In today’s briefing:
- Crude Prices Tank Despite OPEC+ Supply Cuts; Brazil to Join OPEC+
- India: Real GDP to Sustain 8%+ YoY Growth over the Next 18 Months
- CX Daily: China Mourns Loss of ‘Old Friend’ Kissinger
- Portfolio Watch: Time to fade soft landers entirely?
- The Weekly Market Monitor – Gold Shines, Oil Slumps, and Yields Should Reverse
Crude Prices Tank Despite OPEC+ Supply Cuts; Brazil to Join OPEC+
- Virtual OPEC+ meeting was held on 30th November after being delayed by five days. Outcome was an increase and extension of supply cuts till Q1 2024.
- WTI rallied 2.5% heading into the meeting but fell 4% shortly after due to scepticism over members following through on cuts and short-term nature of agreement.
- OPEC+ announced that Brazil would join the coalition in early 2024. A move that unites most top crude oil producers in the cartel with major geopolitical ramifications.
India: Real GDP to Sustain 8%+ YoY Growth over the Next 18 Months
- 11%YoY growth in GFCF enabled real GDP to grow 7.6% YoY in Q2FY24, well ahead of the 6.8% consensus. Manufacturing, construction, utilities and mining grew over 10%YoY in Jul-Sep’23.
- Services should grow over 8%YoY in H2FY24 (in line with 26-year average). Manufacturing should grow 9%YoY, delivering 8%+ growth in H2FY24. Reform and productivity enable 8% growth in FY25.
- The 12mma of the fiscal deficit fell to 5.8% of GDP in Oct’23, and should fall to 5.5% by Mar’24. This will crowd-in private investment, generating virtuous circle of growth.
CX Daily: China Mourns Loss of ‘Old Friend’ Kissinger
Kissinger /: China mourns loss of ‘old friend’ Kissinger
Shanghai /: Xi’s Shanghai visit focuses on tech innovation, affordable housing
Migrant workers /: China aims to ensure migrant workers get paid before Lunar New Year
Portfolio Watch: Time to fade soft landers entirely?
- With November in the rearview mirror, markets are finally starting to discount the disinflation story aggressively.
- There’s a growing gap between what’s happening in financial markets and what central banks are doing: Traders are now betting more heavily on interest rate cuts in the United States and Europe as the soft inflation prints (which we of course forecasted, we don’t mind reminding) and risks have been partying through November.
- We’ve been emphasizing the last phase of the last US leg being absent but today’s ISM manufacturing data fell significantly short of both our estimates and market expectations. So, it looks like we might need to change our tune on that one.
The Weekly Market Monitor – Gold Shines, Oil Slumps, and Yields Should Reverse
- Gold Has closed at its highest monthly close price ever! And further gains lie ahead in the coming years. Yet, most multi-asset investors still do not have any exposure to the yellow metal.
- What if not the Fed but the ECB cuts rates first? Incoming inflation data suggests a 2024 combination of deflation and recession is increasingly likely, leaving the ECB little room but lower rates.
- Oil fell as OPEC+ half-heartedly presented another one million barrels per day production cut, which has written ‘voluntary’ all over it.
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