Good morning! Here’s what you need to know in markets on Thursday.
1. The European Union isn’t being clear with the relationship it wants with Britain after Brexit, Philip Hammond argued in a speech in Germany on Wednesday evening. “In London, many feel that we have little, if any, signal of what future relationship the EU27 would like to have with a post-Brexit Britain,” the chancellor said, adding that “it takes two to tango.”
2. Reports that China may halt US government bond purchases may be incorrect. On Wednesday, a report from Bloomberg suggested thatChina may be looking to slow or halt purchases of US government bondsrippled across the markets. However, according to Reuters, citing a statement from China’s foreign exchange regulator, the State Administration of Foreign Exchange (SAFE), the report on US bond purchases “could be based on erroneous information.”
3. The Canadian dollar and Mexican peso dived after a Reuters report suggested Canada is convinced President Donald Trump will pull the US out of the North American Free Trade Agreement.Trump is expected to make his move at about the same time that negotiators from the United States, Canada and Mexico meet in late January for the sixth and penultimate round of talks to modernise the treaty.
4. The New Year rally in Asian shares ran out of steam on Thursday as concerns about the U.S. administration’s protectionist stance hit Wall Street while U.S. bonds were dented by speculation China may curtail buying.MSCI’s broadest index of Asia-Pacific shares outside Japan shed 0.1% in early trade, slipping further from Tuesday’s 10-year peak.
5, South Korea’s largest cryptocurrency exchanges were raided by police and tax agencies this week for alleged tax evasion, people familiar with the investigation said on Thursday. “A few officials from the National Tax Service raided our office this week,” an official at Coinone, a major cryptocurrency exchange in South Korea, told Reuters.
6. Simultaneously, the country’s justice minister said on Thursday the ministry is preparing a bill to ban cryptocurrency trading through its exchanges.“There are great concerns regarding virtual currencies and justice ministry is basically preparing a bill to ban cryptocurrency trading through exchanges,” said Park Sang-ki at a press conference, according to the ministry’s press office.
7. The U.S. Senate will next month hold a hearing with the country’s top markets regulators to discuss the risks posed by cryptocurrencies such as bitcoin, a person with direct knowledge of the matter told Reuters.The Senate Banking Committee will take testimony from Commodity Futures Trading Commission (CFTC) Chairman Christopher Giancarlo and Securities and Exchange Commission (SEC) Chairman Jay Clayton in early February, the source said.
8. Berkshire Hathaway CEO Warren Buffett said Wednesday that the firm had no interest in jumping on the cryptocurrency bandwagon. “We don’t own any; we’re not short any,” Buffett said in an interview on CNBC. “We’ll never have a position in them.”
9. JPMorgan says that Amazon’s market value could eventually grow to more than $US1 trillion. “We believe Amazon has the potential to be a $US1 trillion dollar company over time, as it remains early in the e-commerce and cloud secular shifts,” JPMorgan analyst Doug Anmuth wrote in a client note.
10. Bitcoin can be a legitimate and widespread form of money but mostly in theory, for now, according to Goldman Sachs strategists. “The widespread use of the dollar outside the US – and full dollarization in some countries – suggests there is already demand for an internationally accepted medium of exchange and store of value,” said Goldman’s Zach Pandl and Charles Himmelberg in a note on Wednesday.
And finally … Bernstein analyst Inigo Fraser-Jenkins spent six months off work through illness. When he returned, he sent clients a 4,000-word note that reads like an existential crisis. It is titled, “Why I do this job.” The note warns that if bankers don’t create “some semblance of social utility” then they are “at risk of simply being shut down and turned into a utility by an act of fiat of politicians.”
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