Market Talk - Monday, Dec. 10

More disappointment today for Asian stocks following the release of yet another weak economic data point. This morning markets responded to the poor trade data for November release as a 5.4% release was way below the double digits expected. Australia ASX had the first opportunity to respond and although held openings levels for a while, was soon to feel the pressure when other markets started trading. The AO’s eventually closed on the lows of the day (-2.26%) with the A$ also falling back against a healthy USD. Japan’s Nikkei and the SENSEX were two other markets that lost over 2%, but also with their currencies trailing against the Dollar. India’s CB Governor Urjit Patel resigns stating “personal reasons”, but reports that tensions have been growing between the CB and the government have long been in the news. INR is off around 1.6% in late US trading. Interesting that even this evening in US hours the flight to safety is not there for the Yen as we see it trading with a 113 handle. Both the Hang Seng and Shanghai played around 1% lower for most of the day, but we did see the CNY back with a 6.91 range, a loss on the day of just over 0.5%.

European markets were already lower without the total mess happening in the UK Parliament. Sterling’s meltdown happened just after Theresa May pulled the BREXIT vote that was due to take place Tuesday, rumor is fearing a huge loss! The GBP 1.6% decline did help FTSE initially, then they realized if things are that serious people will liquidate assets regardless if they are cheap. When things get desperate and you need money, you sell what you can and not what you should! On this FTSE closed down nearly 1% and the outlook remains uncertain. Lots of talk of a second referendum…. Central Europe was dodgier still with CAC, DAX, IBEX, BEL and FTSE MIB all off 1.75%. This puts their YTD returns at -10.75%, -17.75%, -13.75%, 17.25% and -15.75% respectively. There is still a lot of market talk that Europeans are selling US exposure to bring and enhance returns back in Europe. Keep in mind they have probably made on both on the asset and the currency; Euro is down 5.25% and GBP 7% against the USD. Talk that they may merge Deutsche Bank and Commerzbank again – and the assumptions are; it can’t be that great!

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