GRAPHIC-Take Five: Black Friday shoppers to Brexit wreckage, world markets themes for the week ahead (Updates Friday item with end-week Bitcoin data. No otherchanges) Nov 16 (Reuters) – Following are five big themes likely todominate thinking of investors and traders in the coming weekand the Reuters stories related to them.1/A (BREXIT) RECKONING Prime Minister Theresa May’s long-awaited Brexit deal triggereda wave of ministerial resignations that has rocked hergovernment and financial markets and raised chances of a snapelection. On Friday, the pound took the hardest beating. Traders whohad hung back from big sterling bets for much of 2018 rushed tosell it, fuelling its biggest daily drop against the euro since2016. Gilt yields tumbled too and the FTSE index, which usuallyrises when sterling falls, lost that inverse correlation andclosed flat after Thursday’s mayhem. One-month implied volatility on sterling — basically agauge of how much traders expect it to swing in a given period– has climbed to over 15 percent.
Not only is that double thevolatility of the euro and almost triple yen and Swiss franclevels, it has now entered territory reserved for emergingcurrencies such as the Brazilian real and Turkish lira. May might now need to survive a no-confidence vote, possiblyon Tuesday. Even if she does, she has her work cut out to getthe unpopular deal through parliament next month. – Pound dives as UK PM May fights for survival – Hedge funds caught short when Brexit talks surprise2/S-H-O-P-P-I-N-GThe biggest shopping day of the year, Black Friday, is almostupon us and, according to Refinitiv, retailers are going to haveto discount like crazy because the U.S.
Thanksgiving holidaylands on the early side. This year’s Christmas shopping period kicks off on Nov.
23but it gets stretched over five weekends, meaning retailers willbe forced to plan additional promotions, Refinitiv said.
So thefestival which supposedly “turns red ink into black on theledgers” may make or break fourth quarter results for somefirms, Refinitiv warns.
A Reuters/Ipsos poll indicates 38 percent of Americanconsumers plan to shop that day and of those, 37 percent willshop mainly online. Online spending over the 2018 holiday seasonwill grow 14.8 percent from a year ago, outpacing the 2.7percent growth predicted for brick-and-mortar locations, AdobeAnalytics estimates.
Black Friday will also focus attention on U.S. retailers’earnings. These have so far been a mixed bag; Walmart has postedrobust sales and raised its full-year outlook, while Nordstromand J.C.
Penney were less fortunate. Next week will bring thirdquarter results from the likes of Target, Gap, Best Buy andDollar Tree. Refinitiv data may offer clues as to where shoppers areheading with their dollars; discount and specialty sectors maybe the strongest performers, with department stores the weakest,its analysis shows- Ready, set, shop: More than a third of Americans to buy onBlack Friday – U.S. online spending set to rise 14.
8 percent in 2018 holidayseason It’s been a tumultuous six weeks for oil, sliding into a bearmarket and chalking up its longest losing streak on record,including a 7 percent one-day plunge on Nov. 13. The bleedingseems to have stopped, but for how long? What’s certain is thatany talk of $100-per-barrel oil has ceased. The savage selloff has taken oil nearly 30 percent lowersince early October. All else being equal, this should putdownward pressure on inflation in the second half of next year,just as the economic cycle is expected to be in the process ofrolling over.
Throw in a potential equity downturn following thelongest bull run in history, and the scope for higher interestrates across the developed world looks limited.
Central banksmay even be contemplating rate cuts by then. For now, oil markets have steadied, in part thanks tospeculation of an OPEC production cut. But once in a bearmarket, it’s sometimes very difficult to get out.- Oil firms on supply cut talk; still set for sixth weekly loss- COLUMN-Oil prices tumble as traders look beyond Iran: Kemp4/PAROLE FOR PATEL?India’s financial markets are on edge as the government and thecentral bank prepare for what could be an acrimonious RBI boardmeeting on Monday. Tensions have been simmering between thegovernment and the RBI for months, contributing to heavy bondmarket outflows and making the rupee the worst performing majorAsian currency this year. RBI Governor Urjit Patel called the meeting amid tensionswith the Modi administration on several issues, from lendingcurbs on banks to sharing central bank reserves.
The governmentthreatened to invoke a section of the RBI Act that would allowit to dictate policy; Deputy Governor Viral Acharya warnedagainst undermining RBI independence, citing Argentina as anexample of how things could go wrong. Very nervous markets are now hoping for a truce. Sources say the sides are trying to iron out a deal that lets Patel keephis job while the RBI eases lending restrictions. Heading into 2019 general elections, the government islooking to provide some economic stimulus. Yet efforts tobulldoze the RBI, whose inflation credentials and independenceare highly regarded, could backfire in unforeseen ways. EXPLAINER-Why India’s Modi wants to increase control over thecentral bank-[ nL3N1XB3IL]UPDATE 3-India says central bank independence “essential” as rowunnerves markets –Modi government, Indian central bank set for uneasy truce-sources –After weeks of relative calm, the crypto world has witnessed ashake-up.
Bitcoin, the big daddy of digital currencies,experienced its worst week since the week of Sept. 9. Other,lesser coins such as ethereum and XRP have also been mauled. The sudden return of volatility has disappointed many whohad hoped that violent price swings – a feature of bitcoin inits first decade – were a thing of the past.
Some attribute theupheaval to breaches of key technical support levels, whileothers blame fears that the “hard fork” in bitcoin cash, wherethe smaller coin that emerged out of bitcoin split into twoseparate currencies, could destablise others. Having traded at almost $20,000 last December, bitcoin fellthis week below $5,500, or 70 percent from those peaks. It’sparticularly galling for those who hope bitcoin is moving intothe mainstream – after all, price stability is a necessaryfeature if it is to ever evolve into a usable currency.
– France hopes to lure crypto-issuers with Gallic stamp ofapproval – Bitcoin drops to 1-year low as slump persists; ethereum downsharply – GRAPHIC-Bitcoin volatility sinks to lowest in nearly two years (Reporting by Alden Bentley in New York, Vidya Ranganathan inSingapore, Tom Finn, Jamie McGeever and Tom Wilson in London;compiled by Sujata RaoEditing by Gareth Jones) 2018-11-19 09:37:15
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