Kurdish Oil Exports Set To Return In 2025

Numerous major U.S. corporations addressed tariffs at recent investor events and on conference calls, including some after the Nov. 5 election, when Trump edged out sitting Vice President Kamala Hart.

Walmart, the nation's largest retailer, suggested on Tuesday after reporting results that prices could increase if tariffs rise.

"We're concerned that significantly increased tariffs could lead to increased costs for our customers at a time when they are still feeling the remnants of inflation," a Walmart spokesperson said.

Trump has vowed to make tariffs, which are a fraction of U.S. tax collections, central to his economic agenda. Executives have been increasingly fielding questions on the subject, with many noting ongoing efforts to continue to diversify their supply chains.

Since the beginning of September, executives from nearly 200 companies in the S&P 1500 Composite index discussed tariffs on earnings calls or at investor conferences, nearly doubling the same period in the run-up to the 2020 election, and far more than the 23 mentions in 2023, according to LSEG data.

"Roughly 40% of our cost of goods sold are sourced outside of the U.S., and that includes both direct imports and national brands through our vendor partners," Lowe's CFO Brandon Sink said on Tuesday. "And as we look at the potential impacts (of tariffs), it certainly would add to product costs."

Trump has floated the idea of 60% tariffs on China, the world's largest exporter, and universal tariffs of 10% or more, which he says is necessary to eliminate the U.S. trade deficit.

Oxford Economics estimated a 60% China tariff could boost U.S. inflation by 0.7 percentage points, and across-the-board tariffs would boost inflation by 0.3 points. Oxford believes any tariffs would be gradually introduced, but some analysts are worried about a shock effect.

"Trump 47 won't be a mere replay of Trump 45," said Brian Jacobsen, chief economist at Annex Wealth Management, noting that the president-elect's proposals now were "far more expansive."

The United States imports billions of dollars worth of goods from China annually. This chart illustrates the distribution of these imports by sector for the year 2023.

POSSIBLE SECTOR EFFECTS

The sectors that account for the most imports to the United States include electronic products, transportation equipment, chemicals and minerals, according to the U.S. International Trade Commission.

Tariffs could raise prices on clothing, toys, furniture, appliances, footwear, and travel goods, particularly items where China is a major supplier, according to the National Retail Federation, a U.S. trade group of which Walmart's U.S. head is the chair.

"It is certainly one of the quickest things that could happen, because it could kind of happen with the stroke of a pen," Stanley Black & Decker CFO Patrick Hallinan said at a Robert W. Baird investor conference last week. He said current tariffs are costing it about $100 million a year, which could double under Trump's proposals.

To be sure, companies started to shift production away from China during Trump's first term, and continued to do so following legislation passed during Joe Biden's term designed to boost U.S. manufacturing.

U.S. goods imports from China peaked at $538.5 billion in 2018, according to U.S. Census Bureau data, and were $433.3 billion over the 12 months ended in September.

Businesses may also be better prepared to deal with shifts following the COVID-19 pandemic, numerous labor strikes and disruptions to key waterways like the Panama and Suez canals, executives said.

"We've had so many disruptions and challenges that have forced us to make adaptions. We're pretty well versed in managing through this," Tapestry CFO Scott Roe said.

Source: Theedgemarkets

Source: AP

Source: Euronews

USD: Ukraine news not boosting safe havens for now

Global markets have been shaken by a sudden escalation in the Russia-Ukraine conflict after Ukraine used US-supplied long-range missiles for a strike in Russian territory and Moscow lowered the threshold for response using nuclear weapons. So far, this has translated to some noise in the FX market, but no big moves. We suspect the dynamics in dollar crosses were partly still affected by the dollar’s overbought positioning status, which may have contributed to curbing geopolitics-related gains. At the same time, the other two safe havens JPY and CHF only experienced brief and limited support yesterday. USD/JPY broke above 155.0 again this morning.

In other words, markets seem to be cautiously leaning towards a sanguine view on Ukraine, meaning any further escalations should have a much deeper impact on FX. European currencies (excluding CHF) are inevitably the most vulnerable, whereas high-beta currencies that are geographically far from the conflict (like CAD or AUD) should only be affected indirectly through risk-off. The oversold JPY probably has the highest upside potential from an escalation.

