Biden tax plan weighs on stocks, Bitcoin tumbles

Morning Note

European equity indices opened a tad lower on Friday morning after stocks fell on Wall Street on reports Joe Biden is planning to slap much higher capital gains taxes on the wealthy. This was always part of the equation when we looked at the implications of a Biden presidency, but markets have been pepped up on a mix of fiscal stimulus, the Fed’s extraordinarily accommodative stance, a strong cyclical impulse from the vaccine-led reopening and a bounce back in earnings. The major averages fell in lockstep, dropping by almost 1% , though the Russell 2000 ended the session flat as the selling was led chiefly by the longer-term growth names like Tesla and Amazon. The Dow Jones finished the day at 33,815, a decline of more than 300 pts. The S&P 500 closed down 0.92% at 4,134 and the Nasdaq Composite notched a similar decline to finish at 13,818. The FTSE 100 opened lower and is heading for a decline of more than 1% for the week. As of send time the CAC 40 had inched into the green. I would not describe risk as being offered as such; it’s been a pretty choppy week and I would be equally unsurprised if stocks turned around this afternoon and ended the week higher as I would if Wall Street led a sharp decline into the weekend.

The Biden administration is looking to raise the top marginal income tax rate to 39.6% from 37%, whilst also doubling capital gains tax to 39.6% for people earning more than $1 million. Tax the rich, hand it out to the poor. Sounds like furlough, but on a permanent basis. The big problem (one of many) in all this is the Senate – it would require support of all the Democrats in the upper chamber and this is far from assured. Stocks would probably be a lot lower if investors were really worried, and I think markets can overcome this move, even if it manages to pass through the Senate, which I don’t think it will. Nevertheless, coming off record highs and a good run up through the start of the year, the macro picture not really changing, rising Covid cases globally, strong earnings and other supportive factors largely priced in and the extent to which investors are ‘all in’ equities, we could be set for a downwards move in equities over the coming weeks. Beware seasonal factors (I dare not say ‘sell in May’…)

The economic picture continues to improve in the US. Initial claims for unemployment insurance fell to 547,000 last week, down from 576,000 the prior week and below the roughly 600,000 estimated. The number of continuing claims also fell.

Likewise, UK retail sales numbers were very positive in March as consumers opened their wallets ahead of the reopening of non-essential shops. Sales rose by 5.4% from February, well ahead of the 1.5% expected. Clothes, gardening goodies and specialist food items from bakers and butchers were in vogue.

Even Europe is showing immense resilience in the face of lockdowns – France’s Services PMI came in at 50.4 against 46.7 forecast, whilst the manufacturing survey surged to 59.12. The composite PMI rose to 51.7 from 50 previously, with the outperformance in services meaning it easily beat the 49.4 expected. Germany’s composite PMI came in at 56, still in expansion territory, but short of the 57 expected and down from the 57.3 in March.

The dollar is offered in early trade, with EURUSD jumping to 1.2050, Yesterday’s ECB presser high of 1.2070 is the main target for bulls. GBPUSD also tried to sustain a rally to 1.39 but hit resistance at 1.3890 and reversed a touch.

The euro remains steady following yesterday’s ECB meeting, which left markets on an even keel as the central bank managed to maintain its dovish stance and fend off chatter about wrapping up its emergency bond buying programme. Christine Lagarde played down any taper talk, saying this was ‘premature’ and that the recovery still has a long way to go. The yield on 10-year German bunds moved lower.

Bitcoin prices have tumbled. Spot trades under $48k this morning, meaning it’s down 25% from last week’s all-time high. The low tested several times in Feb at $44k is the big support. Basically, it seems to have been bid up on a lot of speculation (even more than usual) ahead of the Coinbase IPO and all this froth has evaporated like a lot of hot air. There has also been a cluster of regulatory reports and rumours that point to a clampdown and tighter regulation. JPMorgan analysts led by the closely-followed Nikalous Panigirtzoglou say the rollover in prices has been led by a steep liquidation in speculative futures positions. “Momentum signals will naturally decay from here for several months, given their still elevated level,” he says.

Shares in Coinbase are in for a hit should cryptos go further south. Also, Cathie Wood’s ARK Innovation ETF is still loading up on COIN – watch this one ,too. The Coinbase listing – the ultimate poacher-turned-gamekeeper moment – might have been the high watermark for Bitcoin.

