (@JoeBiden) November 30, 2019

The “No Malarkey!” tour got off to an awkward start on Saturday, when Joe bit former Second Lady Jill Biden on the finger as she introduced him at a Council Bluffs kickoff event.

One almost has to feel sorry for Jill. After going out on a high note in 2016, she watched the establishment reanimate her senile husband – only to have clips of him creeping on women and children flood the internet. Then there was Hunter Biden’s rental car crackpipe adventures, Burisma, and now an out-of-wedlock grandchild with an Arkansas stripper. And then Joe bites her finger as they announce the stupidest campaign slogan ever.

“We’re going to go to 18 counties, on a 660-mile trip across the state, and we’re going to touch on what we think is a forgotten part of most campaigns — the rural part of your state, rural America,” said Biden, speaking at the Saturday event.

For months, Biden’s campaign has been dogged by criticism among supporters and critics alike that his Iowa operation was slow to get off the ground. Given the nature of the caucuses, where voters choose the nominee by gathering in public spaces like school gymnasiums, churches and community centers for one night in February, a robust organization that encourages people to participate is critical to success. –Bloomberg

Aside from the eight scheduled stops, Biden will take two side-trips; one in Chicago to raise money – returning to Iowa on Tuesday for a single organizing event in Mason City, and then a jaunt to New York that evening to attend more fundraisers before returning on Wednesday afternoon for more Iowa action.

“I’m running to win. I’m not running to lose. I’m not running to come in third or fourth or fifth or anything like that. So I feel good about it,” said Biden.

No Malarkey?

Seeking to turn Biden into an affable elder statesman after a series of ‘Mr. Magoo’ gaffes, the Biden camp decided to go hard at the depression-era demographic with the slogan “No Malarkey!” – something his grandfather used to say.

As Bloomberg describes it, “The “No Malarkey” theme — emblazoned on the side of Biden’s tour bus — nods at both the candidate’s reputation for truth-telling and Trump’s supposed aversion to it.”

“The other guy’s all lies, so we want to make sure there’s a contrast,” said Biden at one stop.

Of course, things may get awkward when someone asks Joe about ‘if you like your health care plan, you can keep it,” or discussing Hunter’s business dealings with his stimulant-addicted son.

Is Biden campaigning for Trump? “Look at the promises made. Look what’s happening now, Iowa is growing, Iowa is moving” pic.twitter.com/wigJJEgkOH

— Benny (@bennyjohnson) December 2, 2019

Biden will be traveling with former Iowa governor Tom Vilsack, who served as Obama’s agriculture secretary. Also joining the tour will be Vilsack’s wife, Christie.

As he stops in small towns, he’s sure to allude to rural values and rural needs and to mention that he’s secured the support of Vilsack, the popular two-term governor, who urged Hillary Clinton’s 2016 campaign to spend more time in rural areas.

“With all due respect to folks who talk about bold, new ideas, the reality is, you’re going to have an incredibly difficult time until the country comes together,” Vilsack told Bloomberg news in an interview in November. –Bloomberg

That said, Vilsack thinks Biden – the current Democratic frontrunner, is best positioned to enact progressive change because he appeals to a much broader audience than other candidates – particularly in swing states. 

“The vice president is speaking to a much broader audience than some of the other candidates. I think he’s speaking to the audience that any Democrat is going to have to speak to consistently through this campaign in order to have the people who will decide this election in Pennsylvania and Michigan and Iowa and Wisconsin basically saying, ‘Yeah this guy has been consistent throughout,’” said Vilsack.

If Biden’s attempt to reinvent himself in Iowa doesn’t work as planned, what does it mean for the rest of the 2020 campaign?

Authored by Mike Shedlock via MishTalk,

China was once very dependent on US chips for its phones. The latest Chinese phones have no US parts.

The Wall Street Journal reports Huawei Manages to Make Smartphones Without American Chips.