The US calendar is still quiet and the only focus today will be on a few Fed speakers, including the dovish-leaning Barr and Cook and the more neutral Williams and Collins. An interesting development on the macro side, however, was yesterday’s release of state payrolls, which allows us to calculate the actual impact of the hurricane on the soft October country-wide print (12k). Our US economist crunched the numbers and estimates that the payroll figure would have been around 121k without the hurricane and strike activities. We expect at least 100k of “technical” rebound in the November payroll print, which raises the bar for a hawkish surprise from the Fed.

We recently highlighted the potential for a positioning-driven dollar correction. With the recent increase in geopolitical risk, it appears that the risks for the dollar are now more balanced, and we may see less resistance to a fresh leg higher in the greenback.

EUR: Wage data due today

ECB member Fabio Panetta made headlines yesterday with some dovish remarks. He is one if not the most vocal Governing Council doves, so no surprise there, although it’s significant how he explicitly laid out the role that the ECB should have in supporting eurozone growth. We have a more dovish view on the ECB compared to market pricing exactly because we believe this shift in focus from inflation to growth will lead to faster easing in light of a stagnant activity picture.

Today, the ECB releases 3Q data for negotiated wages. This used to be a key input for policy decisions but has lost significance given the greater confidence in the disinflation path. A re-acceleration in wages from the 3.5% of 2Q can offer a counterargument for the hawks, but we suspect some pretty substantial surprise would be needed to heavily affect ECB pricing and the euro.

We had expected EUR/USD to find some short-term support, but we now see renewed downside risks given a still wide rate gap and geopolitical risks. Our expectation is that 1.050 can be tested again soon, and by the end of the year we can see a break lower.

GBP: Inflation data confirms December cut unlikely

GBP/USD has broken past the 1.270 level this morning after a slightly hotter-than-expected UK CPI print for October. We know that the Bank of England's focus is on services inflation, so the rise in headline and core CPI to 2.3% and 3.3% is not really relevant. CPI services did accelerate from 4.9% to 5.0%, which is in line with the BoE and our own forecast. A lot of that acceleration is, however, down to components such as airfares and rents that the BoE deems less indicative of persistent inflation. Our economist’s estimate of “core services” inflation saw a deceleration from 4.8% to 4.5% in October.

That is, however, still insufficient to prompt a cut in December, in our view. Even if there is another inflation print before the next BoE meeting, we would probably need a sharp slowdown in services inflation to put a cut back on the table. Our house view is that services CPI will keep bouncing around 5% for the next four months and only turn decisively lower from 2Q25, when we expect the BoE to accelerate the pace of monetary easing.

We currently see the next BoE cut in February, which isn’t fully priced in (19bp). We think there will be room for a dovish repricing to negatively affect sterling next year, but the policy gap with a dovish ECB will hardly be closed and we remain generally negative on EUR/GBP. For the short term, we stick with our call that the pair will move back below 0.830.

HUF: Hawkishness with cracks

As expected, yesterday's National Bank of Hungary meeting did not bring any changes. The central bank tried to send a hawkish signal but did not commit too much. Of course, the main reason is the EUR/HUF level and the volatility of the Hungarian market. The initial market reaction suggested a stronger HUF, however the mention of one vote for a rate cut reversed the direction again and EUR/HUF ended the day higher above 408. As we've mentioned previously, much of the reason behind the FX weakness is not in the hands of NBH but is directed at the global story.

The pressure on FX, as in the rest of the CEE region, is here to stay for longer in our view. So NBH will just have to wait a longer. Rate cuts are of course postponed indefinitely regardless of dovish data from the economy. We believe EUR/HUF will be drawn further towards the 410 level and possibly move higher should global markets come under pressure. Until then, we will likely see NBH wait until next year and do nothing. At the same time, yesterday's escalation of the Ukraine-Russia conflict shows the vulnerability of the situation and clearly the divergence between Europe and the US after the election shows nothing positive for the CEE region which increases the risks of further selling here.

Above: GBP/USD at 1-minute intervals showing the post-CPI release spike.

Source: Poundsterlinglive