Market comment November 2018

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China’s manufacturing sector worsened in October as the trade war hit home, adding to risks the global economy may be edging toward a synchronized slowdown. China’s official factory gauge missed estimates with a reading of 50.2 and its exports sub-index slumped to the lowest reading since early 2016. In other data released Wednesday, Industrial output for September in South Korea and Japan came in below estimates, as did third quarter output in Taiwan.

Weaker China Adds to Risks of a Synchronized Global Slowdown

Eurozone already slowing, US also, it's getting chilly out there..

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Probably true..

President Donald Trump has suddenly suggested that the US and China could make a deal to end the trade war. But the suggestion flies in the face of recent actions by the administration — and Trump's own words. Analysts said Trump could be simply trying to sooth investors and boost the stock market in the run up to the midterm elections by teasing a deal.

Trump, China tariffs: trade war deal midterm election, stock market ploy - Business Insider

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Growth worries were underscored on Thursday when the China Passenger Car Association reported Chinese auto sales fell for a fifth straight month as retail sales of sedans, multi-purpose vehicles and SUVs dove 13.2% in October. That may seem like an esoteric data point, but it's actually a big deal. Bloomberg makes clear just how disconcerting this is by reminding you that October's numbers "brought the world’s largest market closer to its first annual drop in at least two decades."

Here Are 3 Things Keeping Bullish Investors Awake At Night | Seeking Alpha

"A common view that inflation and yields remain quite low and do not represent much of a threat for the stock market is simply incorrect," Paulsen wrote in a client note. "Because both wage and price inflation recently reached new recovery highs, overheat pressure seems poised to become even more pronounced."

Next stock market crash: Hidden threat flaring up, may extend meltdown - Business Insider

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China’s government bonds -- the world’s best performing sovereign notes so far this year -- may have room to advance even further. The securities will be supported by more monetary easing and stronger safe-haven demand amid lingering trade tensions, record corporate bond defaults and dropping stocks, China watchers say. The yield on 10-year sovereign notes has tumbled 54 basis points in 2018, while the costs on similar debt of most other major economies rose. Chinese yields fell 13 basis points last week, the biggest drop since April.

The World's Biggest Bond Rally Is Picking Up Steam in China - Bloomberg

The MSCI Asia ex-Japan index has fallen more than 20 percent from its 2018 highs, and Tantia is seeing opportunities amidst the turmoil. “I like Asian markets because I think there’s a big divergence between fundamentals and prices,” he said. “Prices have moved far ahead of fundamentals.” “You look at the earnings picture for Asian markets, we are still looking at 10 percent kind of growth for 2019. Valuation is extremely cheap and this year, we have seen thirty billion dollar(s) of outflows from Asian equities which we have never seen going back to 2008,” Tantia said.

Credit Suisse: opportunities in Singapore, China and Indonesia

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Bit of a glut in capacity when oil is already crashing..

The race to export U.S. shale oil overseas is about to get fierce, with at least nine proposed terminals angling for a piece of a very limited pie. Within 18 months, new pipelines opening in the nation’s most prolific shale basin promise to carry an added 2 million barrels of oil a day to the Gulf Coast. But the extra crude will arrive at a time when existing terminals in the Corpus Christi area can already offer about 300,000 barrels a day of unused capacity. Meanwhile, some of the terminals proposed are being designed to load a supertanker every other day, each capable of carrying 2 million barrels. The result: It’s likely only one or two new terminals are needed, with the edge going to companies such as Enbridge Inc., whose Freeport, Texas, effort could be fed by two pipelines it already owns interests in.

Shale Boom Raises Specter of New Glut: Gulf Coast Oil Terminals

Silicon Valley has rung alarm bells over the Trump administration’s latest salvo in its trade war with China — a threat to put export controls on a wide range of emerging technologies including artificial intelligence and robotics.  US technology companies are concerned that the sweeping nature of the commerce department targets, imposed on national security grounds, could undermine the goal of maintaining a US lead in the sector.

Trade war puts US tech sector in line of fire | Financial Times