American tech companies are getting the go-ahead to resume business with Chinese smartphone giant Huawei Technologies Co., but it may be too late: It is now building smartphones without U.S. chips.

Huawei’s latest phone, which it unveiled in September—the Mate 30 with a curved display and wide-angle cameras that competes with Apple Inc.’s iPhone 11—contained no U.S. parts, according to an analysis by UBS and Fomalhaut Techno Solutions, a Japanese technology lab that took the device apart to inspect its insides.

In May, the Trump administration banned U.S. shipments to Huawei as trade tensions with Beijing escalated. That move stopped companies like Qualcomm Inc. and Intel Corp. from exporting chips to the company, though some shipments of parts resumed over the summer after companies determined they weren’t affected by the ban.

Meanwhile, Huawei has made significant strides in shedding its dependence on parts from U.S. companies. (At issue are chips from U.S.-based companies, not those necessarily made in America; many U.S. chip companies make their semiconductors abroad.)

Huawei long relied on suppliers like Qorvo Inc., the North Carolina maker of chips that are used to connect smartphones with cell towers, and Skyworks Solutions Inc., a Woburn, Mass.-based company that makes similar chips. It also used parts from Broadcom Inc., the San Jose-based maker of Bluetooth and Wi-Fi chips, and Cirrus Logic Inc., an Austin, Texas-based company that makes chips for producing sound.

Yet Another Trump Trade Win

• Trump cut off supplies so China looked elsewhere.

• Trump changed his mind.

• This is what constitutes a win.

“When Huawei came out with this high-end phone—and this is its flagship—with no U.S. content, that made a pretty big statement,” said Christopher Rolland, a semiconductor analyst at Susquehanna International Group.

Huawei executives told Rolland that the company was moving away from American parts, but it was still surprising how quickly it happened.

This was likely going to happen anyway, but Trump escalated the speed at which it happened.

Trade Deal?

• Reuters reports U.S.-China Trade Deal ‘Stalled Because of Hong Kong Legislation’

• MarketWatch reports China ‘Insists’ on Tariff Rollbacks as Part of ‘Phase One’ Trade Deal

Sources in Beijing informed the Global Times that China insists the tariffs must be rolled back as part of the first-phase trade deal. A US pledge to scrap tariffs scheduled for December 15 cannot replace the rollbacks of tariffs. #ChinaUSTrade #TheBusinessSource pic.twitter.com/5IJuHMuTNM

— The Business Source (@GlobalTimesBiz) December 1, 2019

Standard Assumption for 17 Months

Assuming there is a deal, the standard assumption for 17 months, Trump will announce two key elements.

Greatest Deal in History

1. China will resume buying the same amount of soybeans as before.

2. China will resume buying the same amount of chips as before.

​The longer this takes the more wins there will be.

With that in mind, please recall Another Trump Tariff Success Story: Vietnam.

And despite the fact that Trump’s China Tariffs Made Matters Made the Global Manufacturing Recession Worse and has killed US farmers, It’s important to remember, Trump is collecting “huge tariffs”.

So please brush aside this recession warning: Freight Volumes Negative YoY for 11th Straight Month.

Update (1240ET): Exposing the stunning lack of self-awareness (and engulfing groupthink), Bloomberg’s editor-in-chief has responded to The White House claims:

“The accusation of bias couldn’t be further from the truth. We have covered Donald Trump fairly and in an unbiased way since he became a candidate in 2015 and will continue to do so despite the restrictions imposed by the Trump campaign.”

Nope, nothing to see here…

*  *  *

Last week, Bloomberg News’ editor-in-chief John Micklethwait announced a controversial decision to the outlet’s 2,700 journalists and analysts. The news agency will still cover polls, policies and how the Bloomberg campaign is doing, however investigative stories on Bloomberg or any other Democratic candidate are now banned; but they will continue to investigate and report on the Trump administration.

As one would expect, this immediately caused uproar among those on the right, but perhaps more notably, the media was very upset with a union representing Bloomberg journalists has demanded that the publication lift its ban on investigating Michael Bloomberg and other 2020 Democratic presidential candidates.

