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G20 Fan Animal Spirits

Marc Chandler profile picture
Marc Chandler


  • Equities and oil rally.
  • US dollar and bonds trade heavier.
  • The week's highlights lie ahead.


The US and China kept their trade guns cocked at each other but offered the last opportunity for a negotiated settlement before escalation. What is billed as a 90-day freeze on tariff increases is really only 60 days beyond January 1 when Trump had threatened to increase the 10% tariff on $200 bln of Chinese goods to 25%. The US and China could not agree on a joint statement, and there appear to be differences between the two on what was agreed. Moreover, early today, Trump tweeted that China would reduce and remove tariffs on US autos, which had not been announced previously. At the same time, Russia and Saudi Arabia agreed to extend their pact, boosting the likelihood that OPEC+ will announce output cuts later this week. Efforts to support the oil market also came from an unexpected source. The Canadian province of Alberta announced a 325k barrel a day cut (8.7%) starting in January. Equities have rallied strongly. The MSCI Asia Pacific Index nearly matched last week's 2% gain. China, Hong Kong, Taiwan, and Singapore markets led the advance, gaining more than 2% each. India was the sole exception. The rupee is also underperforming in the face of the US dollar's pullback. Higher oil prices appear to be the drag. Oil has rallied 4-5% after last month's 22% plunge. European shares are higher, and the Dow Jones Stoxx is up more than 2% in late morning turnover in what could be the biggest advance in eight months. The high beta dollar-bloc and Scandi currencies are leading the move against the US dollar. Among emerging markets currencies, the South African rand, the Mexican peso, and Chinese yuan are up over 1%.

Asia Pacific

China reportedly agreed to step up its purchases of US agriculture and industrial goods (including energy) immediately. This

This article was written by

Marc Chandler profile picture
Marc Chandler has been covering the global capital markets in one fashion or another for 25 years, working at economic consulting firms and global investment banks. A prolific writer and speaker he appears regularly on CNBC and has spoken for the Foreign Policy Association. In addition to being quoted in the financial press daily, Chandler has been published in the Financial Times, Foreign Affairs, and the Washington Post. In 2009 Chandler was named a Business Visionary by Forbes. Marc's commentary can be found at his blog (www.marctomarket.com) and twitter www.twitter.com/marcmakingsense

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

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