Five Things You Need to Know to Start Your Day
Here are some of the things people in markets are talking about.
(Bloomberg) --
At long last, there’s an actual deal on Brexit. Plus, Bitcoin fell to its lowest level in over a year, and Americans can’t stop importing Chinese goods. Here are some of the things people in markets are talking about.
Brexit Deal
After more than five hours of being locked away with her Cabinet, Prime Minister Theresa May emerged from her office and in less than five minutes announced she’d wrested their backing for her Brexit deal. More battles lie ahead: “The choice before us is clear: This deal,” she said “or leave with no deal, or no Brexit at all.” The EU's statement was much longer than May's, and also seemed more upbeat. Unlike the prime minister's, it ended with questions from reporters. The EU's chief Brexit negotiator, Michel Barnier, says there's a lot of work still to do and the path may be difficult. In addition, divisions in the Labour Party will play a key role in deciding whether May gets her deal.
Crypto Swoon
Bitcoin tumbled below $6,000 for the first time since August and reached its lowest level in over a year, breaking the recent stretch of tranquility exhibited by the notoriously volatile digital alternative to cash. The world’s largest cryptocurrency tumbled as much as 12 percent, with most of the loss coming during a half-hour window. Other digital coins slumped, with smaller rivals Ether, Litecoin and XRP dropping more than 17 percent. Bitcoin Cash tumbled as much as 21 percent as the Bitcoin offshoot faces its own split.
Trade-War Ironies
The man running the world’s largest container-shipping company says he has access to data that shows Donald Trump has so far failed to wean the U.S. off Chinese imports. Soren Skou, the chief executive of A.P. Moller-Maersk A/S, says Chinese exports to the U.S. actually grew 5-10 percent last quarter. Meanwhile, U.S. exports to China fell by 25-30 percent. There are two reasons, Skou said: The U.S. economy is doing well so consumers there have more money to spend on imports, and a lot of the really big U.S. companies are hoarding Chinese imports to buy as much as possible before tariffs kick in. On another note, global copper consumption is set to expand next year even as the U.S.-China trade war rumbles on, according to a major European miner, which expects usage to be underpinned by shifts in the mainland economy and the government’s plans to develop infrastructure across Asia.
China’s Electric-Car Drive
The world’s biggest market for electric vehicles wants to get even bigger, so it’s giving automakers what amounts to an ultimatum. Starting in January, all major manufacturers operating in China—from global giants Toyota Motor and General Motors to domestic players BYDand BAIC Motor—have to meet minimum requirements there for producing new-energy vehicles, or NEVs (plug-in hybrids, pure-battery electrics, and fuel-cell autos). A complex government equation requires that a sizable portion of their production or imports must be green in 2019, with escalating goals thereafter. The regime resembles the cap-and-trade systems being deployed worldwide for carbon emissions: Carmakers that don’t meet the quota themselves can purchase credits from rivals that exceed it. But if they can’t buy enough credits, they face government fines or, in a worst-case scenario, having their assembly lines shut down.
Oil Stanches Losses, at Last
Oil rose, ending its longest-ever losing streak, amid further signals that OPEC and allied producers are considering production cuts as soon as next year. Wall Street’s been abuzz about -- and confused by -- Tuesday’s epic plunge. But Goldman Sachs think they’ve uncovered one of the main culprits: a rush by major banks to cover their exposure to oil producers’ hedges. Goldman analysts blamed the rout on a combination of momentum trading strategies, and selling from financial institutions which had helped arrange hedges on behalf of crude producers (Goldman is itself one of Wall Street’s top commodity banks).
What we’ve been reading
This is what caught our eye over the last 24 hours.
- Here's what's killing Australia's property boom.
- China's growth engines are losing $32 million a minute.
- Mark Cuban exits the high-frequency trading game he hated anyway.
- Lots of indexes were created last year.
- Tencent's earnings were really good.
- Beijing's air quality is worse than in smoke-filled California cities.
- Three Michelin stars prove elusive in Thailand.
To contact the editor responsible for this story: Boris Korby at bkorby1@bloomberg.net
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