Well the blowback from the decision is continuing as The White House has removed Bloomberg News’ press credentials….

“The decision by Bloomberg News to formalize preferential reporting policies is troubling and wrong.

“Bloomberg News has declared that they won’t investigate their boss or his Democrat competitors, many of whom are current holders of high office, but will continue critical reporting on President Trump. As President Trump’s campaign, we are accustomed to unfair reporting practices, but most news organizations don’t announce their biases so publicly. Presented with this new policy from Bloomberg News, our campaign was forced to determine how to proceed.

“Since they have declared their bias openly, the Trump campaign will no longer credential representatives of Bloomberg News for rallies or other campaign events. We will determine whether to engage with individual reporters or answer inquiries from Bloomberg News on a case-by-case basis. This will remain the policy of the Trump campaign until Bloomberg News publicly rescinds its decision.”

– Brad Parscale, Trump 2020 campaign manager

By way of example, Bloomberg ‘news’ wrote this with a straight face this morning…

The “No Malarkey” theme — emblazoned on the side of Biden’s tour bus — nods at both the candidate’s reputation for truth-telling and Trump’s supposed aversion to it.

Just a reminder, “if you like your news unbiased, you can keep your news unbiased.”

In a day when weeks of “trade deal” optimism are being systematically unwound by the hour, if not minute, moments ago the Global Times’ Business Source group said that that China will release an “unreliable entity list” soon, which includes relevant US entities. The move is being accelerated up in response to the expected passage of a Xinjiang-related bill by US Congress, that will harm Chinese firms’ interests, “prompting China to speed up the move.”

While the existence of a “unreliable entities list” is nothing new, and was first reported back in May, the fact that suddenly various adverse developments related to the trade deal appear to be hitting at the same time is spooking markets, with futures slumping back to session lows following the Chinese news.

The Chinese threat comes about two hours after Wilbur Ross said that absent a deal by Dec 15, the US fully expects to hike tariffs on Dec 15, which in turn appears to have prompted a rapid deterioration in diplomacy among the two sides, and judging by the market, it now appears that a tariff delay in two weeks is becoming increasingly improbable.

Authored by Dave Huber via The College Fix,

A recent op-ed in the Princeton University student paper The Daily Princetonian takes issue with criticism of the trendy phrase “OK, boomer.”

The expression is sort of a payback for derision of the Millennial Generation, but especially its successor, the centennials (those born in 1996 and after). It’s intended as a judgment of boomers’ alleged mishandling of everything from the economy to the climate.

(In case you’re unaware, “Boomer” is short for “baby boomer,” those born in the post-World War II years of 1946 to 1964. They’re the progeny of the Greatest Generation, aka those who — literally — saved the free world just scant years prior.)

I’ve been subjected to “OK, boomer” here and there even though I’m actually a member of Generation X (if barely). The remark doesn’t bother me in the least; indeed, it gives me a good chuckle since it typically comes from someone who’s never paid a bill, raised a family, or planned and made sacrifices for retirement.

In my experience, centennials like op-ed author Anna McGee are the worst culprits.

You want boomers and Gen Xers to take you seriously?

You forget yours is the generation…

• Of grade inflation.

• Of minimal discipline, in and out of school.

• Of being carted around to sports and social functions by helicopter parents who cater to your every whim.

• In college, you run and cry to “bias response teams” when the slightest little thing offends you.

• Then you demand “safe spaces” and other measures to make you feel “welcome” and “wanted” …  like therapy animals, etc.

Not to mention, you want to sell us on the fact that Alexandria Ocasio-Cortez, Greta Thunberg, and the Parkland, Florida activists are heroes of the modern age? That so-called “democratic socialism” is the answer to the country’s ills? People like AOC and Thunberg aren’t “discriminated against” because of their youth, as McGee claims; they’re ridiculed — because they’re stupid. There is a reason, after all, why age restrictions exist in society.

