APAC Global Macro Morning Brief – Happy Macro Wed 4 Dec 2019: Downright Outrageous Trump... plus Saxo's 2020 Outrageous Predictions

Macro 1 minute to read
Kay Van-Petersen

Global Macro Strategist

Summary:  Morning APAC Global Macro & Cross-Asset Snapshot

(Note that these are solely the views & opinions, they do not constitute any trade or investment advice of any kind.)

To see this wk’s Macro Monday click here

APAC Global Macro Morning Brief


Macro Wed 4 Dec: Downright Outrageous Trump... plus Saxo's 2020 Outrageous Predictions

Wondering why the risk-off sentiment continued overnight, look no further than Trump, who was in top form with the attendance of his ego, super-ego & id

The instinctual latter was very much in control as in response to questions on timing & a trade deal with China we got the following

“I don’t have a deadline” I.e. on whether it concludes by end of this year

“I like the idea of waiting until after the election for the China deal. But they want to make a deal now and we’ll see whether or not the deal is going to be right”

And KVP’s personal favorite in bold below… And just get the context right here, this is the ‘leader of the free world’ saying one of the most outrageous things to come out of his outrageous library of comments & rhetoric

“The China trade deal is dependent on one thing: Do I want to make it? . . . We’re doing very well with China right now and we can do even better.”

The FT does a good jobs of summing up some of the latest moving parts…

All this whilst we have just 11 days to the Dec 15 deadline for the potential next wave of US tariff hikes. Is Trump bluffing or is he as serious as cancer or just straight winging it?

Think key risk is that Beijing says enough is enough & closes the door on any further trade dialogue with the current administration. You have to wonder what message the “Do I want to make it?” sends to not just Xi, yet him being the leader of a $16 trillion economy (2nd biggest in the world) with over 1.4bn people

At the end of the day, we all know that past whatever ‘skinny’ phase one deal that is possible… a Phase II & III are close to 0% probability of success. So its not to inconceivable to see a pathway where China’s patience wears thin 

Likely they would have to measure the potential effects of the next round of tariffs increases & slowdown right before Chinese New Year in 2020. Yet, they can also lay out a special 2020 Chinese New Year stimulus to counter the effects of a tariff increase if they decide that there is no deal to be had here

One thing is for sure, this equity markets & volatility are not priced for a complete deal break & lift up of tariffs on Dec 15. Yes, the VIX is up +34% in the last 5 trading days to c. 16 handle, we need to get above 25/30 to really get the volatility party & bearish sell-off kicking

We are still above 3K on SPX and only pulled back -0.66% o/n to 3093… we are not even more that -2% from recent 3153 highs…  Meanwhile we have had US 10yrs go from recent highs of c. 1.86 on Mon (post a 1.77 close on Fri), to closing o/n at 1.7157 

If there is a breakdown in talks, then folks will also get back to repricing the increased probability of Fed cuts for 2020

Also keep a look out for the potential beef with Macron’s France stepping up to tax US big Tech who have been playing tax avoidance game for years, could result in a tit-for-tat between the US & the European union. CAC -101% to 5723 was one of the worse EZ equity indexes o/n

Granted the size of the potential tariffs at 2.5bn are not big for an economy of France that is $2.6trn – yet its more the scope for the ripples around this. And yes this is also a NATO vs. EZ self-defense funding aspect in all this as well

If KVP was a bottoms up stock picker & looking for themes with shelf-life, euro-zone militarization & French A&D names would definitely be on the deep dive list… this is likely not going away anytime soon

Lastly this morning Asia we are seeing that the US house is debating the Uighur bill – likely to pass given the House is controlled by the Dems. Implications on this (if it passes through the Senate & is signed by Trump … think HK bill) is that there would be sanctions on senior Chinese Officials… We have already had China vowing a response

Its just gets more & more personal, which reminds me of that Kai Green quote that I am sure Beijing is heeding:

“It doesn’t get easier you just get stronger… “


Three key things to be on the lookout for today:

Bank of Canada rate decision could have the same effect as RBA did on AUDUSD… i.e. much less dovish than expected by the markets, which saw AUDUSD close +0.41% which is pretty damn good considering Trumps risk-off comments

Poloz & Wilkins are very comfortable with the state of monetary policy & where the Canadian economy is & we could even see a lift-up in activity into year end… so a few folks who initially expected a Dec cut & had moved it to 1Q20… are now starting to see if that is looking dicey as well. I.e. we have moved from potential Dec to potential 1Q cut, to no potentially no 1Q cut

Here are links to RBA statement from yest next mtg is Feb 4, as well as last BoC Statement on Oct 30 & transcript of Wilkins’s Nov 19 speech post the BoC Financial Stability review… 

And yes USDCAD has been stubbornly resilient for the USDCAD bulls (loonie bears) at these 1.3450 to 1.3000 ranges, at the current 1.3292, we are getting towards the topside of the range

100DAM & 200DMA stand at 1.3227 & 1.3281. KVP likes bearish skews on USDCAD from these 1.33 lvls & would having trailing stops in the NZDCAD 0.8669 longs which is c. +3.6% from where we flagged the view from around 0.8370 lvls

All about Service PMIs today & more importantly US ISM Services – big beats here could turn the near-term risk-off assuming not further headline grabbing material on US/CH trade

Expectations are for 54.5e 54.7p for ISM Non-Manufacturing & 51.6e for the Markit Serv. PMI

Our CIO & Chief Economist Steen Jakobsen has just launched our flagship annual Saxo’s Outrageous Predictions for 2020

Do please check out the videos & publication


Wishing everyone a brilliant day ahead





  • AU: 3Q GDP came in-line at 1.7%ae 1.6%r (from 1.4%), the QoQ missed a touch at 0.4%a 0.5%e 0.6%r (0.5%p)
  • CH: Caixin Serv. PMI 51.2e 51.1p
  • EZ: Final Serv. 51.5e, GER bund auction
  • UK: Final Serv. 48.6e
  • US: ADP 137k e 125k p, Final Serv. 51.6e, US ISM Non-Mfg. 54.5e 54.7p, Crude Oil Inventories
  • FOMC Quarles speaking at 23:00 SGT/HKT (10:00am ET) – rare that you see an FOMC member speaking in what should be a blackout wk
  • CA: Band of Canada rate decision, Labor Productivity



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