By Geoffrey Smith
Investing.com -- Presidents Joe Biden and Xi Jinping meet on the sidelines of the G20 in Bali, Indonesia. FTX's collapse continues to send shockwaves through the crypto space but Binance has a rescue plan. A narrow win in Nevada keeps the Democrats in control of the Senate, making a split Congress likely for the last two years of Biden's term. Stocks are set to edge lower at the open after Fed Governor Christopher Waller pours cold water on last week's market exuberance, and oil drifts lower amid suggestions of more output coming out of the OPEC+ bloc. Here's what you need to know in financial markets on Monday, 14th November.
1. Biden, Xi meet
U.S. President Joe Biden met with his Chinese counterpart Xi Jinping for the first time on the sidelines of a G20 summit meeting overshadowed by Russia’s war in Ukraine.
The meeting represents something of a rapprochement between the world’s two most important economies after Beijing effectively froze communications in the wake of House Speaker Nancy Pelosi’s visit to Taiwan in the summer.
The two leaders are not expected to announce any concrete agreements, but the meeting gives them the opportunity to discuss key issues such as Taiwan, and the recent restrictions on sales of U.S. semiconductors to Chinese companies, which has had a big impact on Chinese technology companies.
In other G20 news, Russian Foreign Minister Sergey Lavrov, deputizing for the absent Vladimir Putin, was hospitalized with a suspected heart condition, AP reported, quoting three Indonesian sources. Lavrov's spokeswoman dismissed the news as a "high-class fake".
2. Gridlock on Capitol Hill?
Biden arrived at the G20 in Bali bolstered by the knowledge that his Democratic Party had retained control of the Senate in the midterm elections. That was confirmed by the narrow victory of Catherine Cortez Masto in Nevada over the weekend.
Nor have Republicans yet been able to confirm retaking control of the House of Representatives, as seemed likely immediately after last week’s voting. With 211 seats so far according to the AP’s latest tally, the GOP appears likely to win a slim majority, but it seems unlikely that its internal divisions over Donald Trump and his legacy will allow it to exercise any majority status in the house decisively.
3. Stocks set to head lower after Waller's warning; Brainard speech eyed
U.S. stock markets are set to open the week lower after Federal Reserve Governor Christopher Waller warned at the weekend that the market reaction to the October consumer inflation numbers had been excessive.
Waller, one of the Fed’s more hawkish voices, told a conference in Australia that the Fed will likely slow the pace of interest rate hikes from here on, but warned markets should focus less on the pace of tightening than on the ‘end point’ of the cycle.
“Until we get inflation down, that endpoint is still a ways out there," Waller said. Fed vice-chair Lael Brainard speaks later.
By 06:25 ET (11:25 GMT), Dow Jones futures were down 85 points, or 0.3%, while S&P 500 futures were down 0.5% and Nasdaq 100 futures were down 0.7%.
Stocks likely to be in focus later include Walt Disney (NYSE:DIS), after reports of an internal memo on Friday that announced major cost cuts, hinting at layoffs. Disney's new Black Panther movie enjoyed a healthy box office debut at the weekend.
4. FTX collapse reverberates; CZ has a plan
Also in focus may be Coinbase (NASDAQ:COIN) and Robinhood (NASDAQ:HOOD), as the collapse of cryptocurrency exchange FTX continues to send shock waves through the digital currency space.
FTX’s $470 million holding of Robinhood stock is one of few liquid assets that is likely to be recovered from the wreckage – and that has managed to find its way into a company that wasn’t on the 130-strong list of affiliates included in FTX’s bankruptcy filing on Friday.
Overnight, Binance – seen by many as the unchallenged leader in crypto exchanges, but with a long history of run-ins with regulators itself – said it will launch an “industry recovery fund”. Binance CEO Changpeng Zhao will outline his ideas on a Twitter stream at 08:30 ET.
The collapse of FTX has led to large-scale withdrawals across the crypto space, with Tether facing some $3B in redemption requests and Ether’s outstanding supply falling by some 7% over the last two weeks. Exchange Crypto.com again denied that it was struggling to process withdrawal requests.
5. Crude falls amid reports of OPEC output tweak; OPEC monthly report due
Crude oil prices drifted lower, unimpressed by China’s latest attempts to restart its real estate sector, amid reports that the Organization of Petroleum Exporting Countries may revise its quotas again next month – allowing those capable of producing more oil to do so. Iraq, in particular, is reportedly pressing for a higher quota.
It’s unclear whether that would be compensated for by lower quotas elsewhere in the bloc. A monthly survey by S&P Global Platts indicated that higher output from Iraq, Kazakhstan and Russia last month narrowed the gap between what OPEC and its allies actually produce and they say they want to produce. OPEC is also due to publish its monthly report on the sector in the course of the day.
By 06:40 ET, U.S. crude futures were down 1.1% at $87.97 a barrel, while Brent futures were down 0.9% at $95.09 a barrel.