Inflation is the US focus in the morning and FOMC Powell in the afternoon. Markets have had another miserable overnight as risk-off continues with weaker China retail sales blamed on the November Singles Day waiting for discounts, weaker Japan GDP, weaker German GDP, mostly as expected CPI everywhere and a grim outlook for ongoing talks with China and Brexit. UK PM May has a 2pm cabinet meeting to sell the EU/UK Brexit deal. The larger effort will be to sell it to her party and to the public. No one is happy and the path to financial stability seems riddled with the need for better US/China relations and growth mixed with a more dovish FOMC. Neither of these preconditions looks easy unless there is a data surprise. The lower oil prices maybe a 4Q help for consumer but hit to the US oil patch and to some in EM. The divergence of outcomes isn’t what investors want for a year-end risk rally. There is a clear distrust in the risk-on and risk-off mood swings of late and the barometers in FX – USD, JPY, CHF are all telling us to expect a modest bounce back today. The key maybe back in Copper where $2.60 is the breakdown cut out of everything against $2.80 return to normal and Goldilocks. Today is about reckoning – paying for Brexit 2 year talks, paying for 10-years of QE and waiting for more about US/China talks.
What Happened?
