Europe Is Headed for Serious Trouble
Finally, some good news on trade… China is buying soybeans again… Europe is headed for serious trouble… Why we're watching the paddle surfing world championships…
We noted yesterday that the White House's unsubstantiated trade promises risked losing the market's confidence. Fortunately, we finally received some tangible evidence of progress last night. As Bloomberg reported...
China resumed buying U.S. soybeans, bringing some relief to farmers in Donald Trump's heartland as President Xi Jinping works toward a trade deal with his American counterpart.
The giant Asian commodity importer bought 1.5 million to 2 million metric tons of American supply over the past 24 hours, with shipments expected to occur sometime during the first quarter, the U.S. Soybean Export Council said, citing unidentified industry sources... On Thursday, the U.S. Department of Agriculture disclosed sales of 1.13 million tons to China.
The purchases represent a major gesture by China toward easing tensions between the world's two largest economies. Soybeans have become the poster child of the trade dispute, with the Asian nation shunning imports from farms in rural communities that voted for Trump in 2016. Futures in Chicago tumbled as a result, while the 2018 harvest had been piling up, unsold, in silos, bins and bags across the U.S. Midwest.
Of course, this is a relatively small step. For now, we remain skeptical that a broad trade agreement will be reached anytime soon.
But we'd love to be proven wrong in this case... and given how high tensions have risen of late, any progress is a welcome sign.
In other news, the European Central Bank ('ECB') held its December policy meeting today...
And while it announced no major changes, the comments from ECB president Mario Draghi certainly didn't inspire confidence in the broad European economy. As the Wall Street Journal reported this morning...
"It's a climate of great uncertainty," ECB President Mario Draghi said at a press conference, citing trade tensions, vulnerabilities in emerging markets and volatility in financial markets.
He spoke after the ECB confirmed it would keep its key interest rates – which include a minus 0.4% rate on bank deposits held at the central bank – unchanged at least through the summer of 2019.
Mr. Draghi's comments signal a deepening concern among senior ECB officials over the state of the 19-nation economy, which has slowed sharply in recent months after outpacing the U.S. in 2016 and 2017. Officials had maintained until recently that the slowdown reflected temporary factors that would soon pass.
Analysts said the change of tone suggested the ECB might delay lifting interest rates out of negative territory, where they have languished since mid-2014.
We're often critical of the Federal Reserve...
Its decision to keep interest rates near zero – and to buy trillions of dollars of bonds through its quantitative easing ("QE") program – for years following the financial crisis sowed the seeds of the huge credit bubble we find ourselves in today.
Worse, despite raising rates eight times over the past three years and beginning to unwind its QE, monetary policy still remains historically easy today. The Fed has little "ammunition" left to ease when the next downturn begins.
Yet as dire as this is, the situation facing the ECB is far worse...
Despite slashing interest rates to less than zero (where they remain today) and unleashing its own massive QE program, the eurozone economy remains weak. And it is only now ending QE, effective this month.
In other words, all of this unprecedented stimulus wasn't enough to keep Europe from rolling over again. And now the ECB has even less "ammo" left than the Fed.
Finally, we'll end today with something that has absolutely nothing to do with the financial markets...
Longtime readers may be familiar with the name Sean Poynter. Sean is a pro surfer who grew up in Florida in a house roughly 100 yards from where our colleague Steve Sjuggerud lives.
Today, Sean is the No. 1-ranked paddle surfer on the Stand Up World Tour. He's currently in the Canary Islands competing in the final event of this year. And it's his goal to bring home a world title for the first time.
Why do we bring this up?
Because believe it or not, Steve was actually the one who introduced Sean to stand up paddle boarding in the first place.
Many of our subscribers know Steve is passionate about the guitar. But you may not realize he's equally passionate about surfing. And as you can see in this short clip, he has developed a close friendship with Sean over the years...
Stansberry Research recently sponsored Sean to help him reach his dream of winning a world title...
He sent us an e-mail update from the competition last night and asked us to pass it along to Stansberry readers today...
The last event of the season and the determiner of the world title starts tomorrow. This is my big event. The event that Stansberry's support of me has helped out hugely. I've been able to get my coach here, and I've been able to get here early to practice because of it.
I'm leading as No. 1 into this final event. And with a strong finish here I can win my first-ever world title. Different from my 2x gold medal/world champion finishes.
I'm nervous, but I'm ready.
The swell is forecast to be in the 6ft-12ft range during the event period, possibly bigger.
The competition is not easy. I'm competing against the best guys in the world, so I will have my work cut out for me. I will keep you posted how I go.
Thank you so much for the support. I'm really stoked for it. I've certainly been wearing my Stansberry gear and board logo with pride.
Thank you again.
We're pleased to report Sean won his first heat in the event, in challenging conditions. Here's his brief post-heat interview...
And here are a couple pictures he sent us from the Canaries, below...
We hope you'll join us in wishing Sean all the best this week.
New 52-week highs (as of 12/12/18): none.
A quiet day in the mailbag. As always, send your questions, comments, and concerns to feedback@stansberryresearch.com.
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Brill comment: Of course! As promised, Alliance members receive any new services we publish, for life, at no additional cost.
"I'm interested [in Advanced Options], but don't want to listen to a spiel. Send me the text and info." – Paid-up subscriber Alan W.
Brill comment: No problem, Alan. You can read more about Doc's new service right here. But please note, your chance to take advantage of a substantial discount on Advanced Options ends tomorrow.
Regards,
Justin Brill
Baltimore, Maryland
December 13, 2018