I refer to two points we highlighted when Coinbase registered to go public:

1. Earnings are inextricably tied to crypto prices. This may be obvious, but it is interesting to see in black and white. “Our total revenue is substantially dependent on the prices of crypto assets and volume of transactions conducted on our platform. If such price or volume declines, our business, operating results, and financial condition would be adversely affected.”

2. More than anything it’s highly dependent on Bitcoin. A majority of Coinbase’s net revenue is from transactions in just two crypto assets: Bitcoin and Ethereum. For the year ended December 31, 2020, Bitcoin, Ethereum, and other crypto assets represented 70%, 13%, and 13% of assets on the platform respectively. “If demand for these crypto assets declines and is not replaced by new demand for crypto assets, our business, operating results, and financial condition could be adversely affected” says the filing.

Caveat emptor and all that.

Week Ahead: ECB speaks amidst vaccine pressure

Week Ahead

Rate statements from the European Central Bank and Bank of Canada are this week’s big stories. Will we see any major policy tweaks? UK retail sales are also in focus as the country emerges from lockdown. Elsewhere, earnings season rolls on on Wall Street.

Vaccine rollout puts pressure on ECB ahead of press conference

Another month, another ECB press conference.

The European Central Bank is, again, unlikely to make any major policy changes this month.

Instead, we’re probably looking at how the bank plans on keeping things steady. The big issue facing economic recovery is still vaccine rollout throughout the EU. At least, it looks like a key concern for ECB bigwigs according to March 11th’s meeting minutes.

The minutes underline ECB council members’ feeling that near-term economic growth depends on how the pandemic evolves.

“Reference was made to the slow pace of vaccination compared with other parts of the world,” the minutes stated. “Questions were raised as to how realistic it was to assume that containment measures would be reduced as early as the second quarter. Weakness in activity might continue well into the second quarter and beyond.”

There is a feeling that persistently high Covid-19 infection rates across Europe, spread of mutant strains, and prolonged lockdown restrictions are negatively the bloc’s recovery. GDP growth may come in lower than previously forecast in the next quarter too.

That said, the base rate probably won’t rise. Keeping borrowing costs low for banks throughout the EU is also a top priority, as the recent ramp in bond yields colours policymakers’ decision making.

Governing council member and Dutch central bank president Klaas Knot has said he doesn’t want to see a run up on government bond yields, as this may lead to a tightening of economic conditions throughout the EU. As the bloc recently committed to increase its bond buying programme, this is something the central bank will be very keen to avoid.

Are policy tweaks ahead as Bank of Canada makes rate statement?

Another rate decision will be coming from the Bank of Canada this week. Chances are no major changes are coming to Canadian rate policy, but we might some tweaks.

One thing that is unlikely to change is the BOC’s policy rate, which is pretty much frozen at 0.25% until 2023 when economic slack is absorbed.

Instead, Canada’s central bank is exploring changes to its policy frameworks, including average inflation targeting, a dual mandate targeting employment and inflation together, nominal GDP targeting, and price-level targeting.

This comes after it appears consumers and banks are feeling calm, despite historically low interest rates.

“Overall, inflation has not become a bigger concern for Canadians, and the pandemic has not dramatically changed consumers’ views on inflation,” the BOC said in its latest quarterly survey of consumer expectations, published on April 12th.

“Canadians are cognizant that inflation hurts others differently,” Governor Macklem said. “That is informing our research agenda. We are working with Statistics Canada on getting measures of inflation that are targeted more to specific groups. That has come directly out of speaking with Canadians.”

One thing we do know is that the bank is considering tapering off its quantitative easing programme, so we may see a more concrete strategy regarding this with the latest rate statement.

UK retail sales look to post strong March gains

The UK has opened non-essential shops, so we’re probably bracing for a bit of a boom when April’s stats roll in. March’s month-on-month retail sales are reported this week, and indicators look like retail is still strong, despite the pandemic’s challenging conditions.

We can see two-year increases in the latest reports from the British Retail Consortium and KMPG monthly sales monitor. This report is released ahead of month-on-month stats which come out this week but will give an indicator to the state of the UK’s retail health.

For context, the IRC has decided to compare sales data from 2019 and 2021 due to the disruption caused by the pandemic in 2020.

UK retail sales increased 8.4% on a like-for-like basis from March 2019, when they had decreased 1.1% from the preceding year.

