It's Christmas Eve, but is it Brexit day?
It's all very positive and sounds like the majority are on board, even Macron & the ERG.
Press conferences are expected from both sides this AM, any time between 8:00 & 11:00 GMT, which probably means they'll actually happen around lunchtime.
Politico Playbook have a superb summary;
DEAL DONE: In the next few minutes, Boris Johnson is due to speak with European Commission President Ursula von der Leyen (h/t Laura Kuenssberg). After that, he’s expected to deliver a statement at Downing Street announcing that the U.K. has at last struck a free-trade agreement with the European Union after 10 months of painstaking negotiations between London and Brussels. Britain’s chief negotiator David Frost has been up all night with his European counterparts conducting line-by-line talks to thrash out the final details on the crucial fisheries sticking point. Barring any last-minute drama, the prime minister will address the nation this morning to announce he has fulfilled his manifesto commitment to “get Brexit done,” and claim he has secured an agreement for the U.K.’s future relationship with the EU that will “take back control,” as he promised in the Brexit referendum four and a half years ago.
RELIEF IN DOWNING STREET: No. 10 insiders who spoke to Playbook last night were both delighted and relieved at the outcome, which brings to an end weeks of uncertainty amid repeated claims by Johnson and senior ministers that it was “likely” they would fail to reach a deal with Brussels. The PM is expected to set out the terms of the deal imminently, but here’s what we know so far — and how the government will likely sell the agreement to the public and its own Tory Brexiteer hardliners.
Zero tariffs, zero quotas: The top line you can expect to hear from Johnson and his Cabinet today is that they have secured unprecedented access to European markets that will allow the U.K. to continue trading freely with the EU, while regaining “control” of money, laws, borders and non-EU trade. A New Year cliff-edge of tariffs on World Trade Organization terms has been avoided at close to the last possible moment.
No more ECJ: The government will claim to have “taken back control of our laws,” with no role for the European Court of Justice and the U.K. no longer subject to EU law.
Legislative freedom: As word first emerged of how a likely deal was shaping up yesterday afternoon, several prominent Tories made the case to Playbook that the agreement Johnson was negotiating was superior to his predecessor Theresa May’s proposed “Chequers” plan, which included a “common rulebook” based on EU regulations, dynamic alignment with EU laws and ECJ oversight. Johnson’s deal will allow for competitive regulatory divergence, Playbook is told.
Fish compromise: The sell gets bumpier for Johnson on fisheries. The Express’ Joe Barnes got the scoop on the deal: The EU fishing quota in British waters will be cut by 25 percent over a five-and-a-half year transition period. After that, fishing quotas are under British control, with annual negotiations going forward. From what Playbook can tell so far, both sides compromised here. The U.K. had wanted a three-year transition, the EU had wanted 10 years, so five and a half is closer to the British position. On the quota, the 25 percent cut is a significant climbdown from the 80 percent the U.K. had originally wanted, and even the 35 percent offer made over the weekend.
Punishment clause dead: Crucially for the hard sell, the U.K. appears to have scored a win on how the EU can retaliate if Britain decides to change its fishing quotas in the future. Brussels had wanted to impose “cross-retaliation” tariffs across the U.K. economy, but Barnes reports: “It appears EU has given way on its ‘punishment clause’ demand that would see Britain slapped with tariffs if EU boats lose access in future.” Playbook also hears from a U.K. official that “cross-retaliation has been killed.”
LE FOLD: The Mail’s Jason Groves quotes sources saying the only remaining hurdle is a “last minute protest by French President Emmanuel Macron.” But an excitable French official gloated to Reuters that the U.K. had made “huge concessions” on fish in the final 48 hours, suggesting Macron is going to try to claim a win. We’ll have to see the detail, but so far this morning it looks like good news for France on the quota, not much in it on the transition length, and a win for Britain on cross-retaliation.
HOW THE DEAL WAS DONE: The Sun’s Harry Cole reports the main breakthrough came on Tuesday, when Johnson and von der Leyen held four phone calls to discuss details and numbers on fish. Groves in the Mail says that when the discussions were drawing to an end, von der Leyen asked Johnson: “Do we have a deal?” to which the PM replied, “Yes.”
ONE MORE TIME: The European Research Group of Conservative backbenchers will be closely looking at the text on both fish and what Johnson has signed up to in terms of level playing field arrangements, as Brexit Party leader Nigel Farage inevitably accuses the government of selling out. The ERG says it is reconvening its “star chamber” of legal experts, chaired by Tory grandee Bill Cash, before delivering its verdict. What would be the point of the ERG if they can’t find something they don’t like in there? The Mail’s Simon Walters says around 20 ERG MPs led by Mark Francois will vote against a deal, including Iain Duncan Smith, Andrew Bridgen and Peter Bone.
HOWEVER: Playbook spoke to/WhatsApped half a dozen ERG MPs last night, and all but one of them were effusive with praise for the PM and his negotiating team, implying they were minded to back the deal so long as it didn’t contain any especially nasty surprises. The other ERG MP was more strongly critical of the reported settlement on fish. In reality, how much of a challenge Johnson faces internally depends on whether any particularly egregious horrors are discovered in the text by eagle-eyed Euroskeptic experts and tweeters over the next few days.
RESIGNATION WATCH: Some jittery government sources suggested last night that at least two ministers were on resignation watch over their potential opposition to the deal. Though to be honest Playbook would be surprised if there was a great deal of dissent from within government. Cole reports Johnson told a Cabinet call last night that he needed their help to “sell the deal,” which he said was designed to let “both the U.K. and the EU retain their sovereignty.”
WHAT HAPPENS NEXT IN BRUSSELS: EU countries will have to back a deal … the European Council will make a decision on whether to impose “provisional application” of any agreement in order to bypass the European Parliament and have it in place by the time the transition ends.
