YTD returns

Below is Snapshot of the Top Stock Indices from U.S. and Europe with YTD( year to date returns) in USD performance.Today the Stoxx 600 hit an all time high,Dax is less then 1% away from ATH. The majority of experts saying European Stocks will outperform U.S. next year ,I will believe it when I see it. The FTSE 100 +12% even with all the doom and gloom surrounding Brexit and its impact on the Economy

Morning 12-16

“Cease-fire on trade war tariffs even though Details of deal a but Murky still.” Bloomberg

 Economic data overnight Saw UK PMI drop to a four month low as production dropped to  the lowest since July 2012, Eurozone and German  manufacturing PMI’s  both missed expectations and China’s Industrial production beat expectations and Retail sales \a bit better than  Forecast

 Bad data, good data markets do not care too much about that now, FTSE +2%, Dax +.75%, Cac +1% both Spoos and Nasdaq +.5%, Bonds a bit heavy, Bunds Up slightly and gold little changed. Copper +.7% A rumor this morning that Trump and president Xi are going to sign trade deal in Davos has added a to the positive sentiment this morning. Tight range in oil overnight but Crude still hovering around the $60 handle. Fed repo operation today was for 32 days it   was oversubscribed by $4B  no need to panic. The Fed is providing, at least in there eyes, ample liquidity over the turn of the Year let us hope it is enough.

This week we see Second tier US economic data, Central bank meeting from Japan and UK and A couple of Fed speakers. A bit of Risk on Theme so far this morning

Easier rates

Today’s retails sales number was on the weak side of expectations,Some may use the late start to the Christmas shopping season as an excuse.But market pricing for Interest rate cuts or what the Overnight implied rate will be at next years Fed meetings show lower rates expected versus yesterdays closing levels.take a look at the circled area which shows the September and October meetings,it isnt a drastic move lower but the direction is what is important, markets pricing in a bit more easing after today’s events.

Trade deal Commentary

Trump tweets post China press conference in regards to trade deal:

We have agreed to a very large Phase One Deal with China. They have agreed to many structural changes and massive purchases of Agricultural Product, Energy, and Manufactured Goods, plus much more. The 25% Tariffs will remain as is, with tariffs on $110B of goods cut to 7.5% from 15%

Trump announces there will be a 50 percent reduction in the tariffs that he’s imposed on Sept. 1 (which cover about $110 billion of Chinese goods). Those duties will go from 15% to 7.5%. The 25% tariffs on $250 billion in goods he imposed in 2018 will stay.

Official Statement from the USTR( U.S. trade representative)

The United States and China have reached an historic and enforceable agreement on a Phase One trade deal that requires structural reforms and other changes to China’s economic and trade regime in the areas of intellectual property, technology transfer, agriculture, financial services, and currency and foreign exchange.  The Phase One agreement also includes a commitment by China that it will make substantial additional purchases of U.S. goods and services in the coming years.  Importantly, the agreement establishes a strong dispute resolution system that ensures prompt and effective implementation and enforcement.  The United States has agreed to modify its Section 301 tariff actions in a significant way.

“President Trump has focused on concluding a Phase One agreement that achieves meaningful, fully-enforceable structural changes and begins rebalancing the U.S.-China trade relationship.  This unprecedented agreement accomplishes those very significant goals and would not have been possible without the President’s strong leadership,” said United States Trade Representative Robert Lighthizer.

“Today’s announcement of a Phase One agreement with China is another significant step forward in advancing President Trump’s economic agenda.  Thanks to the President’s leadership, this landmark agreement marks critical progress toward a more balanced trade relationship and a more level playing field for American workers and companies,” said Secretary of the Treasury Steven Mnuchin.

The United States first imposed tariffs on imports from China based on the findings of the Section 301 investigation on China’s acts, policies, and practices related to technology transfer, intellectual property, and innovation.  The United States will be maintaining 25 percent tariffs on approximately $250 billion of Chinese imports, along with 7.5 percent tariffs on approximately $120 billion of Chinese imports.

Morning 12-13

Everyone loves all things British today as the magnitude of the conservatives win points to a pro-business anti austerity  agenda for PM Johnson, conservatives now hold biggest majority since 1987 FTSE +1.6% ,Pound +1.66% but well off session highs, gilt yields only +1.7 bps though as yields well off highs of day.

China Still has not said much about Trade deal, CNBC report saying China not willing to commit to massive Ag purchases. Some Doubt creeping in whether or Not China will agree to this deal. Bloomberg story saying that China wants no big signing ceremony; they do not want text of deal released to public, sounds very secretive and a bit irregular. Same story goes on to say unlikely a phase two deal before next year’s election thus one and Done? China will be holding a press conference shortly to comment on deal

Risk On For stocks  still but fading a bit, spoos 10 handles off highs but still green, NKY closed higher by 2.6% biggest advance in 10 months(Mizuho),Shanghai closed +1.78% all European  bourses higher gold and silver steady and palladium +2%.. Spoos roll to march today, Expiration one week from today ,Currencies futures rolled to as well

 Today all eyes on China press conference do they agree to deal or do they will not more concessions from US, all eyes on twitter and news feeds again today