Over the three months to March on a two-year basis, in-store sales of non-food items declined 44.4% on a total and 44.0% on a like-for-like basis. This is worse than the 2019 Total average decline of 3.1%.

For March, the two-year like-for-like excluding temporarily closed stores remained in decline. This is probably to be expected. Until last week, UK non-essential shops had been shuttered, so the high street has pretty much been dead.

Online sales continued to grow quickly during March, the final month of lockdown 3.0. The BRC says almost 60% of sales were online during the month. IMRG, which is continuing to compare 2021 figures with those of 2020, says that in March, online sales were 71.7% up compared to the same time last year.

We’ll be able to see more on a month-by-month basis when data is released this week.

Wall Street earnings season rolls on

After the big banks kicked off proceedings last week, earnings season is in full swing on Wall Street. The large caps are circling, and they’re bringing reports with them.

We’ll be able to see with more clarity which companies continue to be pandemic winners, and which may have struggled in the tough conditions it threw up.

Amidst the large caps reporting this week are Coca-Cola, Johnson and Johnson, Intel, Netflix, SAP, and a host of others. See below for a roundup of the large caps sharing earnings reports this week.

Major economic data

Date Time (GMT+1) Currency Event
Tue 20-Apr 11.45pm NZD CPI q/q
Wed 21-Apr 2.30am AUD Retail Sales m/m
7.00am GBP CPI y/y
1.30pm CAD CPI m/m
  3.00pm CAD BOC Monetary Policy Report
3.00pm CAD BOC Rate Statement
3.00pm CAD Overnight Rate
3.30pm USD Crude Oil Inventories
4.00pm CAD BOC Press Conference
Thu 22-Apr 12.45pm EUR Main Referencing Rate
12.45pm EUR Monetary Policy Statement
1.30pm EUR ECB Press Conference
1.30pm USD Unemployment Claims
3.30pm USD US Natural Gas Inventories
Fri 23-Apr 7.00am GBP Retail Sales y/y
8.15am EUR French Flash Services PMI
8.15am EUR French Flash Manufacturing PMI
8.30am EUR German Flash Manufacturing PMI
8.30am EUR German Flash Services PMI
9.00am EUR Flash Manufacturing PMI
  9.00am EUR Flash Services PMI
9.30am GBP Flash Manufacturing PMI
9.30am GBP Flash Services PMI

 

Key earnings data

Date Company Event
Mon 19-Apr Coca-Cola Q1 2021 Earnings
IBM Q1 2021 Earnings
Prologis Q1 2021 Earnings
United Airlines Q1 2021 Earnings
Tue 20-Apr Johnson & Johnson Q1 2021 Earnings
Proctor & Gamble Q3 2021 Earnings
Netflix Q1 2021 Earnings
Philip Morris Q1 2021 Earnings
Lockheed Martin Q1 2021 Earnings
Wed 21-Apr ASML Q1 2021 Earnings
NextEra Energy Q1 2021 Earnings
Anthem Inc. Q1 2021 Earnings
Canadian Pacific Railway Co. Q1 2021 Earnings
Ericsson Q1 2021 Earnings
Thu 22-Apr Intel Corp. Q1 2021 Earnings
AT&T Q1 2021 Earnings
Union Pacific Q1 2021 Earnings
Snap Inc. Q1 2021 Earnings
Blackstone Q1 2021 Earnings
LG Chem Q1 2021 Earnings
Volvo AB Q1 2021 Earnings
Fri 23-Apr Industrial & Commercial Bank of China Q1 2021 Earnings
Agricultural Bank of China Q1 2021 Earnings
Honeywell Q1 2021 Earnings
Bank of China Q1 2021 Earnings
PetroChina Q1 2021 Earnings
American Express Q1 2021 Earnings
Daimler Q1 2021 Earnings

Week Ahead: Acronyms a-go-go – CPI, PMI & GDP releases

Week Ahead

A lot of economic data is released in key economies this week. Starting with the UK, CPI and retail sales figures are released, with furlough and lockdown still looming large over the economy. US GDP numbers for the first quarter are finalised but the focus will be on business sentiment showing up in a fresh batch of PMI releases from the US, UK and Eurozone amid vaccine progress that is diverging in the major economies.  

UK CPI 

Investors and FX traders will be watching UK inflation figures this week following the Bank of England decision. 

