Five Things You Need to Know to Start Your Day

(Bloomberg) --

The most scrutinized Fed meeting in years kicks off. Washington and Beijing are planning to hold a fresh round of trade meetings in January. And the plunge in oil prices continues. Here are some of the things people in markets are talking about.

Trade Talks on for January

The U.S. and China are planning to hold meetings in January to negotiate a broader truce in their trade wars but are unlikely to have any face-to-face contact before then, according to Treasury Secretary Steven Mnuchin. Speaking in a roundtable interview Tuesday at Bloomberg’s Washington office, he said the two sides had held several phone conversations in recent weeks and were still in the process of planning further formal discussions. “We’re in the process of confirming the logistics of several meetings and we’re determined to make sure that we use the time wisely, to try to resolve this,” Mnuchin said. Both sides are now focused on trying “to document an agreement” by a March 1 deadline for their current tariffs truce to run out. “We expect there will be meetings in January,” he said. Previously the administration hadn’t been specific on the timing of talks. Mnuchin also discussed freeing Fannie Mae and Freddie Mac from government control, the U.S. budget deficit, and recent equity-market volatility in the wide-ranging interview.

Fed Meeting Is Finally Here

The Federal Reserve began a two-day policy meeting Tuesday, perhaps its most scrutinized session in years, as it takes direct fire from President Donald Trump. He has blasted the central bank for two days running, calling for officials to cease raising interest rates, a level of public pressure no president has put on the Fed in decades. While financial conditions have tightened significantly, the U.S. jobs market is still strong  and the outlook for 2019 is relatively solid, so the case for a hike hasn't disappeared by any stretch. However, "fear of fear itself" has become an economic risk as 2019 comes into focus.

Crude Collapse Continues

Economic jitters and surging supplies from the U.S. to Russia hammered oil again, with crude suffering its biggest decline in more than three weeks. Futures slid 7.3 percent in New York on Tuesday, putting prices on track for their worst quarterly loss since the start of the last oil market crash in late 2014. Anxieties over growth swirled as Chinese President Xi Jinping appeared to push back against Trump in a Beijing speech and American investors braced for an interest-rate hike. Another late-afternoon fizzle for U.S. equities added to the dour outlook. The S&P 500 held near a 14-month low after earlier climbing as much as 1.1 percent.

A Bitcoin Bottom?

Just as the euphoria surrounding Bitcoin was peaking last December, Mark Dow decided to short the leading digital currency. Almost a year to the day, and after a more than 80 percent decline from its record high price, Dow has closed out the trade. “I’m done. I don’t want to try to ride this thing to zero,” Dow said in a phone interview Tuesday. “I don’t want to try to squeeze more out of the lemon. I don’t want to think about it. It seemed like the right time.” Meanwhile, longtime bull Michael Novogratz says crypto declines won't get too much worse. And JPMorgan says it sees signs that the pros are ditching cryptocurrency markets.

Sydney Housing Slump Reaches RBA

Sydney’s plunging house prices are usurping a prolonged wage slump as the key worry for the central bank, with markets now showing more chance of an interest-rate cut than a hike in 2019. Prices in Australia’s biggest city have tumbled 10 percent and some economists are tipping a similar fall next year. While the central bank isn’t panicking just yet, a 15 percent nationwide drop in prices would cut about A$1 trillion ($718 billion) from the housing stock value. That could deal a major blow to consumption, which props up about 60 percent of the economy. The wages picture isn’t much brighter than property’s, though the RBA and government say labor shortfalls are emerging in some industries. Pay packets rose 2.3 percent last quarter, a three-year high and inching closer to Governor Philip Lowe’s goal of annual increases with a “3” in front of them. But a reasonable amount of slack remains in the labor market.

What we've been reading

This is what’s caught our eye over the last 24 hours.

• The world’s top IPO venue in 2018 has seen its worst returns in a decade.
• China signals it’s open for business.
• Southeast Asia’s biggest economies diverge on rate action. 
• Longer flights and nicer jets are changing how we travel.
• Meet the new Japanese robots designed to hack your emotions.
• The world’s most controversial mine is set to break ground. 
• Computerized running shoes, anyone?

To contact the editor responsible for this story: Boris Korby at bkorby1@bloomberg.net

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