Putin and OPEC struggle to prop up oil prices
OPEC+ countries agreed to continue production cuts this week, cutting as much as 2.2 million tons from the market. But, this gesture did not impress the market much.
The markets remain strong, even if they have not been able to extend their impressive gains. They may be taking a breather before the Christmas rally, because, after all, winter has begun, which means there are already garlands and plans for the holidays everywhere. Some people have started celebrating in advance. For example, Elon Musk. He allowed himself a little too much after a difficult trip to Israel and sent the big corporations that refused to advertise in his favorite brainchild X. His main target was Disney, which will definitely remember it. Another villain may appear in the Marvel universe. Although it is unlikely that he will be complimented with the prefix "super." It is interesting, of course, how long the economy and the market will forgive Musk's inadequacies. One way or another, he remains the wealthiest man in the world, and the market remains near local highs. The S&P 500 index will open on Friday at 4567 points, 11 points higher than a week earlier.
There is some interesting news from Europe.
Inflation has fallen sharply there, approaching the desired benchmark. Inflation in the euro area was 2.4% in November. Now I wonder if I'm running too fast, i.e., if inflation has fallen too sharply, and if this is evidence of some kind of deep crisis instead of the soft landing that the market has been discussing lately. Moreover, the data from China does not please people who would like to avoid a global recession. But the German economy has been tied to China's in recent years. But the most important thing for the market, of course, is rates. And the more signs of disinflation there are, the more optimistic speculators and bankers are, who are already being advised by JP Morgan to prepare their glasses and chill the champagne. Preparing to celebrate the moment when the regulators officially declare that inflation has been defeated and defeated like the Russians at Austerlitz (by then, everyone will have watched the terrible new movie Napoleon and will have a false impression of how it happened), and therefore it is time to raise rates.
The downside of this holiday is a cooling of the economy. No wonder that all attempts by oil barons to raise oil prices have so far been in vain. Hinting that the problems in the market are still on the demand side. Even the attempts to play with supply, which Saudi Arabia and Co. have continued, do not help. OPEC+ countries agreed to continue cutting production this week, cutting as much as 2.2 million tons from the market. As usual, Saudi Arabia took the biggest hit. The kingdom accounts for up to 50% of the participation in the operation "Saving the Dream of $100 per barrel oil price." Iraq, the UAE, Kuwait, Kazakhstan, Algeria, Oman, and, of course, Russia are expected to contribute. Moscow has promised the same 500 thousand tons again, but it is still being determined whether it will fulfill its promise, and it is unclear how much oil Russia supplies, to whom, and how much. This gesture made little impression on the market, especially since the United States and Iran do not play these games; they are increasing production, and few people believe in a major war on the part of Venezuela. As a result, oil prices, which had risen slightly on expectations, fell after the decision itself. As of Friday morning, the benchmark Brent is worth $80 per barrel.
In the Ukrainian segment of Eurobonds, everyone is waiting for news from the EU and the US, where discussions and preparations for voting on the allocation of aid to Ukraine for 2024 have entered the home stretch. So far, both smell like optimistic decisions, but the market prefers to wait. Moreover, the factor of inadequate macho men (there are so many of them that there may not be enough room for them in all the parallel Marvel universes) remains in force, and both Orban and Trump are getting on our nerves. And in the United States, Democrats and Republicans still can't agree on the border, namely, how much to curb the flow of migrants. While Democrats have already taken it for granted that migration is a problem that can be easily felt by simply walking into the center of New York City, many Republicans still hope that they will be allowed to shoot without warning. And with good news comes selling. As a result, sovereigns fell by a point across the yield curve.
But the variants have grown. We are encouraged by the absence of shelling, because it is already December 1st, and there has yet to be even a tiny blackout. As a result, unlike last year, businesses are operating at full capacity, and GDP is growing faster than expected. Monthly GDP growth in October was 10.5% year-on-year. As a result, analysts are already revising their forecast for 2023, predicting growth above 5%, even in the event of blackouts in December. The prospect of which remains unclear, giving rise to a timid hope that the Russians have chosen some other insidious plan. The domestic market is calm. The National Bank even allowed itself to lift a few more currency restrictions. The biggest of which is the restriction on the purchase of foreign currency by households. The NBU reasoned that there had been no recent queues at exchange offices and that their decision would not cause a stir so that they could liberalize them. On the interbank market, however, the hryvnia weakened slightly this week, reflecting changes in accordance with the NBU's mysterious formula, which is now as crucial for bankers as discovering the formula of the Philosopher's Stone for medieval alchemists.
P. S. There is only one corner of the universe that you can be sure will improve, and that is your own self.
Aldous Huxley
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