Inflation is in focus in the UK right now, as the effects of rising bond yields, further government economic support via Chancellor Sunak’s “spend now, tax later” budget, and the Bank of England’s response continue to colour the economic picture. 

ONS data shows the latest full-year CPI at 0.9%. Across 2021, the CPI is expected to rise to 1.5% across the year. Some estimates suggest it may even rise to 1.8% by April. 

 CPI inflation for the UK came in at -0.2% monthonmonth in January, down on December’s 0.3%, but the figure was above the -0.4% the market was expecting. 

CPI inflation rose 0.7% year-on-year in January, which is above December’s figure of 0.6% and above the consensus expectation for a reading of 0.6%. January’s upward trend was driven by rising prices of food, transport, and household goods. 

UK Retail Sales 

UK retail sales data is released this week. The latest industry data suggests February was a solid month for the UK’s retail sector, according analysis from KPMG. 

Total sales were up 1% in February on a like-for-like basis against last year’s stats. Importantly, this was a sharp reversal of January’s retail sales, where sales contracted 1.3% against 2020’s figures. 

Driving February’s growth was March’s reopening of schools across England. Spending on non-food items, like school uniforms and stationery, was up as shopper’s fell into the back-to-school trend.

Non-essential stores still remain shuttered in England and will remain so until April 12th. Online sales are benefitting greatly from lockdown, mainly because consumers have no other choice but to use digital outlets to get their non-essential items. Non-food spending accounts for 61% of February sales – up nearly double compared with 31% in February 2020. 

However, overall consumer spending is down, Barclaycard reports, slipping 13.8% y-o-y in February. Lockdown restrictions on hospitality and leisure continue to weigh heavy. No doubt they’ll surge once full lockdown restrictions are removed in June, but until then the sector is going to greatly underperform. 

US, UK, EU PMI 

PMI data is released in major economies this week as the UK, US, and EU share index findings. 

Starting with the UK, observers will be hoping the momentum started in February will continue into March. The IHS Markit/CIPS Composite PMI gave a reading of 49.6 for February, up from an eight-month low of 41.2 in January.  

Some industries are performing above expectation. According to IHS Markit, UK construction was perkier than forecast in February, with the construction PMI at 53.3 from 49.2, as projects halted by Covid-19 were given the green light to continue or begin. Manufacturing continued an upward swing too, rising to 55.1 last month. 

However, services remain disappointing, with the revised February figure chalked up as 49.5 – still below the 50 growth threshold. This is perhaps to be expected. Leisure and hospitality are still heavily restricted, so don’t expect any upward trends in March. 

EU leaders were breathing a little easier after  February’s numbers.  For instance, manufacturing was up to 57.9 in February from 54.8 in January – a 3-year high – led by strong performance from The Netherlands and Germany. 

However, since then the outlook for Europe has deteriorated as Covid cases in France and Germany have spiraled and Italy has entered a fresh lockdown. Survey data may not reflect the recent developments fully. 

Hopping across the Atlantic, the US enjoyed a smash-hit manufacturing PMI in February, blowing the EU’s impressive numbers out the water. The US manufacturing PMI came in at 60.8 – the highest level seen for 3 years. However, that impressive figure may be cooled by issues in the supply chain.  

According to manufacturers surveyed by the Institute for Supply Management (ISM), commodities and component prices are rising. The steel price is up, for instance, which massively affects pricing for the US manufacturing sector. 

US GDP 

The final reading for US Q4 2020 GDP comes this week but all eyes are really on the updated forecasts we are getting for 2021. Last week the Federal Reserve raised its outlook for growth to 6.5% this year, up from 4.2% expected at the time of the December meeting.  

The OECD and several investment banks have also upped their guidance for US growth this year. Therefore, high frequency data like the weekly unemployment claims and personal income and spending figures will be the ones to watch, particularly as the arrival of $1,400 stimulus cheques begins to be felt. 

Markets, however, like to look forward, not backward. Q1 2021’s GDP figures will be very interesting for the market. On that front, the outlook is optimistic. 

Back in December, Goldman upgraded its Q1 2021 GDP figure to 5%, following the passing of $900bn in stimulus. Joe Biden’s further $1.9bn stimulus package has been passed, which may influence the quarter’s GDP movement. 

More recently, the Philadelphia Fed has put Q1 2021 GDP growth at 3.2%, citing a brighter outlook for labour markets, although it has also bumped its inflation expectations up to 2.5% for this quarter’s CPI release. The Atlanta Fed is even more upbeat than its cousin to the north. Its initial Nowcast puts the quarter’s GDP growth at 5.2% – in line with Goldman’s December estimate.  