Centennials have more available to them than any other generation before. Even the American “poor” are the envy of the world. Try enjoying it, centennials! Cheer up! The world isn’t going to end in a dozen years because of climate change, and Donald Trump isn’t going to throw you in an internment camp.

Now get off my lawn.

After previously finding herself stuck in the wrong place halfway around the world when the United Nations moved its global climate meeting from Chile to Spain, young climate activist Greta Thunberg is running a little late to the Madrid 25th Conference of the Parties to the UN Framework Convention on Climate Change (COP25).

Though lacking in creating the same guilt-laced “terror” and panic-laden atmosphere that Greta has proved herself capable of, there was still plenty of climate apocalypse fear mongering during Monday’s opening remarks to kick off the conference sans Greta. UN secretary-general Antonio Guterres declared “the point of no return is no longer over the horizon”.

Guterres warned that, “In the crucial 12 months ahead, it is essential that we secure more ambitious national commitments — particularly from the main emitters — to immediately start reducing greenhouse gas emissions at a pace consistent to reaching carbon neutrality by 2050.”

“We simply have to stop digging and drilling and take advantage of the vast possibilities offered by renewable energy and nature-based solutions,” he added, though the aging bureaucrat’s words certainly won’t go viral as he can’t work in a tirade or the same level of emotive guff about being forced to miss school.

Speaking of Greta, she’s expected to arrive Tuesday after hitching a boat ride across the Atlantic with an Australian sailing couple. 

I expect a clear demonstration of increased #ClimateAction ambition & commitment out of #COP25. Leaders of all countries need to show accountability & responsibility. Anything less wold be a betrayal of our entire human family and all generations to come. pic.twitter.com/jnKjMRYRmI

— António Guterres (@antonioguterres) December 1, 2019

“Betrayal of our entire human family” is what we’re facing apparently, says Guterres. But oops, there’s this:

A British yacht skipper’s flight to the US to help Greta Thunberg sail to Portugal has produced the same amount of carbon emissions the voyage hoped to save.

Nikki Henderson, 26, flew to the US from Britain to sail 48-foot catamaran the La Vagabonde… The journey was meant to save approximately two or three tons of carbon dioxide emissions.

But Ms Henderson’s flight from Britain to the US likely produced the same amount of emissions the journey hoped to save, countering Ms Thunberg’s mission, The Times reports.

“As #COP25 has officially been moved from Santiago to Madrid I’ll need some help,” Thunberg tweeted last month when it became apparent she was in the wrong place. “Now I need to find a way to cross the Atlantic in November… If anyone could help me find transport I would be so grateful.”

But just like the last few summits the conference involving top officials from 197 countries, which aims to drastically cut emissions through passage of agreed upon targets, will likely be big on hyper sensational “the world is ending!” alarmism and light on agreements to ‘reverse course’ etc. 

This is especially given the political and economic situation marked by ongoing mass protests and upheavals in some dozen countries from Chile to Peru to Catalonia to Paris (Yellow Vests) to Lebanon to Hong Kong to Iraq and more. Given that in terms of the long view the West has in reality barely recovered from the crash of 2008, now is a worse and more fragile time than ever for politicians to attempt to shove down radical green initiatives on their populations. 

Meanwhile, this doesn’t mean pressure won’t continue to build for the US to stay the course on dubious and politically costly efforts like the Paris Agreement. On Monday it was announced that:

Google has joined with 70 other companies and union leaders to call on the US to stay in the Paris Agreement. The letter was signed by the CEOs of Google, Mastercard, Salesforce, Aon, Tata Sons, Disney, Bank of America, Tesla, Microsoft, Adobe, IBM, Goldman Sachs, Verizon and Corning, among many others, and marks the start of the 25th annual United Nations Climate Change Conference.

But as one environmental journalist and author observes, this will likely not get far beyond virtue signaling and moralistic threats and condemnation for those not on board, like the Trump White House.

