Can't keep The Donald out of the headlines...
Asian markets very positive overnight;
U.S. futures turned slightly lower after Trump's announcement, although those losses have proven short-lived.
GBP moderately higher on hopes for a Brexit deal;
European markets set to open slightly lower.
Stimulus hopes, Brexit hopes. Hopium is VERY addictive.
Let's start with Trump.
Here's the full (~4 minute) speech;
President Trump indicated in a video Tuesday evening that he won't sign the $900 billion coronavirus relief bill and $1.4 trillion government funding measure passed by Congress if it's not amended to increase stimulus payments.
Why it matters: The surprise announcement could delay desperately needed aid for millions of Americans if Trump decides not to sign the package as it stands. It also risks a government shutdown on Dec. 28.
Trump's Treasury Secretary Steven Mnuchin, who was involved in negotiating the bill, said Monday that the $600 checks passed by Congress would go out next week.
What he's saying: Trump said he's asking Congress to send him an amended bill, calling on lawmakers to "increase the ridiculously low" amount Americans would receive for COVID relief to $2,000 per adult or $4,000 for a couple, and "get rid of wasteful and unnecessary items" in the spending bill.
Trump added that there's not enough money in the package for small businesses.
"It really is a disgrace," he said.
Between the lines: Many of the items Trump complained were excessive, such as foreign aid, were not related to COVID-19 because they formed part of the $1.4 trillion government funding bill — which was passed alongside the coronavirus relief package.
House Speaker Nancy Pelosi (D-Calif.) responded to Trump's direct checks request on Twitter, saying "let's do it!"
"Republicans repeatedly refused to say what amount the President wanted for direct checks. At last, the President has agreed to $2,000 — Democrats are ready to bring this to the Floor this week by unanimous consent. Let’s do it!" she tweeted.
As with everything Trump, there are questions...
Does he actually mean it or is he just playing to the crowd?
Is this empty rhetoric or something substantial?
Chad Pergram (Fox News) fills in some blanks in a twitter thread;
Congress must adjourn sine die (pronounced sy-nee DY, and is Latin, for leaving without a return date) no later than 11:59:59 pm et on January 3. In other words, Congress would have to get the President the bill by December 23 to prevent a pocket veto.
Otherwise, the President could run out the clock on the Congressional session, effectively blocking any potential override attempt. The President would have to send it back to Capitol Hill with a veto.
If he failed to do so in the ten days/Sundays excluded window, then the bill would automatically become law. Note that the President did not outright threaten a veto. And, it’s unclear that the President’s demands could even pass the House and Senate.
Attached to the COVID bill is a $1.4 trillion spending package to fund the government through September 30, 2021. If the President vetoes the COVID/omnibus bill, or, if he fails to sign the bill by December 28, there is a government shutdown.
Reading between the lines, Trump has voiced his objections but has not said he will veto the bill.
He can 'prove' his objections by refusing to sign the bill, but unless he vetoes, it becomes law by default anyway.
Democrats sense an opportunity to score some points, and will put a new bill on the floor;
It only takes one objection to derail this.
All in all, a lovely bit of political theatre, and the chances of it being any kind of disaster are small.
If they manage to push $2k through...
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Angela Merkel, Emmanuel Macron and other European Union leaders have seized the reins of Brexit trade and fishing talks as the entire deal hinges on fish stocks worth less than £60 million.
Ursula von der Leyen, president of the European Commission, has taken over the negotiations from Michel Barnier, the EU’s chief negotiator. A new British offer on fishing was tabled after she held a telephone call with Boris Johnson on Monday that was kept from Mr Barnier.
Mr Johnson agreed to lay out a new compromise proposal allowing the EU to keep 65 per cent of the value of fish caught in British waters following a five-year transition period.
After talks yesterday, Mr Barnier told EU ambassadors that he was sticking to his demand to keep 75 per cent of the fish caught in UK waters, a catch with a total value of €650 million (£580 million). “We reject the UK offer on fisheries as it is deemed unacceptable,” he said. “The EU offer is already causing problems for some member states and cannot be the final offer.”
Mrs Von der Leyen has held “constant” calls with European leaders over the last 48 hours, with France and Denmark digging in their heels over fishing.
“My prime minister told [Mrs Von der Leyen] that it was not worth losing a deal worth almost €400 billion for fish worth a tiny percentage of trade,” an aide to a European leader said.
Another diplomat, from the hardline French-led camp, said: “If the outcome of the Brexit deal is rioting French fishermen then that will set the message of who comes out on top for ever.”
A Brexit trade deal between the United Kingdom and the European Union is possible on Wednesday after progress in talks on fishing rights, ITV’s political editor said, hours after tweeting that there was no chance of an accord before Christmas.
“A UK source now says agreement on a UK/EU trade deal is again possible tomorrow”, political editor Robert Peston said in a tweet just before midnight on Tuesday.
“Presumably because, says a separate source, there was movement late tonight on access to the 6-12 mile (offshore) zone, ocean fishing and the sanctions regime after the interim period of moving towards new quotas”, he added.
