A roundup of what The Globe and Mail’s market strategist Scott Barlow is reading today on the Web
S&P 500 futures fell more than 30 points overnight after U.S. President Donald Trump suggested that a trade deal with China might have to wait until after the 2020 U.S. federal elections,
“'I have no deadline, no. In some ways, I think I think it’s better to wait until after the election with China,' Trump told reporters in London, where he was due to attend a meeting of NATO leaders.”
Global equity had been priced for economic optimism in 2020, in part founded on the belief of a partial trade resolution. The sheer arbitrariness of White House announcements is also causing investor caution.
“Trump says U.S.-China trade deal may not happen until after 2020 election” – Report on Business
“Here’s what happens to markets if fresh U.S. tariffs on China kick in on the 15th - “Trump would be the Grinch that stole Christmas”” – Bloomberg
“@jsblokland #Trump: it might be better to wait until after the 2020 election for a China trade deal. Markets are not priced for that” - (chart) Twitter
***
Citi strategist Chris Montagu provides a monthly ranking of 22 major global equity markets based on macroeconomic and valuation factors. The most recent report puts Canada as the seventh least attractive of the markets.
Austria, Italy, Sweden, Switzerland and the U.K. were ranked most attractive, Australia, Belgium and Brazil were at the bottom.
“ @SBarlow_ROB C: global markets ranked by attractiveness (factor, macro, valuations)” – (full table) Twitter
***
Deutsche Bank strategist Binky Chadha calculated how much 2020 growth U.S. stocks have priced in,
“What’s priced in? A strong rebound in macro growth with the ISMs rising to around 57 and earnings growth to 15% ... This year the S&P 500 has climbed to new all-time highs despite continued slowing in both, suggesting the markets are pricing in a rebound in fundamentals”
The Tuesday announcement on trade throws a wrench into these optimistic forecasts, leaving significant short-term market risk.
“@SBarlow_ROB Deutsche: What's priced in?” – (research excerpt) Twitter
***
Global markets reacted violently (but temporarily) to the hiccup in U.S. interbank lending markets in September and further upheaval is possible into year-end. Former Department of Treasury economist Mark Dow (now a hedge fund manager) provided an explanation of what happened.
“Repo made simple” – Behavioural Macro
***
Newsletter: There’s really only one big question for investors in 2020 – Globe Investor
Diversion: “50 Years Ago, Sugar Industry Quietly Paid Scientists To Point Blame At Fat” – National Public Radio (U.S.)
Tweet of the Day:
Editor’s note: In an earlier version of this column, Australia was listed as one of Citi's most attractive equity markets. In fact, it is Austria. This has been updated.
Scott Barlow