Trump will highlight ‘horrible’ trade deals on Asian tour
Five big themes likely to dominate thinking of investors and traders in the coming week
1. Trump on tour
US President Donald Trump embarks on his first trip to Asia in the coming week, stopping in Japan, South Korea, China, Vietnam and the Philippines.
Security concerns in the Korean peninsula and the South China Sea will grab a lot of attention, but investors will also look at trade talks, with Trump particularly keen to address his country’s vast trade deficit with China that Beijing calls unintentional, but which he calls “horrible.”
There is also the first deluge of data since last month’s People’s Party Congress in China. Import and loan growth figures will be particularly closely watched.
A weakening of the former would point to domestic demand finally flagging, while an acceleration of loan growth would show borrowers are finding ways around tighter new lending rules.
2. Ballistic bitcoin
Investors’ appetite for bitcoin appears to have no bounds. The digital currency climbed above $7,000 on Thursday for the first time ever, after an astronomical increase of more than 900% over the past 12 months. News that the world’s biggest derivatives exchange operator, CME Group, was set to launch bitcoin futures was seen as a significant step in bitcoin’s road to mainstream adoption, driving the latest surge in price.
But with high-profile investors such as Warren Buffett and the head of Credit Suisse saying in recent days that the bitcoin market represents a bubble, could that be set to burst in spectacular fashion? What is to stop a rival cryptocurrency – of which there is a potentially unlimited quantity – from becoming investors’ digital currency of choice? With bitcoin now worth more than $120 billion, more than Citi or Goldman Sachs, the consequences of a sudden crash could be severe.
3. Need a jolt?
The Nov. 7 release of the September Job Opening and Labor Turnover (JOLT) survey will show whether demand for labor has held up or is in need of an – ahem – jolt.
At the moment, the ratio of job openings versus quit jobs is close to 2 to 1, hovering in a range close to the all-time peak of 2.12 hit in July 2015.
It all comes following strong recent US GDP data and after Republicans in the US House of Representatives released plans on Thursday for a tax overhaul they believe will help lift the economy.
US Job Openings and Labor Turnover (JOLTS) http://reut.rs/2zaKAT2
4. Italian banks job
Italy’s biggest banks, including UniCredit, Intesa and Banco BPM, report their latest earnings and they could make encouraging reading following the euro zone-wide pick-up in growth and a strong rally in Italian debt over the last month.
It certainly seems a long time since last year’s bail out of problem child Monte dei Paschi di Siena BMPS.MI. It is now back in the market, and the main Italian banks are comfortably outperforming their euro zone peers in share performance .SX7E in 2017, so the results round should be telling.
5. Venezuela restructuring
After what feels like years of speculation, OPEC member Venezuela’s socialist leader Nicolas Maduro wants to restructure the ailing country’s foreign debt.
Maduro has invited Venezuelan bondholders to a Nov. 13 meeting in Caracas to discuss the matter, although getting clearance from the compliance department could be interesting for the bankers involved.
Vice President Tareck El Aissami, who is on a US blacklist for alleged drug trafficking, said the country remained committed to paying all its debt but wanted to reformulate terms with creditors, which is likely to mean some lively bouts of price discovery.