Nov 30, 2018, by Samuel Potter
Brace yourselves, because Five Things is about to kick off with something that isn’t Trump or trade. The Federal Reserve is ramping up its investigation into how Goldman Sachs Group Inc. executives dodged the bank’s internal controls while helping Malaysian authorities raise billions of dollars that later went missing, according to people briefed on the matter. In Europe, a number of lawmakers in Denmark want money-laundering investigations currently focused on Danske Bank A/S to include more firms. And just yesterday, about 170 German police officers raided the headquarters of Deutsche Bank AG and other locations, seeking evidence of money laundering. It’s all rather unpleasant just before bonus season.
We can’t escape the two Ts for long though, because almost every investor eye will now turn to that G-20 gathering, getting underway in Argentina today. For those who’ve been living under a rock: the centerpiece will be a dinner between Presidents Donald Trump and Xi Jinping. No word on what they will eat, but the conversation menu is tantalizing: Trump has hinted at a deal on trade, but threatened more tariffs if the talks don’t work out. Some disappointing data on the Chinese economy has only upped the stakes. Elsewhere, one thing that’s off the table is a sit-down between Trump and Vladimir Putin. The U.S. president scrapped a planned one-on-one with his Russian counterpart after Russia captured Ukrainian naval vessels in the Black Sea. Meanwhile, Theresa May will keep on pitching her Brexit deal at the confab. She’ll be hoping for more success than she’s enjoying at home.
Another meeting Trump may not be having is with German Chancellor Angela Merkel, whose arrival at the G-20 was delayed when her plane was forced to make an unscheduled stop due to technical issues. In a shock development, a German media report said the incident is being examined as a possible criminal act. A government official said investigators are looking at all possible causes, while a spokesman for the German Air Force said there’s no immediate evidence of a crime.
Overnight, the MSCI Asia Pacific Index slipped 0.2 percent while Japan’s Topix index closed 0.5 percent higher. In Europe, the Stoxx 600 Index was 0.5 percent lower at 5:55 a.m. Eastern time as automakers led a retreat in most sectors. The euro weakened as data showed inflation in the region easing off a six-year high. S&P 500 futures pointed to a drop at the open, the 10-year Treasury yield was at 3.019 percent and gold dipped.
It’s a very light day for data, with just the Chicago Purchasing Manager numbers out at 9:45 a.m. Shortly before that, New York Fed President John Williams will be speaking about the global economy at an event in the city, presumably for those who feel the Federal Reserve has been a bit quiet this week. And one final thing to watch at the G-20: Any interactions between Saudi Arabia’s crown prince and Putin. With an OPEC meeting just days away, it could shape the oil market in 2019.