Business & Finance
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The outcome of Thursday’s UK general election will be a key talking point for markets near the end of the week, with a Conservative Party majority largely priced in financial markets.
On the data front, UK October gross domestic product is out on Tuesday. After avoiding a “technical recession” in the three months to September (Q3), but seeing the weakest year-on-year growth rate since 2010, the data will give the first insight into whether activity firmed in the early stages of Q4 or continue to remain vulnerable as a result of entrenched uncertainty. If leading indicators are to be believed, the latter is likely to be the case.
The US Federal Reserve’s (Fed) meeting on Wednesday should indicate whether a “mid-cycle adjustment” has now occurred. The minutes of the Fed’s October meeting appear to suggest that after three rate cuts this year, the rate-setting Federal Open Market Committee believes that the US economy is in a “good shape”. The day after is Christine Lagarde’s first meeting as the European Central Bank president. While further monetary stimulus may be on the cards in 2020, the market is not pricing in a change in the deposit rate.
Wednesday also sees eurozone industrial production data for October published. With market optimism over a “bottoming-out” of weak economic activity, this should indicate whether Europe’s lacklustre manufacturing and industrial production is starting to see a change in fortunes.
Ending the week in the US is November retail sales data. According to web analytics tool Adobe Analytics, US online shoppers spent $7.4bn on 29 November, Black Friday, up by 19.6% from last year. This would likely aid the monthly retail sales reading, after a prior month-on-month reading of 0.3%.
Looking into next year, markets will undoubtedly be focused on whether the Organisation of the Petroleum Exporting Countries and allied producers (known as OPEC+) decide to extend cuts in oil production targets or not.
OPEC makes up a significant share of total production. Total daily production of oil, as of 4th September, was 82.5 million barrels per day (mbpd), with OPEC members producing 31.8mbpd and Russia 10.9mbpd.
OPEC+ lowered output by 1.2 mbpd earlier in 2019, with the agreement due to end in March 2020. Combined with geopolitical instability in Venezuela and Libya, tensions in the Middle East and US sanctions on Iran, the production cuts have reduced the supply of oil and been positive for the price of the commodity.
However, the upward pressure on oil prices has been offset by weakening global demand as the US-China trade dispute hits global growth prospects and non-OPEC supply of the commodity rises.
The US has significantly increased oil production over the past decade, becoming one of the largest producers globally and a net exporter, as opposed to net importer, of oil. Relative to the 82.5mbpd produced globally, the US accounted for 12.4mbpd of this.
Besides the US, supply growth from Brazil and Canada further increased aggregate supply in the non-OPEC+ world, which is now anticipated to be 1.7mbpd in 2020.
The fundamentals for oil suggests an imbalance in the market through 2020. Not only have non-OPEC+ countries (particularly the US) increased supply, but elevated trade tensions are doing little to provide upside support to oil prices.
OPEC+ members face a difficult decision in terms of making production cuts past March or not. While a continuation of the 1.2mbpd cut evidenced in 2019 seems likely, there is a possibility that further production is lowered in an effort to counter the downside pressures oil prices are facing. Such a move could increase the potential for an imbalance.
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The Maltese Communication Authority has approved a €250 million corporate contract between Monaco Telecom and Malta’s leading telecommunications company, Vodaphone Malta.
Monaco is reopening the Larvotto construction site to workers, saying the beach project is “essential for the development of the Principality”.
Monaco’s self-employed entrepreneurs will have access to a minimum monthly income as part of the government’s new economic measures, effective immediately.
The Prince’s government has announced another raft of economic measures to support employees impacted by the Covid-19 crisis.
French fashion designer Sonia Rykiel has died at the age of 86, it was announced on Thursday. Rykiel, nicknamed the Queen of Knitwear, had been suffering from Parkinson’s disease for some time before her death.
Nathalie Rykiel, managing and artistic director of the Sonia Rykiel fashion label, said, “My mother died at 05:00 this morning at her home in Paris from the effects of Parkinson’s.”
French President François Hollande praised her as “a pioneer”. He said Rykiel, whose relaxed striped knitwear was seen as a shift away from more formal suits, had “offered women freedom of movement”.
Rykiel was born Sonia Flis in Paris in May 1930, to a French father and Romanian mother. She started her career as a window dresser in 1948, with her first foray into design being when she knitted herself maternity dresses after marrying Sam Rykiel, the owner of a Paris boutique.
Rykiel made her breakthrough in 1962 with the so-called poor boy sweater, which had long sleeves and a fitted shape. Elle magazine then featured teenage pop star Françoise Hardy wearing a red and pink striped Rykiel sweater on its cover in December 1963. Brigitte Bardot was later photographed in a Rykiel creation, with Audrey Hepburn among her other famous fans.
Rykiel opened her first ready-to-wear store on Paris’s Left Bank in 1968 and her fashion empire went on to include menswear, children’s clothing, accessories and perfumes, the BBC reports.
During her career Rykiel developed new techniques like inside-out stitching and no-hem finishings, with other star pieces including embroidered knitted tops and rhinestone-studded berets. Rykiel wrote several novels and also featured in 1994 film Pret-a-Porter, Robert Altman’s satirical take on the fashion industry.
In a 2005 interview, she said she had been plagued by doubt in her early career. “When I started in fashion, for the first 10 years, I said to myself every day, ‘I’m going to quit tomorrow,’” she told Le Nouvel Observateur. “People are going to figure out that I don’t know anything. I always thought I’d be discredited in the end.”