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White Flag ?


The hot spot remained the accelerating weakness in oil prices which shed 7%. Anecdotally perhaps, D. Trump lashed out at French President E. Macron with a series of ad hominem attacks that are customary in his handling of political foes at home but more unusual in diplomatic usage. “The problem is that Emmanuel suffers from a very low Approval Rating in France, 26%, and an unemployment rate of almost 10%. He was just trying to get onto another subject. By the way, there is no country more Nationalist than France, very proud people-and rightfully so!........” Friendly relations have ups and downs but if Trump ever considered E. Macron as a friend, he is hiding it well. This eructation was likely in response to E. Macron calls for “Patriotism” in his speech on Sunday which is not quite the same as the “Nationalism” D. Trump referred to. Or perhaps it was his cancellation of a commemoration on Sunday due to heavy rain that stirred amusing comments as to whether he was perhaps more mindful of his fragile haircut than of the need to pay tribute. Susceptibility and hypersensitivity are often the common trait of serial offending characters. D. Trump did not like the idea of a common European army either, ignoring the fact that with friends like him, nobody needs enemies anymore. European markets outperformed but they also closed before the US rally petered out helping the Dax to close with a +1.5% gain. They are likely to outperform further on the overnight news. Italian spreads were stable with markets discounting and back pedaling on the risk of populist politics in Rome destabilizing the EU. US 10y Treasury yield (bond yields snapshot) dropped 1bp. HY spread underperformed with spreads driven higher by the sharp fall in oil prices. Oil plunged most in three years, for the 12th consecutive day and by 7.1% after OPEC issued a dire forecast for 2019 demand at a time of steadily rising US production and stockpiles. The liquidation had a smell of capitulation as hedge funds, already roughed up from a rout in tech, remained long crude oil, just weeks after calling for oil to reach USD100.   

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