Five Things You Need to Know to Start Your Day
Trump likes what he sees from Beijing, crude production cuts are coming, and Theresa May is seeking a way to salvage her Brexit deal. Here are some of the things people in markets are talking about.
U.S. President Donald Trump said China is sending “very strong signals” following weekend trade discussions in Argentina, as uncertainty remains over what commitments were made between the two nations. “Not to sound naive or anything, but I believe President Xi meant every word of what he said at our long and hopefully historic meeting,” Trump said on Twitter Wednesday. “ALL subjects discussed!” Beijing will start to quickly implement specific items where there’s consensus with the U.S. and will push forward on trade negotiations within the 90-day "timetable and road map," the Ministry of Commerce said in a statement on Wednesday morning in China. Hours later, Bloomberg News reported that officials have begun preparing to restart imports of U.S. soybeans and liquefied natural gas.
Saudi Arabia, Russia and other members of the OPEC+ group recommended an oil production cut, defying a Twitter plea from President Donald Trump to keep the taps open, but their meeting didn’t agree on how big any reduction should be. The group secured the participation of Russia for six months of output curbs starting in January, Oman’s Oil Minister Mohammed Al Rumhy told reporters in Vienna as he left the meeting on Wednesday. The committee didn’t discuss specific numbers and there’s still debate on the scale of the cut that’s needed. Al Rumhy said the group could eventually agree to remove about 1 million barrels a day from the market — just over 1 percent of global output — but a delegate from another country said some members believe a smaller reduction is adequate.
How to Trade China in 2019
Buy stocks and corporate debt, take profit in government bonds and don’t worry about the yuan. That’s the 2019 China markets advice from two seasoned pros who (mostly) got it right this year. Jonathan Garner, a Morgan Stanley strategist who called the bear market in China, says investors should snap up cheap shares after Beijing and Washington agreed to hit pause on their trade dispute, adding that there’s “too much cynicism” about a potential agreement. BNP Paribas Asset Management’s Jean-Charles Sambor, whose year long bullish stance on government bonds proved profitable, is reducing duration risk and hunting for value in the country’s battered credit market. Supportive steps by policy makers to shore up growth will likely reward investors with a more aggressive stance, according to Sambor.
May Seeks Lifeboat
Theresa May is searching for a compromise to avoid a crushing defeat on her Brexit deal in a key vote in Parliament next week. Late Wednesday the premier sent Chief Whip Julian Smith to negotiate a way forward with the pro-Brexit European Research Group of Conservative lawmakers that would allow them to support the package she painstakingly negotiated with the EU over 17 months. She’s been holding what officials described as productive meetings in her office with Tory rebels, and will hold more Thursday. The idea she’s said to have hit on is a so-called Parliamentary "lock” that would mean lawmakers would need to give their consent before the most contentious part of the exit deal comes into force. It’s effectively a veto for the House of Commons which could vote to stop the U.K. entering the Irish border backstop arrangement, a part of the deal loathed by pro-Brexit Tories because it binds Britain to EU rules they want to escape.
Siri, how do I get to Shanghai?
Apple Inc. on Wednesday said its HomePod wireless speaker will go on sale in China next year, potentially beating Amazon.com Inc. and Google to the world’s most-populous nation. On its website in China, Apple added a banner that said the speaker will go on sale in "early 2019." The Hong Kong website announced a similar move. The speaker will cost HK $2,799 ($358), according to the website, roughly in line with pricing in the U.S. and other countries. The launch in China is notable as this would make Apple the first major smart speaker maker from the U.S. to launch in China’s huge internet market. Amazon and Alphabet Inc.’s Google don’t sell their popular smart speakers in China currently. Major local players, like Xiaomi Corp. and Alibaba Group Holding Ltd., dominate the Chinese market for the devices at the moment.
What we’ve been reading
Here’s what caught our eye over the past 24 hours.
- America mourned George H.W. Bush.
- The stocks rout eased Wednesday.
- Bitcoin falls again, and technical indicators point to more pain in 2019.
- Private equity titan Leon Black says credit markets are in bubble territory.
- This Australian company is selling China on easier-to-digest milk.
- Toyota is still worried about American auto tariffs.
©2018 Bloomberg L.P.