The point about unemployment raised by Philadelphia is pertinent here. The last Nonfarm payrolls indicated the jobs market was beginning to come off life support, surging 379,000. More people at work suggests more productivity, suggests healthy Q1 GDP growth. 

Essentially, we’re looking at a healthier US economy in 2021 so far. Morgan Stanley has even gone so far as to suggest pre-pandemic GDP growth will kick in as early as the end of March. That might be a bit too ambitious, but it’s an indicator of increased confidence regarding the United States. 

Major economic data 

 

Date  Time (GMT)  Currency  Event 
Wed 24 Mar  7.00am  GBP  UK CPI y/y 
  8.15am  EUR  French Flash Manufacturing PMI 
  8.15am  EUR  French Flash Services PMI 
  8.30am  EUR  German Flash Manufacturing PMI 
  8.30am  EUR  German Flash Services PMI 
  9.00am  EUR  Flash Manufacturing PMI 
  9.00am  EUR  Flash Services PMI 
  9.30am  GBP  Flash Manufacturing PMI 
  9.30am  GBP  Flash Services PMI 
  1.45pm  USD  Flash Manufacturing PMI 
  1.45pm  USD  Flash Services PMI 
  2.30pm  USD  US Crude Oil Inventories 
       
Thu 25 Mar  8.30am  CHF  SNB Monetary Policy Statement 
  12.30pm  USD  Final GDP q/q 
  2.30pm  USD  US Natural Gas Inventories 
       
Fri 26 May  7.00am  GBP  Retail Sales m/m 
  9.00am  EUR  German ifo Business Climate 

 

Key earnings data 

 

Date  Company  Event 
Mon 22 Mar  Saudi Aramco  Q4 2020 Earnings 
        
Tue 23 Mar  Adobe  Q1 2021 Earnings 
   Markit  Q1 2021 Earnings 
        
Wed 24 Mar  Tencent Holdings  Q4 2020 Earnings 
   Geely Motors  Q4 2020 Earnings 
        
Thu 25 Mar  CNOOC  Q4 2020 Earnings 

Stocks firm, earnings unmask weakness, OPEC+ decision eyed

Morning Note

European markets moved up again this morning after stocks rallied on Wall Street and futures indicate further gains for US equity markets despite big bank earnings underlining the problems on Main Street. Sentiment recovered somewhat after Moderna’s vaccine candidate showed ‘promising’ results from phase 1 trials. It is too early to call a significant breakthrough, but it’s certainly encouraging.

Cyclical components led the way for the Dow with top performers the likes of Caterpillar and Boeing, as well as energy names Exxon and Chevron up over 3% as the index rose over 500pts, or 2.1%, its best day in over two weeks. Apple shares regained some ground to $388 ahead of an EU court ruling today on whether the company should repay €13bn in unpaid taxes.

Asian markets were mixed, with China and Hong Kong lower as US-China tensions rose, but shares in Japan and Australia were higher. European shares advanced around 0.75% in early trade, with the FTSE reclaiming 6,200 and the DAX near 12,800.

However, Tuesday’s reversal off the June peak may still be important – lots of things need to go right to extend the rally and you must believe this reporting season will not be full of good news, albeit EPS estimates – such as they are – may be relatively easy to beat.

My sense is what while the stock market does not reflect the real economy, this does not mean we are about to see a major drawdown again like we saw in March. The vast amount of liquidity that has been injected into the financial system by central banks and the fiscal splurge will keep stocks supported – the cash needs to find a home somewhere and bonds offer nothing. It will likely take a significant escalation in cases – a major second wave in the winter perhaps – to see us look again at the lows.

For the time being major indices are still chopping around the Jun-Jul ranges, albeit the S&P 500 and DAX are near their tops. Failure to breakout for a second time will raise the risk of a bigger near-term pullback, at least back to the 50% retracement of June’s top-to-bottom move in the second week of that month.

Trading revenues, loan loss provisions surge at US banks

US bank earning highlighted the divergence between the stock market and the real economy. JPMorgan and Citigroup posted strong trading revenues from their investment bank divisions but had to significantly increase loan loss provisions at their consumer banks. Wells Fargo – which does have the investment banking arm to lean on – increased credit loss provisions in the quarter to $9.5bn from $4bn in Q1, vs expectations of about $5bn.

