The rally up in the USD dominates price action today. The EUR slips to 16-month low as the 1.13 barrier breaks with 1.1187 the next target all on fears about Italy and Brexit. GBP loses 1% as deals continue to elude for UK/EU and politics continue nag. Oil stabilizes as Saudi unilaterally cuts its output and sees need for 1mbd more cuts in 2019 but OPEC pushes back with 106% compliance in October. The USD rally and the Oil rally aren’t enough for Europe. The fears over growth, ECB policy, EU/Italian budget clashes, EU/UK Brexit deal failures and ongoing political discord from Germany to France all make the start of the week less obvious. Many would like to believe that US divergence with growth and rates continues and that the USD is not playing a safe-haven role today as much as an obvious investment flow barometer.  Whether this proves out will be hard to tell given this is a US bond holiday and that many see the markets as waiting for the more important CPI and FOMC Powell speech to decide. US rate sensitive sectors will be important to watch this week along with the usual rotational plays into year-end as many want to hear that all-clear siren for risk but hearing that for the noise of the news headlines maybe hard. The trend up in the USD seems clear with 96 base and 98 short-term target and perhaps that is all we need, as the correlations to other markets fray like the faith that it’s going to be a sunny day. 

Question for the Day: Does Alibaba’s Singles Day Sales matter? Worries about the state of China growth should ease modestly on the $30.8bn record sales. There are two stories wrapped in the event – first is how Beijing treats Jack Ma, second is how the company actually performs into 2019. The fact that Ma appeared at the event (albeit via video clip matters). While the event broke records, the sales growth rate clearly slowed in 2018 from the 40% climb in 2017. Also notable, Alibaba cut its full-year forecast earlier this month by as much as 6% as growth slowed in categories such as consumer electronics. And at yesterday’s event, the housing-related big-ticket items slowed down sales. The other story related is the role of the on-line retailer as the government tries to regain some controls. Overall, online retail sales growth in China slowed to 24% in the third quarter, down from 36% in the previous quarter, according to the National Bureau of Statistics. For investors, China tech and US tech are a key focus as they correlate and lift the entire regional bourses. The recent pullback in shares in both places isn’t just about US/China trade relationships and the sales event yesterday makes this clear.