Thursday, December 4, 2014

In World New This Morning

Employment gains were widespread across districts, according to the Fed's Beige Book survey, though wage gains remained muted except for a few fields facing worker shortages. The optimistic tone of the report seemingly sets the stage for the FOMC to remove the "considerable time" language from the policy statement when it meets on December 16-17. Next up is tomorrow's Nonfarm Payroll report, and the expectation is for 230K in job gains and a steady unemployment rate of 5.8%.
European stocks are up marginally ahead of the ECB's policy decision due at 7:45 ET. No changes in interest rates are expected, but ECB President Draghi last month pledged to raise euro area inflation "as fast as possible." Markets will be looking to his press conference at 8:30 ET to see if Draghi has been able to move forward with convincing the reluctant Germans about the need for outright QE.
Western nations would have imposed sanctions on Russia even without the Ukraine conflicts, said President Putin in his annual speech in front of both houses of parliament. The policy of the West, he said, is to hold Russia back. He called for tax breaks for small businesses, a doubling of road construction, and amnesty for capital brought back to Russia. As for the ruble, its weakening means more inflation in the short term, he says, but also makes Russian companies more competitive internationally. The currency fell further as he spoke, with one dollar now buying 53.453 rubles.
Gasoline prices fell to a four year low and sub-$2 per gallon was seen for the first time since July 2010. The $1.99 price was spotted at an Oncue Express station in Oklahoma City, and yesterday's national average of $2.74 per gallon was a whopping $0.51 lower than a year ago, saving consumers about $200M per day. According to AAA, gas stations have yet to catch up to the recent plunge in crude oil prices and drivers can expect another $0.15-$0.20 in price declines in coming weeks.

China's Shanghai Composite soared another 4.3% overnight, the largest gain in two years. The move brings the index's advance to 19% over the past month, the most among 93 global markets tracked by Bloomberg. The rally coincides with not just a rate cut by the PBOC, but the opening up of trading of mainland stocks to the rest of the globe, and volumes are nearly double what they were in the previous month.

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