US Open – Phase 1 remains on course, Google, Oil rises, Gold remains trade sensitive, Bitcoin’s dead-cat bounce

US stocks are poised to snap a three-day losing after a phase-one trade deal remains on course despite recent rhetoric over Hong Kong and Xinjiang tensions.  US sources are claiming the phase-one deal will be finalized before the critical December 15th deadline that would raise tariffs on goods that mostly punish the US consumer. 

There was no supporting evidence on why markets should be optimistic that the phase-one deal will get done, but it seems pretty apparent that President Trump at the very least will kick the can down the road on the December 15th tariff increase deadline.  Business confidence will not return on simple delayed decision on tariffs and we will start seeing that put a damper on future earnings outlooks.

Safe-havens fell alongside Treasuries on renewed optimism that the world’s two largest economies will show progress on the trade front in the near future.  The British pound was the best performing currency as Conservatives seem to have maintained a steady lead over Labour.  Sterling could make a run towards 1.35 if we see markets price in expectations for Boris Johnson to win a majority. 

Google

Google is making a major change in strategy and will likely begin reining in ambitious projects in the near future.  Google founders, Larry Page and Sergey Brin are out and have made Sundar Pichai the CEO.  The simplification of Alphabet’s management structure was mostly expected, and many changes will likely be on the way. 

Oil

Oil prices are rising on renewed trade optimism and after the API report showed crude inventories fell by 3.7 million barrels last week.  For oil to return to a bull market, OPEC and allies will need to deliver a deeper production cut at this week’s upcoming meeting in Vienna.  While we are starting to see signs of life in the global economic recovery, slowing demand could easily warrant an OPEC surprise this week.  The Saudis are all in doing what it needs to keep oil prices firm ahead of the final pricing of the Aramco IPO.  A deeper cut should not get much resistance, especially from the Russian’s who have yet to comply except when they had a contamination issue.    

Gold

Gold prices continue to trade off of every trade headline.  After almost reaching the $1,490 an ounce level, gold has fallen back towards the $1,480 region as renewed trade optimism signals a phase-one trade deal is still on course.

Bitcoin

Bitcoin’s rebound from last week seems to be a dead-cat bounce.  With no major bullish catalysts on the horizon, except for the Bitcoin halving date of May 12th, 2020, the bearish queues from China and the US are going to continue to push the entire crypto space lower in the short-term.  If Bitcoin breaks below the $6,500 level, we could see an easy freefall towards the $6,000 mark.  Institutional funds are still heavily invested but may ride the move lower before piling back on bullish bets.  The end is not here for Bitcoin, but the right narrative is looking very bleak.    

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