“There were two main problems with the Paris Agreement,” writes Rob Lyons. “First, there is no international mechanism to enforce the targets that countries declare. Beyond domestic laws and ‘peer pressure’ from other countries, there is no penalty for failure.”

Indeed Guterres admitted as much in his opening remarks: “What is still lacking is political will. Political will to put a price on carbon. Political will to stop subsidies on fossil fuels,” the UN chief said.

Hence the importance of adding the fixture of an emotionally manipulative autistic child’s voice which can induce the appropriate level of fear, dread and ‘panic’ over the ‘climate emergency’ that will imminently usher in The End. 

Good news, world! Global manufacturing – according to JPMorgan  – is back in expansion in November, rising to 50.3, a seven-month high.

Output and new orders saw marginal gains, while the trend in employment stabilised after job cuts in the prior six months.

International trade remained a drag on the sector, however, as new export business decreased for the fifteenth successive month.

Eleven of the nations for which November PMI data were available registered expansions, with the strongest growth signalled for Greece, Colombia and Brazil. The USA, China and France were also among the nations seeing an improvement. Germany and the Czech Republic remained at the bottom of the growth rankings.

Business optimism stayed relatively subdued in November, continuing the recent trend of lacklustre confidence. The lowest readings for the Future Output Index (which was first compiled in July 2012) have all been recorded during the past seven months.

Finally, we note that global stocks have perhaps front-run this modest rebound just a little too much on the heels of a year of printing money dangerously…

Source: Bloomberg

Sell the news?

Ukrainian President Volodomyr Zelensky says in a new interview that he and President Trump never discussed a “quid pro quo” – though he was unhappy to have learned that US security aid had been blocked.

“I never talked to the president from the position of a quid pro quo. That’s not my thing,” Zelensky told TIME in an interview published Monday.

“I don’t want us to look like beggars. But you have to understand. We’re at war,” he continued. “If you’re our strategic partner, then you can’t go blocking anything for us. I think that’s just about fairness. It’s not about a quid pro quo. It just goes without saying.“

Allegations that President Trump abused his office are at the heart of impeachment proceedings in the House, as Democrats claim he ‘pressured’ Zelensky to investigate Democratic rival Joe Biden and his son Hunter, as well as a claim that the hacked DNC server was located within Ukraine.

Unbeknownst to Zelensky, nearly $400 million in US military aid had been paused – with Democrats claiming it was used as leverage for the Biden investigation, and the Trump administration claiming that they were concerned about how the money would be used in the notoriously corrupt country.

In 2014, Hunter Biden was hired to sit on the board of Ukrainian gas company Burisma – allegedly to protect its owner, Mykola Zlochevsky, who was under investigation for money laundering, bribery, granting himself drilling permits while he was the Minister of Ecology, and other crimes.

Zlochevsky’s investment in Hunter Biden appeared to pay off, after Joe Biden notoriously threatened to withhold $1 billion in US aid to Ukraine if they didn’t fire the country’s head prosecutor who was leading the investigation.

In short, total malarkey.

Tackling Corruption

Zelensky told Time that he wants to improve Ukraine’s image on the world stage after people – including President Trump, keep referring to it as corrupt.

“When America says, for instance, that Ukraine is a corrupt country, that is the hardest of signals,” said Zelensky. “It might seem like an easy thing to say, that combination of words: Ukraine is a corrupt country. Just to say it and that’s it. But it doesn’t end there. Everyone hears that signal. Investments, banks, stakeholders, companies, American, European, companies that have international capital in Ukraine, it’s a signal to them that says, ‘Be careful, don’t invest.’ Or, ‘Get out of there.’”

Read the rest of the interview here.

