After days of trade war doom and gloom, a wave of optimism has spread across global markets after the first day of talks between the U.S. and China.
U.S. President Donald Trump saidnegotiations are “going very well” andhe plans to meet Chinese vice premier Liu He on Friday.
De-escalation in one conflict was followed up by escalation in another.
Iran said one of its oil tankers was hit by two rockets off the coast of Saudi Arabia, sending crude prices surging.
However, ourchart of the daysuggests that regardless of geopolitical tensions and global uncertainty, the Federal Reserve will still run the show.
Bank of America Merrill Lynch highlighted a particularly turbulent period of American history between 1968 and 1976, which included the Vietnam War, the end of the Bretton Woods monetary system, an oil crisis and Nixon’s impeachment process.
Despite all of the above, BAML said the Dow “slavishl y followed the path of Fed policy – easing caused rallies and tightening caused corrections. ”
The bank’s global investment strategy team said strong returns in 2019 were being driven by the Fed’s easing and bond bubble.
They remained bullish into 2020 as the European Central Bank restarts quantitative easing (bond buying), and the Fed resume purchases of Treasury securities (T -bills), which it described as ‘unofficial QE’.
“If Greece cansuccessfully auction negative-yieldingT-bills, we see no reason why the S&P 500 bull market that started at 666 [in March 2009] couldn’t end with an overshoot to 3333, ”BAML said.
Extre me liquidity policies and bearish investors keeps the bank “contrarian bullish” into next year, it said.
The market
After the Dow Jones Industrial Average DJIA, 0. (%) finished 150 points up on Thursday, Dow futures YM 00, 0. 99% are up, along with S&P 500 futures ES 00, 0. 98% and Nasdaq NQ 00, 1. 09%
Oil (CL) , 1. 29% is up 1.5% after Iran said one of its tankers was hit by a rocket in the Red Sea. Gold is up and the dollar is down.
Europe stocks SXXP, 1. 61% are up, while Asian markets ADOW, 1. 38% rose sharply on fresh trade optimism.
The buzz
Oil has been thrust into thespotlight once again after an Iranian tanker was reportedly hit by two rocketsoff the coast of Saudi Arabia, sending crude prices 2% higher.
US President Donald Trump brought a fresh wave of optimism to global markets, insisting trade talks with China are “going very well.”
Amazon laid out itsposition on a number of hot topics, clarifying it will continue working with energy companies and the US government.
The board of Frenchcar manufacturer Renault has voted to oust chief executive Thierry Bollore,who had replaced Carlos Ghosn accused of falsifying financial reports in under-reporting compensation and breach of trust. Ghosn, who led the Nissan-Renault alliance, is currently awaiting trial and denies wrongdoing.
The British poundcontinued to rise, hitting $ 1. 25, as hopes of a last-minute Brexitdeal were raised. European Council President Donald Tusk said he had received “positive signals” from Irish leader Leo Varadkar following his meeting with U.K. Prime Minister Boris Johnson on Thursday.
Shares ofGerman business-software giant SAP roseafter upbeat results and news that CEO Bill McDermott stepped down on Thursday.
The Tweet
Golden State Warriors coach Steve Kerr caused a stir after giving his thoughts on the NBA’s China controversy.
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