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China waives tariffs, NFP preview & Uber safety

European shares have opened stronger on Friday before the release of US monthly employment figures. That follows a generally upbeat session in Asia. Similarly LCG pricing points to a higher start on Wall Street. The British pound is hovering at 2-year highs against the euro while the dollar is near its weekly lows. Gold is treading water near a one-month high while oil is little changed at the start of the 2nd day of the OPEC meeting.

China waives pork tariffs (while US tell porkies)

It’s not the first time this point has been made by any stretch but... The comments made by President Trump and his team about the state of trade negotiations with China are really stretching the limits of credibility. Luckily some real proof that a trade deal could be imminent came by China waiving tariffs on some US soybeans and pork imports. You might say China waiving tariffs on pork back up the US porkies. Digging a bit deeper into the supply and demand for these products in China things might not be quite as rosy as they seem. A swine flu out break in China means it suited Beijing to offer the waivers to the US imports to address the drastic reduction in pork supply. Still, it keeps up appearances for a phase one deal.

Rising scepticism about their ability to judge the current state of affairs on trade has pushed traders to look for other clues about the next market direction. And this week those clues have come in the form of generally soft data out of the US and Europe.

Non-farm Payrolls preview

The standout disappointment this week was the November ADP unemployment report. It came in at half the average expectation with the smallest monthly job growth since May. The correlation between ADP and NFP is not well defined but were NFP to come in soft too- a marked deterioration in the US labour market would be upon us. That could easily renew talk of a US recession next year with a typical market reaction of lower treasury yields, a weaker dollar and a pullback in equities. The return of General Motors worker from on strike should give the NFP numbers a favourable skew over ADP, perhaps reducing the risk of a repeat of Wednesday’s disappointment.

Passenger safety issues at Uber

We do not think ride-hailing apps are going anywhere but the industry needs to evolve to make sure journeys are safe for passengers. This latest report on sexual assault involving Uber drivers and passengers is a real shocker. Female passengers especially might well look at this report and think twice about using an Uber.

The share price fell yesterday but investors have been prepped about the release of this report since before the IPO. The silver lining is that the report is a welcome move toward transparency for Uber. What the share price does from here depends on how Uber use this information to improve passenger safety. What we would like to see is a firmer process for hiring drivers- and probably some kind of vetting process for passengers too. This problem will not be exclusive to Uber and needs to be tackled at an industry level. Collaboration between ride sharing apps– including sharing background check information is necessary. The risk to not addressing the problems this report raises is not only to passenger safety -but also to these apps user growth.

21-9-2020

Trump approves TikTok deal, Powell & Superdry earnings
MARKETS The Dow Jones fell on Friday as investors had to contend with another selloff in big tech, led by Google. Friday moves came as four major types of options contracts were set to expire in a quadruple witching, triggering a rise in volatility. European e… Read more

18-9-2020

USD/JPY sub-105 and UK retail sales
MARKETS US stocks fell in volatile trading on Thursday amid renewed pressure in shares of major tech companies. Conflicting messaging on the coronavirus vaccine front and uncertainty around further stimulus also weighed on sentiment. European equities fell aro… Read more

16-9-2020

Buffett-backed Snowflake IPO & Fed Preview
MARKETS The Dow Jones ended roughly flat on Tuesday, pressured by a fall in financials and a u-turn in Apple after the tech giant launched a new services bundle and hardware. The S&P 500 was up 0.52% while the Nasdaq added 1.21%. Apple rose 0.2% but had be… Read more

14-9-2020

Brexit bill first debate & tech stock sell-off
Markets The major U.S stock indexes fell for the second week in a row, as technology stocks experienced their worst pullback since March. The market was volatile in a holiday-shortened week, with the Nasdaq posting a 4% decline on Tuesday followed by a nearly… Read more

18-5-2020

Gold hits 7-year high after Powell Warning
Fed Chair Jay Powell has warned the US economic recovery might last through the end of 2021. The Fed is normally too optimistic in its forecasts so the outlook feels bleak. Still, warm weather is encouraging countries to continue exiting lockdown. If the flu s… Read more

14-5-2020

Powell predicts more pain to come but no NIRP
A warning from the top of the US central bank that there’s more pain to come isn’t going down well across markets. Fed Chair Jerome Powell warned yesterday that more stimulus will likely be needed in the US to fend off the economic damage done by virus and pol… Read more

13-5-2020

“Suffering and death” warning hurts markets
A sense of caution has taken hold across markets. Shares, riskier currencies and oil are pointed lower. There’s a reassessment of the likely timeline for economic reopening. Our sense is markets juiced up by higher liquidity may have gotten ahead of themselves… Read more

12-5-2020

Bitcoin halving, dollar breakout on second wave fears
Market sentiment remains fragile. There’s a lot of emphasis being placed on the virus numbers in economies that have been gradually reopening.  Wuhan, the City in China where it all began reported its first ‘cluster’ of new cases yesterday after lifting restri… Read more