Morning 11-15

Trade deal optimism or pessimism that is how I shall describe the trade from now on, Today trade optimism stemming from these comments via Zero hedge

White House economic advisor Larry Kudlow said on Thursday that the U.S. and China were getting close to an agreement and were talking every day.

“We’re getting close,” he told an event at the Council on Foreign Relations in Washington. “The mood music is pretty good, and that has not always been so in these things.” Commerce secretary Wilbur Ross echoed this sentiment on Friday morning who told Fox Business that the trade deal will be done in “all likelihood.”

 China and U.S. Will hold Phone call today per Ross

 As expected with optimism   Spoos, Dax higher, Bonds, bunds, Gold and JPY all lower and Currency markets sideways. The PBOC added a bit of Stimulus to the Chinese Economy to the tune of $28.6 Billion via one-year loans to banks. PBOC says it is to help Banks through tax season, Tomato tomatoe stimulus is being provided regardless of reason. Eurozone Trade surplus not a disaster as Exports rose 5.2 % vs year earlier helping a bit with firmer stocks. All is  Not Rosy  markets must pay attention the ongoing in U.S. Senate regarding Hong Kong, if the Senate would bring to a vote a bill supporting protests in Hong Kong it could result in a collapse of trade talks, we say yesterday a negative reaction in Spoos when talk  of this bill possibly be signed hit wires.

Retail sales today  very important  as the Health of the Consumer is what drives GDP,Consumer stops spending GDP to be revised lower

 More Not QE QE (IFR news)

In addition to additional TOMOs the Fed also released a schedule for POMOs that will see outright purchases of $60bn of T-bills for reserve management purposes (from Nov 15 to Dec 6) as well as $20bn (across different maturities) as part of its reinvestment operations. While this seems in line with the October announcement (ie at an initial pace of approximately $60 billion per month), note that the POMOs will be happening over a 3-week period.

The Fed is clearly looking to get ahead of the game in wanting to have no surprises ahead of and into year-end. The question is whether this is enough, and clearly the Fed has shown a willingness to adapt and throw more term liquidity at the problem. However, given the liquidity increases if repo funding over the turn remains elevated, then we could see the debate shift from looking at this as just about reserve scarcity but potentially balance sheet scarcity.

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