Blain’s Morning Porridge, submitted by Bill Blain of Shard Capital

This is probably the last Big Week for markets this decade! The game through to Dec 31st will be to avoid compromising this year’s surprisingly substantial gains, and focusing on how to play the pitch when markets surge again in January.
There are two entirely predictable schools of thought for next year:

• A) There is still too much money sloshing round financial assets, and compliant central banks that will continue to pump in yet more too much money to avoid anything that looks wobbly that might destabilise the too much money financial asset economy. If you buy this scenario, the strategy is buy, buy and buy some more…
• B) Or, some “no-see-um” idiosyncratic event or global slowdown is going to destabilize the whole market driven caboodle. Prices will come crashing down, the bubbles will burst – bond yields will rise, zombie defaults will be unstoppable, illiquidity will leave investors no choice but hit distressed bids, while equity markets will rattle like dried peas in a hollow gourd. In this scenario, the strategy will be to wait, then buy, buy and buy some more. The only question is when to risk holding returnless cash…

Personally, I’m going with something a bit different. I’m still writing my year end strategy note, but it will argue the 2020s are going to be all about sustainable investment.

The defining strategy of the 2010-2019 market was riding the monetary policy mistakes which pumped money into financial assets – it was a brilliant game for those who played it well.

The last 10-years were largely about denial of rationality by piling on risk in what looked to be risk-off markets, holding your nerve in the face of improbable market gains, all of which required a long-term suspension of disbelief.  Do these three things and you did well! It really didn’t require that much skill – just the understanding of why Central Banks could not afford to stop juicing markets via flawed monetary policy.

The next 10-years is going to be very interesting.  Central Banks have smelt the coffee and know it was all a mistake. Fiscal policy is a dangerous thing in terms of unwise government debt loads and badly chosen spending.  

Sustainability is more intriguing – it will embrace climate cure, but also seek to invest on a rational basis across markets to create a more stable, just and fair social and economic base – hence my earlier comments about Education, Law and Order, and Living Standards. I’m shocked how we seem to be regressing: our children’s generation starting their careers crippled by debt, nations burdened by civil service pension loads, and businesses run solely for the enrichment of the few.

The 2020’s are going to be very different as the excesses of the last 10-years are deconstructed. Sustainability is a grown-up version of the ESG card investors have been learning to play the last few years. It will encompass Climate Cure, but also the reality that you can’t sort out the environment if you stop investing in fuels, coal for steel, and keep the global economy expanding to raise living standards. No reason it can’t be done better – and that’s my big theme for the next 10-years. Rational sustainable market solutions to the despair of the last 10-years and the environmental damage done by the last 200!  

The Short-term

The big issues to focus on this week will include:

• How much has Trade shenanigans stifled the global economy?  Will we ever get a deal? China are demanding Trump rolls back tariffs, which is a no-no in election year!
• How much is China hurting? PMIs look stronger, but the stories on defaulting, cross-encumbered, zombie quasi state companies seem to be never-ending.  
• Hong Kong rumbles on like a soggy firecracker that may or may-not go off. Taiwan is going to be “interesting” next year.
• How badly have the Democrats miscalculated the Trump impeachment effort in the face of a suspicious American electorate? Does it spin the electoral calculus for Nov 2020?
• What happens next for UK election – will the Melting block of Ice be no-show shamed by Boris replacing it to do an interview with Andrew Neil? Will T’rump’s London Visit for the Nato meeting prove a disaster for Boris if T’rump says something “Positive” about him.
• What does the recent German SDP shunt to the left mean for Merkel’s final demented years? – The coalition might break down. Macro is smiling sinisterly….
• Ireland’s bond rating  was hiked to AA- by S&P. I’m pretty sure the EU is going to throw Ireland under the proverbial bus once Brexit is done, and they are likely to find little support from a Tory government here.

Sadly, most of these questions are of politics, and I simply don’t know…

The key piece of data will be the US Jobs number on Friday, with markets focused on the likelihood of whether the Fed will cut rates again in the new year. With the US economy sending strong signals – in terms of jobs and growth, it would only be the lack of inflationary threat and the strength of the dollar that would mitigate for further easy policy… but that’s far too logical an argument for a Monday.