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France’s President Emmanuel Macron (R) and Russia’s President Vladimir Putin attend a bilateral meeting on the sidelines of the G20 Summit in Osaka on June 28, 2019.

LUDOVIC MARIN | AFP | Getty Images

French President Emmanuel Macron is hosting his Russian counterpart Vladimir Putin for talks on Monday in the hope he can persuade Russia to return to peace talks over Ukraine. Some experts are doubtful as to just how much Macron can achieve.

The meeting, which comes before the Group of Seven (G-7) industrialized nations attend a summit in Biarritz next weekend, has proved controversial given Russia’s turbulent relations with other global powers and Putin’s recent crackdown on protesters in his own country.

Hosting talks at a presidential residence at the Fort of Brégançon on the Mediterranean coast on Monday, Macron and Putin are expected to talk about the delicate political situations in Ukraine, Libya and Syria. A press conference was due to begin at 10:00 a.m. ET.

Ukraine is of particular importance for Macron given that France and Germany tried to broker a peace deal, known as the Minsk agreements, between Russia and Ukraine following Moscow’s annexation of Crimea. Putin’s government is also seen as fomenting a pro-Russian uprising in the Donbass region in the east of Ukraine which led to two areas in the Donbass region (Donetsk and Luhansk) declaring themselves as separate republics.

Despite attempts at a ceasefire, both Russia and Ukraine have accused each other of flouting conditions set out in the Minsk peace accords and skirmishes continue. In total, the armed conflict between separatists and Ukrainian forces in the Donbass has caused as many as 13,000 deaths, according to the United Nations.

Relations between the neighbors remain tense and skirmishes in east Ukraine happen often, with the death of four Ukrainian soldiers in early August prompting new Ukrainian President Volodymyr Zelensky to call for a resumption of peace talks with Russia.

A subsequent phone call held between the presidents led to the Kremlin signaling a potential for further talks, noting that the leaders had discussed “future contacts in the Normandy Format”– the name given to the diplomatic group of senior representatives of Germany, France, Russia and Ukraine involved in previous talks.

No-win situation

Russia used to be part of the Group of Eight (G-8) but it was kicked out of the group in 2014 following its annexation of Crimea. Western sanctions are also in place, causing frosty relations between Russia and its neighbor Europe. Russia has retaliated with its own counter-sanctions on agricultural imports from the EU; In June, Putin signed a decree extending the Russian ban on food imports from the EU until the end of 2020.

The lifting of restrictions on Russia’s economic activity has been tied to it making progress on its peace agreement with Ukraine.

But experts in Russian foreign policy have little confidence that Macron will be able to persuade Putin to make concessions on Ukraine, although they note that Russia has a vested interest in remaining engaged on Ukraine.

“My sense is that Macron isn’t the key interlocutor here. The issue is how Putin shapes up to the new administration in Ukraine and President Zelensky,” Daragh McDowell, the principal Russia analysts at Eurasia Group, told CNBC on Monday.

“I wouldn’t envisage there will be any concessions on Ukraine at this point. I don’t think Putin will want to signal any readiness that he’s willing to back down. He doesn’t want to signal any weakness to Zelenksy.”

Even if peace talks are pushed for by Macron, and the offer taken up by Putin, that is only the start of a process, McDowell noted. “there is some potential for peace talks to reopen but the question is, what would actually be accomplished by those talks?” He added that the situation was something of a no-win one for the Kremlin in that the conflict in Ukraine was a drain on resources but to back down would equate to a loss of face for Russia, particularly among nationalist groups.

AKE Senior Political Risk Analyst Max Hess told CNBC that Moscow “sees the meeting as an opportunity to show that it is not wholly isolated from the international stage.”

“However, no progress should be expected in resolving the Ukraine crisis – France does not have the diplomatic capital to get this process going on its own, and it is clear the so-called Normandy Format that also involves Germany is dead, with no meeting under its auspices in the last two years.”

“There have been some talk about getting these restarted, which I think is the most success we can hope for. The meeting may see Macron and Putin agree new measures to expand French business in Russia – French energy firm Total has been among the largest Western investors in recent years – but Moscow’s agricultural sanctions, which particularly affected France when they were introduced, will not be lifted. The situation in Iran and Syria will be on the table as well, and while it is possible this will include some bilateral efforts to “take the initiative,” I also think we are unlikely to get anything game-changing,” Hess said.

Macron’s “immaturity”

Some analysts went further in their cynicism regarding the high-profile meeting. James Nixey, head of the Russia and Eurasia Programme at Chatham House, said Macron’s invitation to Putin smacked of immaturity, telling CNBC’s “Squawk Box Europe” on Monday that “there is still an immaturity in Macron whereby he believes he can do things that other leaders are incapable of.” He also believed that France was driven by commercial interests in repairing relations with Russia.

