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Don’t say I didn’t warn you | Calamatta Cuschieri

OPEC countries seemingly unable to come to an agreement, the US powers ahead and the focus in Europe turns to politics

calamatta_cuschieri
Calamatta Cuschieri
30 November 2016, 11:45am
Crude oil futures are now rallying 5% as some kind of deal appears to be imminent
Crude oil futures are now rallying 5% as some kind of deal appears to be imminent
 

Don’t say I didn’t warn you

The much-talked-about OPEC deal is seemingly set to go down in flames as Iran, and Saudi Arabia by consequence, are not willing to talk at the current terms. Officials from Tehran are insisting they will not curb production, and Saudi Arabia want out if Iran does not agree to the deal. Iran argues that the cuts it is being asked to implement do not take into account the fact that it has recently returned to the oil market after years of economic sanctions.

Oil futures fell swiftly as news of dissent hit the wires, dropping by almost 4% yesterday before recovering slightly this morning. Informal discussions are currently underway before the formal meeting takes place at 10am, according to multiple unidentified sources.

But I guess I should have put in ‘at time of writing’ in the title – crude oil futures are now rallying 5% as some kind of deal appears to be imminent. Oh, OPEC.

US on track

It’s all looking good in the US at the moment – the NASDAQ finally caught up with other indices hitting its own record high, consumer confidence hit a nine-year high, Cyber Monday sales smashed previous records by at least 12% and GDP was revised up on stronger consumer spending.

With a holiday season just round the corner, the data remains encouraging for the overall monetary policy outlook. The data keeps a 25 basis point hike fully priced for December despite somewhat weak business investment.

Politicking

Italian Prime Minister Matteo Renzi has put his top dog position on the line and final polls were not encouraging
Italian Prime Minister Matteo Renzi has put his top dog position on the line and final polls were not encouraging
Next on the political agenda – the Italian referendum on constitutional reform. Prime Minister Matteo Renzi has put his top dog position on the line and final polls were not encouraging. Officials yesterday were also denying a rumour that Renzi was going to step down even if the ‘Yes’ vote wins.

Over in France, François Fillon is now the front-runner to fill the soon-to-be-vacated presidential seat. All looks set for a final run-off against Marine Le Pen, leader of the far-right National Party in May of next year. The last time a Le Pen faced off against the more mainstream centre-right candidate the result was overwhelmingly negative – Marine’s father Jean-Marie Le Pen garnered only 18% of the total votes cast versus the 82% obtained by Jacques Chirac.

That is not to say all is set and done, as we have seen two shocking results in the past six months. The lessons learnt from Brexit and Trump’s victory is that the current political crop has to campaign hard if it still wants the people to believe their message is worth listening to. Fail on that count, and it might be Madame La Président this time round.

J&J ups the price

Happy days if you were a shareholder of Actelion last week. Shares in the Swiss biotech company have surged more than 30% as US healthcare company Johnson & Johnson (yes, the company who makes the yellow baby shampoo) is reportedly raising its offer for the company in a buyout attempt.

Both companies declined to comment, but talks of a transaction based on a share or swap deal began in October. Talks have seemingly broken down, with Johnson & Johnson now forced to offer a hefty premium to force Actelion to give up its independence.

An ensuing price war could drive potentially interested companies such as France’s Sanofi or Switzerland’s Roche away from putting in a bid.

This article was issued by Andrew Martinelli, Trader at Calamatta Cuschieri. For more information visit, www.cc.com.mt. The information, view and opinions provided in this article is being provided solely for educational and informational purposes and should not be construed as investment advice, advice concerning particular investments or investment decisions, or tax or legal advice. Calamatta Cuschieri Investments Services Ltd has not verified and consequently neither warrants the accuracy nor the veracity of any information, views or opinions appearing on this website.

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