WHAT HAPPENS NEXT IN LONDON: Parliament is likely to be recalled next week to approve the deal. ITV’s Robert Peston says he expects MPs to be brought back in for Wednesday December 30, giving them six days to digest its contents. Playbook also hears Tuesday the 29th is a possibility. We’ll find out soon enough.
WHAT WILL STARMER DO? “Keir Starmer is preparing to urge his shadow cabinet to back a Brexit trade deal,” the Telegraph’s Harry Yorke reports, with “the Labour leader set to convene an urgent meeting of his frontbench to hammer out a final position on whether to vote for legislation expected to be put to Parliament next week.” That shadow Cabinet meeting is due at 11 a.m., so we’ll get an idea of how big the Remainer Labour backlash is pretty soon after that.
FROSTY’S COMING HOME: Government insiders were full of adulation for Frost last night, with one official saying he was “knackered” after months of back and forth to Brussels, but had “played a blinder.”
With Brexit sorted, does that clear the decks for a Santa rally?
Sentiment is certainly positive in Asian markets...
Santa Rally Stats;
Santa may not be heading to China, with Alibaba shares down ~10% overnight.
China kicked off an investigation into alleged monopolistic practices at Alibaba Group Holding Ltd. and summoned affiliate Ant Group Co. to a high-level meeting over financial regulations, escalating scrutiny over the twin pillars of billionaire Jack Ma’s internet empire.
The probe announced Thursday marks the formal start of the Communist Party’s crackdown on the crown jewel of Ma’s sprawling dominion, spanning everything from e-commerce to logistics and social media. The pressure on Ma is central to a broader effort to rein in an increasingly influential internet sphere: Draft anti-monopoly rules released November gave the government unusually wide latitude to rein in entrepreneurs like Ma who until recently enjoyed unusual freedom to expand their realms.
Once hailed as drivers of economic prosperity and symbols of the country’s technological prowess, Alibaba and rivals like Tencent Holdings Ltd. face increasing pressure from regulators after amassing hundreds of millions of users and gaining influence over almost every aspect of daily life in China.
The anti-monopoly rules now threaten to upset that status quo with a range of potential outcomes, from a benign scenario of fines to a break-up of industry leaders. Beijing’s diverse agencies appear to be coordinating their efforts -- a bad sign for the internet sector.
“There is nothing that Chinese Communist Party doesn’t control and anything that does appear to be gyrating out of its orbit in any way is going to get pulled back very quickly,” said Alex Capri, a Singapore-based research fellow at the Hinrich Foundation.
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Worth keeping an eye on the 100 level, especially if we get the Santa Rally and the dollar heads lower in tandem.
Japan may intervene in the foreign exchange market to prevent the yen from rising above 100 to the dollar, but just once given the difficulty of keeping currency rates pegged at a set level, former top currency diplomat Hiroshi Watanabe said on Thursday.
Many analysts expect the yen, which hovered around 103.50 to the dollar on Thursday, to rise past the psychologically crucial 100 mark in coming months as expectations of huge U.S. fiscal spending weigh on the greenback.
Watanabe, who oversaw Japan’s currency policy from 2004 to 2007, said he did not expect the yen to shoot up much as narrowing interest-rate differentials between the United States and Japan keep the dollar/yen in a tight range.
If the yen were to climb past 100 to the dollar, the Ministry of Finance may step into the market under pressure from Prime Minister Yoshihide Suga, who is known for his aversion to yen rises that hurt Japan’s export-reliant economy, he said.
“There’s a chance the MOF will intervene just once to defend the 100 line, mostly as a political gesture,” Watanabe, who retains close contact with incumbent bureaucrats, told Reuters.
But intervention cannot keep the dollar sustainably above 100 yen in the massive global currency market, he added.
Angry at his fellow Republicans in Congress, Trump sought to refashion two complex pieces of legislation that passed Congress by wide, bipartisan margins after months of negotiation.
Trump followed through on a threat to veto the defense bill and demanded dramatic changes to a $2.3 trillion package that funds the federal government and provides nearly $900 billion in coronavirus aid.
If Trump blocks the spending package, large parts of the U.S. government could start to shut down next week for lack of funds at a time when officials are distributing two coronavirus vaccines and working to respond to a massive hacking attack.
Trump said he vetoed the defense policy bill, which has passed every year since 1961, because he objected to liability protections for social media companies unrelated to national security and did not want to rename military bases that are currently named for generals who fought for the pro-slavery Confederacy during the Civil War.
Democrats and Republicans objected to Trump’s veto of the National Defense Authorization Act.
“I look forward to overriding the president’s fruitless and ridiculous attempt to undermine our national security,” Democratic Senator Mark Warner said in a statement.
President Donald Trump’s threat late Tuesday to veto the $892 billion coronavirus relief bill approved by Congress this week may delay aid for millions of families on the cusp of eviction and about to lose unemployment benefits.
Trump’s apparent refusal to immediately sign the bill “has injected uncertainty or worse into the effort to protect millions of Americans from falling over a financial cliff,” said Mark Hamrick of Bankrate Wednesday.
Trump said the bill, which passed Congress Monday night, did not provide enough support for small businesses, and he asked Congress to increase stimulus checks to individuals to $2,000, instead of the “ridiculously low” $600 in the bill.
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Turkey's central bank meet today, and are expected to hike rates another 150 points
The median estimate in a Reuters poll of 18 economists was for the central bank to hike its one-week repo rate to 16.50% from 15%. The estimates ranged between hikes of 75 basis points and 200 basis points.
The central bank is scheduled to announce its rate decision on Dec. 24 at 1100 GMT.
Market closures today;
Have an awesome Christmas, the Opening Belle returns on Monday!