Nixey believed that France’s approach to Russia was one of a “business first relationship” rather than one focused on the ethical arguments for sanctions. “The French’s relationship (with Russia) has been a more industry-driven relationship than say, the U.K.’s or Scandinavia’s relationship with Russia, by comparison.”

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Tariff rollback ‘smaller than expected’



Chinese President Xi Jinping and President Donald Trump at the G-20 Summit in Osaka on June 29, 2019.

Brendan Smialowsi | AFP | Getty Images

Amid a slew of headlines and tweets, a long-awaited phase one trade deal between the U.S. and China has finally been agreed upon. However, Goldman Sachs is not so happy about it.

As part of the limited deal, the U.S. said it will maintain 25% tariffs on approximately $250 billion of Chinese imports while reducing tariffs on $120 billion in products to 7.5%. The rollback in duties is “smaller than expected,” according to Goldman’s chief economist Jan Hatzius.

“The reduction is only half as large as our baseline assumption,” Hatzius said in a note. “There is still some uncertainty regarding the status of this agreement, as it appears once again that some technical and legal details are still in flux.”

U.S. Trade Representative Robert Lighthizer said the two sides hope to sign the deal in the first week of January in Washington. He also cautioned the Trump administration has not promised a future rollback of tariffs, adding it would be wise to be skeptical on whether China would deliver on certain agreements.

The representative also said in a statement Friday the deal addresses “intellectual property, technology transfer, agriculture, financial services, and currency and foreign exchange” and “includes a commitment by China that it will make substantial additional purchases of U.S. goods and services in the coming years.”

“Neither U.S. nor Chinese officials have been specific about what the reforms are, nor has there been any detail provided regarding the size of Chinese agriculture purchases from the U.S.,” Hatzius said.

Chinese officials said Beijing will increase agricultural purchases significantly without specifying by how much. Meanwhile, Lighthizer said China pledged to buy a total of $40 billion in agricultural products. Those purchases will be made over a two-year period, according to National Economic Council Director Larry Kudlow.

While still short on details, many analysts said the deal is positive for stocks as it could boost business confidence and that should spill over to more investment spending and higher corporate profits.

— CNBC’s Michael Bloom contributed reporting.

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Path is clear for a year-end rally



Traders work on the floor at the New York Stock Exchange.

Brendan McDermid | Reuters

With trade tensions toned down, stocks have clearance to rally into year-end, a traditionally positive time for stocks.

Stocks surged to record highs in the past week, as the U.S. and China moved to announce a phase one trade deal that halts tariffs that were set to go into effect Sunday. Stocks gave up some of their best gains Friday, in a sell-the-news move after U.S. and Chinese officials announced the agreement.

“Three big geopolitical things are taken off the table — USMCA, phase one and Brexit, and even though we might not like or be fulfilled by phase one, these uncertainties are behind us,” said Sam Stovall, chief investment strategist at CFRA.

Earlier in the week, the House had approved the USMCA, a revised version of the North American Free Trade Agreement. On Thursday, British voters handed the Conservative party a strong victory, meaning there should be no gridlock as Prime Minister Boris Johnson pushes through Brexit, the U.K.’s planned exit from the European Union.

“We’re getting a running start on the Santa Claus rally,” said Stovall. Stovall said historically stocks often hit the low of the month in mid-December, before rallying into the rest of the year.

The S&P 500 was up less than a point on Friday, but ended the week with a gain of 0.7% at 3,168. The Dow ended the day up just 3 points, at 28,135, but ended the week with a gain of 0.4%. The Dow is up about 20% for the year so far while the S&P is up 26.4% for the year.

The trade deal was met by some skepticism as investors hoped to see more details. The market will continue assessing the deal in the coming week.

“Phase 1 is less ambitious than recent reporting, but modestly beat our below consensus expectations by partially reducing September tariffs. Yet ambiguity on key issues suggests execution risk remains for 2020, meaning this ‘uncertain progress’ is not yet a ‘game changer’ for our outlook.,” wrote Michael Zezas, Morgan Stanley policy analyst.

There was some disappointment that more tariffs weren’t rolled back, which would have been a bigger plus for corporate earnings and the economy. Goldman Sachs economists said they expected a 20% rollback in tariffs, but the reduction of tariffs on $120 billion in goods to 7.5% amounted to just 10%.

“While the smaller tariff rollback is slightly negative relative to our expectations, we note that the most important aspect of the agreement—assuming it is finalized—is that US tariffs are now set to decrease, marking a sharp turn from the US stance over the last two years,” the economists noted.

Liz Ann Sonders, Charles Schwab chief investment strategist, said a trade deal would be a slight positive as it had been largely priced into the market, but if talks had unraveled without an agreement, a new wave of tariffs would have been very negative for stocks.