This begs the question of when the credit losses from bad corporate and personal debt starts to catch up with the broader market. Moreover, investors need to ask whether the exceptional trading revenues are all that sustainable. Shares in Citigroup and Wells Fargo fell around 4%, whilst JPMorgan edged out a small gain. Goldman Sachs, BNY Mellon and US Bancorp report today along with Dow component UnitedHealth.

UK retail earnings

In the UK, retail earnings continue to look exceptionally bleak. Burberry reported a drop in sales of 45% in the first quarter, with demand down 20% in June. Asia is doing OK, but the loss of tourist euros in Europe left EMEIA revenues down 75% as rich tourists stayed clear of stores because of lockdown. Sales in the Americas were down 70% but there is a slight pickup being seen. Encouragingly, mainland China grew mid-teens in Q1 but grew ahead of the January pre COVID level of 30% in June, Burberry said. Shares opened down 5%.

Dixons Carphone reported a sharp fall in adjusted profit to £166m from £339m a year before, with a statutory loss of £140m reflecting the cost of closing Carphone stores. Electricals is solid and online sales are performing well, with the +22% rise in this sector including +166% in April. Whilst Dixons appears to have done well in mitigating the Covid damage by a good online presence, the Mobile division, which was already impaired, continues to drag.

Looking ahead, Dixons says total positive cashflow from Mobile will be lower than the previous guidance of about £200m, in the range of £125m-£175m. Shares fell 6% in early trade.

White House ends Hong Kong special status, US to impose sanctions

US-China tensions are not getting any better – Donald Trump signed a law that will allow the US to impose sanctions on Chinese officials in retaliation for the Hong Kong security law. The White House has also ended the territory’s special trade status – it is now in the eyes of the US and much of the west, no different to rest of China. This is a sad reflection of where things have gone in the 20+ years since the handover.  Britain’s decision to strip Huawei from its telecoms networks reflects a simple realpolitik choice and underscores the years of globalisation are over as east and west cleave in two.

The Bank of Japan left policy on hold but lowered its growth outlook. The forecast range by BoJ board members ranged from -4.5% to -5.7%, worse than the April range of -3% and –5%. It signals the pace of recovery in Japan and elsewhere is slower than anticipated.

Federal Reserve Governor Lael Brainard talked up more stimulus and suggested stricter forward guidance would be effective – even indicating that the central bank could look at yield curve control – setting targets for short- and medium-term yields in order to underpin their forward guidance.

EUR, GBP push higher ahead of US data; BOC decision on tap

In FX, we are seeing the dollar offered. EURUSD has pushed up to 1.1430, moving clear of the early Jun peak, suggesting a possible extension of this rally through to the March high at 1.15. GBPUSD pushed off yesterday’s lows at 1.2480 to reclaim the 1.26 handle, calling for a move back to the 1.2670 resistance struck on the 9-13 July.

Data today is focused on the US industrial production report, seen +4.3% month on month, and the Empire State manufacturing index, forecast at +10 vs -0.2 last month. The Bank of Canada is expected to leave interest rates on hold at 0.25% today, so we’ll be looking to get an update on how the central bank views the path of economic recovery.  Fed’s Beige Book later this evening will offer an anecdotal view of the US economy which may tell us much more than any backward-looking data can.

Oil remains uncertain ahead of OPEC+ decision

Oil continues to chop sideways ahead of the OPEC+ decision on extending cuts. WTI (Aug) keeps bouncing in and off the area around $40 and price action seems to reflect the uncertainty on OPEC and its allies will decide. The cartel is expected to taper the level of cuts by about 2 million barrels per day from August, down from the current record 9.7 million bpd. Secretary General Mohammad Barkindo had said on Monday that the gradual easing of lockdown measures across the globe, in tandem with the supply cuts, was bringing the oil market closer to balance.

However, an unwinding of the cuts just as some economies put the brakes on activity again threatens to send oil prices lower. OPEC yesterday said it expects a bullish recovery in demand in the second half, revising its 2020 oil demand drop to 8.9m bpd, vs the 9m forecast in June. The cartel cited better data in developed nations offsetting worse-than-expected performance in emerging markets. EIA inventories are seen showing a draw of 1.3m barrels after last week produced an unexpected gain of 5.7m barrels.

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