President Trump: Oil Cheerleader

From the Telegraph newspaper:

Quote Of The Day:

“Oil prices getting lower.  Great! Like a big Tax Cut for America and the World.  Enjoy! Thank you Saudi Arabia, but let’s go lower!”

U.S. President Trump comments on the slump in oil prices

We wrote some days ago about the issues that we see as being the drivers for risk and equity markets into the year end and Q1 2019.

  1. Trade discussions between China and the U.S.:  some of the analysts we speak to are saying the a positive outcome is much higher now than it was a few weeks ago.  Should there be an agreement or even postponement, it will help equities.
  2. EU/Italy:  there seems to be a bit of a softer tone in discussions, but no agreement.  Stay tuned
  3. Brexit:  feels like the EU wants this situation to calm down and most likely will be some type of agreement that allows more time to work out the remaining key issues.
  4. Energy prices hurting global consumers and companies by driving up costs and uncertainty for markets
  5. Federal Reserve becoming less hawkish regarding hikes in 2019.  The market is starting to price a less aggressive hiking path as we see inflation remaining subdued and growth in the U.S. slowing, but still in good shape.

We are thinking that #1 and #4 are heading towards positive influences on the global stock and bond markets.  We still think that the Fed will hike in December and at least 1 hike in Q1 next year.

A quick summary of views as we enter the Holiday weekend in the U.S.:

Gold:  holding the range we have been discussing since August.  We wait for a breakout, which we think will be above 1235/1240.

USD holding for now, Market watching Fed closely along with developments in Washington and China trade for direction into 2019: (USD dollar index)

EURNOK:  testing key level of 9.75 to 10.00.

Brent Crude, in a similar fashion as the S&P index, is back to the start of the year levels.

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