Sonders said she remains focused on U.S. large caps over small caps, and expects the market to have a positive year in 2020.

“I don’t think it will be a steady, boring end-the-year-up-6% with no drama,” said Sonders. “I think the drama will not be just driven by trade but increasingly by the election.” She said small caps are caught up in the value trade and appear to be breaking out because of it, but they haven’t yet proven themselves on a fundamental basis.

Sonders said it’s important that the weakness in manufacturing does not spill into services, and she’s watching the jobs market for clues. “I do think the labor market really holds the key of whether we see this manufacturing weakness morph more broadly into the economy,” she said. “If not, I think we’re okay for next year.”

She said the market will have to see earnings growth next year. “It does not mean a gangbuster year for the market. Probably with decent swings around it like we’ve had in the last year and a half,” she said.

What to watch

There are a few important economic reports in the week ahead, with PMI data on Monday on the service sector and manufacturing. There is industrial production Tuesday, and personal income and spending is Friday. Consumer sentiment could be important on Friday.

Clearly, traders will be watching the jobless claims Thursday to see if it remains elevated after a two-year high reported in the past week. Claims are seen as an early warning for the jobs market, which so far looks strong. Economists said seasonal factors around Thanksgiving may have impacted the weekly claims data.

Week ahead calendar


8:30 a.m. Empire State manufacturing

9:45 a.m. Manufacturing PMI

9:45 a.m. Services PMI

10:00 a.m. NAHB survey

4:00 p.m. TIC data


8:00 a.m. Dallas Fed President Robert Kaplan

8:30 a.m. Housing starts

8:30 a.m. Business leaders

9:15 a.m. Industrial production

10:00 a.m. JOLTS

12:30 p.m. New York Fed President John Williams

1:00 p.m. Boston Fed President Eric Rosengren


12:40 p.m. Chicago Fed President Charles Evans


8:30 a.m. Initial claims

8:30 a.m. Philadelphia Fed survey

8:30 a.m. Current account

10:00 a.m. Existing homes


8:30 a.m. Q3 GDP (third reading)

10:00 a.m. Personal income

10:00 a.m. Consumer sentiment

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Supreme Court will hear three cases over Trump’s financial records



The Supreme Court said on Friday that it will hear three cases over President Donald Trump’s financial records next year, and scheduled arguments for its March session.  

The arguments are likely to be the most high-profile of the term, and will test the court’s newly constituted conservative majority. A decision is expected by the end of June, in the midst of the 2020 presidential election. 

The cases are the first in which Trump’s personal dealings have come before the top court since he became president. 

Read more: Trump brings a third case over his financial records to the Supreme Court

Trump asked the justices to reverse three lower court rulings that would require his longtime accounting firm and two of his banks to hand over financial records to investigators.

The nine-member panel has a 5-4 conservative majority, including two Trump appointees, Justices Neil Gorsuch and Brett Kavanaugh.

Trump is the first president in more than four decades not to voluntarily make his tax records public, and has fought vigorously to shield his finances. 

Two of the cases involve subpoenas issued by congressional committees led by Democrats in the House of Representatives. One involves an investigation led by Manhattan District Attorney Cy Vance into potential violations of New York state law.

The cases raise separate legal questions, but all could turn on a sweeping view of presidential immunity put forward by Trump’s personal attorneys. 

The White House did not immediately respond to a request for comment from CNBC. Jay Sekulow, the president’s private counsel, said in a statement that “we are pleased that the Supreme Court granted review of the President’s three pending cases.”

“These cases raise significant constitutional issues. We look forward to presenting our written and oral arguments,” he said. 

The first case to reach the top court stems from an investigation launched by the Manhattan district attorney’s office, which is examining how the Trump Organization accounted for hush-money payments made to two women alleging affairs with the president in the months before the 2016 president election.

Trump has denied the affairs with porn star Stormy Daniels and Playboy model Karen McDougal. His attorneys have argued that the president enjoys temporary immunity from such investigations while in office.

Vance’s office issued a subpoena to the president’s longtime accounting firm Mazars, seeking eight years of the president’s corporate and personal financial records, which the New York-based 2nd U.S. Circuit Court of Appeals upheld. 

The second case involves a subpoena issued to Mazars by the Democratic-led House Oversight Committee, which has said that it is pursuing whether new ethics-in-government legislation is needed. That subpoena was upheld by the U.S. Circuit Court of Appeals for the D.C. Circuit.

The third case involves subpoenas issued to the president’s lenders, Deutsche Bank and Capital One, by the House intelligence and financial services committees.

Those committees have argued that they are pursuing an investigation into legislation involving foreign money laundering. The subpoenas seek information about both Trump and his family members. The 2nd Circuit upheld those subpoenas last week. Trump has denied wrongdoing.

— CNBC’s Dan Mangan contributed reporting

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