Good morning, Opening Bell crew. Phil Rosen here, reporting from New York.
If you take anything away from today’s newsletter, let it be this: As of today, Russian oil faces a new European Union embargo, as well as a price cap.
Scroll down for details.
If this was forwarded to you, sign up here. Download Insider’s app here.
Contributor/Getty Images
1. EU leaders have been debating a price cap for months, but on Friday agreed to a $60-a-barrel level. That paved the way for the Group of Seven to launch the unprecedented measure by the December 5 deadline (that is, today).
As Insider’s Brian Evans writes, the idea behind a price cap is to reduce Moscow’s export revenues, thereby limiting President Vladimir Putin’s ability to fund his war on Ukraine, while still keeping as much Russian oil flowing through global markets as possible.
Keeping those barrels on the market, the thinking goes, will prevent a crash in the world’s crude supply, and stave off a price spike.
Still, experts have warned that it’s possible the whole initiative falls flat.
Take China and India, the two biggest buyers of Russian crude. They haven’t agreed to participate in the price cap, and are already getting steep crude discounts from Moscow.
Oil historian Gregory Brew said the two nations, among other buyers in Asia, won’t feel obligated to commit to the cap.
“What it suggests is that Russian buyers are able to negotiate very favorable terms from Russian oil companies, who have to sell in order to maintain operations,” Brew told me on a recent phone call.
But even if those major customers keep buying, Russia will have to figure out what to do with the 2.4 million barrels of crude per day that once flowed to the EU.
Some analysts predict Russian oil exports could drop by 1 million barrels per day, or about 20% of its seaborne volume.
To Energy Aspects’ senior oil analyst Livia Gallarati, the price cap idea may prove moot because Moscow has cautioned for months that it will cease trade with countries that adhere to the ceiling.
She told me over a video call from London that, ultimately, oil markets probably won’t react dramatically in either direction.
“If [Russia] kept selling at the level at which they’re selling today, then no countries actually need to officially sign up to the price cap because they’re getting that discount anyway,” Gallarati said.
What do you think is the most likely outcome of the new sanctions on Russian oil?
Tweet me (@philrosenn) or email me ([email protected]) to let me know.
Ed Yardeni
2. US stock futures fall early Monday, as investors await further economic data from the Institute for Supply Management later today. Meanwhile, Asia shares rose after China announced an easing of COVID measures. Here are the latest market moves.
3. Earnings on deck: Wavestone SA, Meta Materials Inc, and more, all reporting.
4. BMO Capital Markets’ chief strategist said stocks are ready for a multi-year recovery starting in 2023. He does expect a recession in the early stages of the year, but after that expects a rebound in US markets. These are the 11 stocks that he said look attractive right now.
5. China’s zero-COVID policies are top of mind for investors. How Beijing decides to move forward in the coming months could influence how much money is flowing in and out of the world’s second biggest economy. Here’s what investors are watching as policymakers in Beijing signal a willingness to loosen some restrictions.
6. Bank of America said it’s time for investors to sell any rally in stocks as job losses are about to rattle markets in 2023. Friday’s nonfarm payrolls data came in hotter than expected, which has opened the door for more aggressive policy from the Federal Reserve. That means, just as inflation did in 2022, rising unemployment will shock indexes in 2023.
7. Veteran strategist Ed Yardeni expects a 60% chance of a soft landing for the US economy in 2023. In an interview with Insider, the economist broke down his market forecasts for the new year — and shared why the inverted yield curve may not be as serious a recession signal compared to previous downturns. Read the interview here.
8. This real-estate investor owns 22 units and started buying up properties during an economic downturn. In the grand scheme of things, according to Dana Bull, today’s interest rates are “not that high.” She gave her top advice for investors heading into the new year.
9. Here’s how to survive a market that’s underestimating the damage from a recession. According to BlackRock, there’s a certain way to position in stocks, bonds, and credit next year — and doing so could help investors profit on the other side of a downturn.
Markets Insider
10. Crypto bull Mike Novogratz backed off his call for bitcoin to hit $500,000 in five years. He blamed the Fed’s aggressive monetary policy tightening, and said now it will take longer than expected for the token to reach the half-a-million threshold. Bitcoin has dropped roughly 64% this year.
Keep up with the latest markets news throughout your day by checking out The Refresh from Insider, a dynamic audio news brief from the Insider newsroom. Listen here.
Curated by Phil Rosen in New York. Feedback or tips? Tweet @philrosenn or email [email protected]
Edited by Max Adams (@maxradams) in New York and Hallam Bullock (@hallam_bullock) in London.