Michel Barnier says talks are in the 'final push' but EU says it is prepared to keep negotiating after deadline
Britain offered the EU a five-year transition period on fishing, where 35 per cent of the value of fish caught in UK waters would be repatriated to the UK, until annual negotiations on fishing opportunities would begin.
Brussels offered 25 per cent, with a six-year glidepath to the new arrangements, which would give EU fishermen, dependent on access to UK waters, time to adapt and the UK time to rebuild its fishing fleet. The difference between the two positions is as little as £58.1 million euros a year, compared with a trading relationship worth £650 billion. The Commission urged member states to move beyond their red line of 25 per cent of the value of fish going back to UK fishermen. But EU ambassadors told Mr Barnier they were unhappy with that.
Maybe today will provae ambitious (we've been here before), but a deal certainly looks more likely than not.
Get the deal done, and then lock the UK down.
Sounds like a plan.
Government sources warn there is 'high chance' of full national lockdown in New Year as virus mutation 'bleeds'
Health officials are concerned that the exodus of large numbers of people from Tier 4 areas into the Midlands and the North has fuelled the spread. On Monday, Sir Patrick Vallance, chief scientific adviser, said cases were "everywhere" and signalled that restrictions are set to increase.
A Government source said: "Changes are expected, including in some areas that are currently on the margins and edges of Tier 4 areas. We're concerned that some areas have had significant increases in case numbers as a result of the mutation."
Whitehall sources said there was now "a high chance" that the country would be placed into a third lockdown after Christmas. One said: "The expectation now is that we can get through Christmas, but after that the chances of a full lockdown in the New Year look pretty high."
The source added that while ministers were reluctant to announce such measures and would prefer to extend the use of Tier 4, "there comes a point where it doesn't make much sense to stick with it".
"If the new variant continues to bleed across the country, and we see more cases of it in the North, then there isn't much of a case for keeping anyone out of Tier 4, so it amounts to a national lockdown, whether it is called it or not," the source said.
“No decision has been taken, but the numbers look awful – everything is going the wrong way, and the numbers are worse than those that triggered the December lockdown."
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The American Petroleum Institute (API) reported on Tuesday a build in crude oil inventories of 2.70 million barrels for the week ending December 18.
Analysts had predicted an inventory draw of 3.135 million barrels for the week.
In the previous week, the API reported a build in oil inventories of 1.973-million barrels, after analysts had predicted a draw of 1.937 million barrels.
Both Brent and WTI were down on Tuesday afternoon before the data release, despite earlier vaccine optimism and a new stimulus package that was approved in the United States. Dragging on oil prices is a new strain of Covid-19 that caused massive border closures throughout the world in an effort to contain the spread of the mutated strain.
In the run-up to Tuesday's data release, at 2:15 p.m. EDT, WTI had fallen by $0.78 (-1.63%) to $47.19, down $.30 per barrel on the week. The Brent crude benchmark had fallen on the day $0.62 at that time (+1.22%) to $50.29—down nearly $0.40 per barrel on the week.
U.S. oil production fell to 11.0 million bpd for the week ending December 11, according to the Energy Information Administration—2.1 million bpd lower than the all-time high of 13.1 million bpd reached in March.
The API reported a small draw in gasoline inventories of 224,000 barrels of gasoline for the week ending December 18—compared to the previous week's 828,000-barrel build. Analysts had expected a 1.210-million-barrel build for the week.
Distillate inventories were up by 1.03 million barrels for the week, compared to last week's 4.762-million-barrel increase, while Cushing inventories rose this week by 341,000 barrels.
At 4:33 p.m. EDT, the WTI benchmark was trading at $46.92, while Brent crude was trading at $49.98 as the latter slipped below $50.
The spot price of iron ore tumbled $US11.92 or 6.8 per cent to $US164.53 a tonne on Tuesday, after having surged 7.3 per cent the previous session. It did so even after a report showed global steel output surged in November.
The pullback came after China's Dalian Commodity Exchange proposed cutting some trading position limits by more than half for its iron ore futures, Reuters reported.
In a statement issued late on Monday, the exchange said it was proposing changing position limits for non-futures company members to either 15,000 or 20,000 lots from the current 40,000 lots.
The proposed reductions were designed "to strengthen the risk management of iron ore futures", the DCE said, adding it's soliciting public opinion on the changes until December 23.
The exchange has tightened single-day open positions on its most traded iron ore contract twice since the start of December to 5000. As of Tuesday, the DCE further limited open positions for all iron ore futures to 2000 lots.
In a note, Capital Economics said the slight easing in global output reflected the impact of cold weather on construction activity in China.
"Nevertheless, we expect global output to remain high in 2021 as elevated prices have boosted mill profitability."
Capital Economics said it thinks "that the recent surge in [Chinese] domestic steel prices will incentivise output, assuming that temperatures increase".
In a December 16 note, Liberum said it didn't see the iron ore price advance, in particular this month, as sustainable.
"Steel consumption [in China] is down for the fourth month in a row, as per usual seasonal patterns, so there does not seem to be any reacceleration here to justify the parabolic spike in iron ore prices to over $US150 a tonne."
On today's calendar, U.S. jobless claims, durable goods, personal income data & EIA crude oil inventories.