The Poon Report - Pimco Is Buying Yen
News Summary
US confident Arab states will not weaponise oil, says Biden adviser
Taken from FT Monday, 20 November 2023
Amos Hochstein tells FT energy markets are coping ‘fairly well’ despite pressure from two wars
The White House’s chief energy adviser has said he is confident that Arab oil producers will not weaponise energy, despite mounting anger across the Middle East over Israel’s siege and bombardment of Gaza.
Amos Hochstein told the Financial Times that the level of collaboration between the US and Gulf producers, including Saudi Arabia, had been “very strong” over the past two years.
“Oil has been weaponised from time-to-time since it became a traded commodity, so we’re always worried about that, working against that, but I think so far it hasn’t,” he said in an interview. “We have two active wars in the world, one involving the world’s third-largest producer [Russia], the other in the Middle East where missiles are flying near where oil is produced, and yet prices are near the lower point of the year.”
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But people familiar with the thinking of Saudi Arabia, the world’s top oil exporter, say a drop in oil prices to a four-month low of $77 a barrel last week and mounting anger among members over Gaza could contribute to a decision to make further cuts to oil supplies.
Riyadh is expected to prolong voluntary oil production cuts into next year when Opec+ members meet in Vienna on November 26, and a production cut of up to 1mn barrels a day, about 1 per cent of global supplies, could be on the table.
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US and Qatar say deal closer over Hamas hostages
Taken from FT Monday, 20 November 2023
Any breakthrough is expected to lead to a multi-day pause in Israel’s offensive in Gaza
The US and Qatar signalled on Sunday that they were edging closer to a deal to release a significant number of civilian hostages held by Hamas in the besieged Gaza Strip.
Any breakthrough is expected to lead to a multi-day pause in Israel’s offensive on Gaza and an increase of urgently needed aid into the coastal enclave that is enduring a deepening humanitarian crisis.
The plight of about 240 hostages has exacerbated the trauma of Israelis and become a politically sensitive issue for prime minister Benjamin Netanyahu as he pushes ahead with the offensive against Hamas, while families of the captives have pressured his government to do more to secure their freedom.
US deputy national security adviser Jonathan Finer said Washington believed it was “closer than we have been to reaching a final agreement”, adding that many areas of difference that “previously existed have been narrowed”.
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Radical libertarian Javier Milei elected president of Argentina
Taken from FT Monday, 20 November 2023
Victory over economy minister Sergio Massa pulls crisis-hit country’s politics far to the right
Javier Milei, a radical libertarian economist and first-term congressman, has won Argentina’s presidential elections, defeating economy minister Sergio Massa and pulling the country’s politics far to the right amid its worst crisis in two decades.
At 8.10pm, almost an hour before official results were due to be published by Argentina’s electoral commission, Massa, who hails from the moderate wing of the ruling, left-leaning populist Peronist movement, announced that he had called Milei to concede.
He added that the two had spoken and come to agreements about the transition that would take place ahead of Milei’s December 10 inauguration to ensure “no one has any doubts about the . . . economic, social, political and institutional functioning of Argentina”.
Milei’s campaign centred on a pledge to take a “chainsaw” to the state — slashing spending by up to 15 per cent of gross domestic product — and dollarise the economy to stamp out inflation. Argentina’s annual price rises hit 142.7 per cent in October.
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Tax corporate polluters and rich to help tackle climate crisis, Jeremy Hunt told
Taken from The Guardian Monday, 20 November 2023
In letter to Guardian, campaigners say billions could be raised to help finance decarbonisation
Jeremy Hunt has been warned that combating the climate emergency will require higher taxes on wealth and big corporate polluters at the autumn statement rather than a package of giveaways for the rich.
In the run-up to the chancellor’s speech to the Commons on Wednesday, a group of 19 leading charities and campaigners – including Greenpeace, Christian Aid and Patriotic Millionaires UK – said billions of pounds could be raised to help finance decarbonisation.
Writing in an open letter shared with the Guardian, the group said urgent reforms were required to make Britain’s tax system fairer and more efficient, while ensuring that wealthy individuals and heavy polluters paid their fair share.
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Autumn statement will avoid tax cuts that promote inflation, pledges Hunt
Taken from The Guardian Monday, 20 November 2023
Chancellor seeks to promote growth ahead of autumn statement that could spark a rebellion among Tory backbenchers defending marginal seats
Jeremy Hunt has played down the prospect of immediate income tax cuts, pledging not to do anything in this week’s autumn statement that will fuel inflation.
Although some Conservative backbenchers are eager for measures that would be quickly felt by households, the chancellor on Sunday sought to emphasise the need to promote growth and indicated that tax cuts were “not going to happen overnight”.
The controversial prospect of announcing an inheritance tax cut on Wednesday that could spark a rebellion among Tory backbenchers defending marginal seats in less well-off areas is still on the table. However, it remains to be seen whether an emerging scenario in which the chancellor announces business tax cuts while signalling an intention to cut income tax in the spring budget will be enough to placate rebels.
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Rishi Sunak’s positive vision could pave way for tax cuts
Taken from The Times Monday, 20 November 2023
Rishi Sunak is expected to pave the way for tax cuts by setting out a positive vision for the economy after halving inflation. Jeremy Hunt, the chancellor, is forecast to cut national insurance and business taxes in his autumn statement on Wednesday as he seeks to revive Tory fortunes.
Sunak will deliver a speech in north London, in which he sets out plans to bolster economic growth after bringing inflation under control. The speech was originally intended for last week after the government hit its target of halving inflation but was delayed following the Supreme Court’s decision on sending asylum seekers to Rwanda.
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Pimco Is Buying Yen to Prepare for Tighter BOJ Monetary Policy
Taken from Yahoo Finance (BBG) Monday, 20 November 2023
Pacific Investment Management Co. is buying the yen on a bet the Bank of Japan will be pressured into tightening monetary policy as inflation quickens.
The bond giant started building a long yen position when Japan’s currency weakened past 140 per dollar a few months ago, said Emmanuel Sharef, a Pimco fund manager, whose areas of focus include multi-asset investing and asset allocation.
“As we continue to see inflation in Japan rising and being steadily above their target, they will want to move in the direction of abandoning or changing their yield-curve control policies and eventually there might be a need for a hike,” he said last week in an interview in Singapore.