US stocks appear on hold ahead of President Donald Trump’s speech before the Economic Club of New York. Markets are eagerly awaiting his latest update on trade with both the Europeans and Chinese. Trump is widely expected to hold off on a decision on whether to hit European carmakers with tariffs. German car manufacturers have suggested they are considering moving global production to the Americas.
In Germany the ZEW expectations survey posted its best reading since May and provided some optimism that a bottom is in place for Germany. The ZEW expectations survey could point to rebound in German GDP early next year. Germany is expected to enter a technical recession on Thursday, but with a bottom possibly in sight, the euro could see limited pressure.
Energy markets are really not buying OPEC members that are saying they will not deliver deeper production cuts. On Tuesday, Oman’s oil minister Rumhy noted they will stick with current levels of output. Oversupply risks in 20200 could deliver a strong blow to oil prices, which could easily take Brent prices back towards $50 a barrel. We could hear more cautious comments from OPEC members over the coming weeks, but ultimately see the Saudis lead the charge in December for deeper its cuts.
The Aramco IPO will have the institutional book-building period lead up to the 177th OPEC Meeting on December 5th. The Saudis will not want to gamble with this IPO as it is key to their vision for 2030. The street is somewhat split on whether OPEC + needs deeper cuts, but with too much at stake for the Saudis in the short-term, they will want to have strong oil prices going into the final pricing of their IPO.
Gold appears to be in a holding pattern while also barely hanging on a thread ahead of President Trump’s speech at the Economic Club of NY. If everything goes as planned and we hear both mixed comments on China and a delay with the decision for tariffs on EU automakers, we could see limited downside for gold prices. With gold hovering around key support, a Trump Christmas surprise could deliver a blow to all safe-havens. If Trump chooses to announce any major trade breakthroughs, we could see US stocks reinvigorated and safe-havens punished across the board.