Daily Report Template – Dec 2020

OVERNIGHT HIGHLIGHTS

US stocks ended Friday’s trade marginally higher all-in-all.
The S&P500 jumped 0.48 per cent;
Our market is set to dip.

U.S. to pull out of WHO; Trump outlined a series of measures against China; U.S. to pull out of WHO;Trump outlined a series of measures against China; Powell promised Friday to use untapped firepower to bolster the U.S. economy;

Top Market News

Stimulus talks break down on Capitol Hill as negotiators walk away without a deal

Negotiations over the next stimulus package intended to bolster the economy and help struggling Americans pay their bills have stalled on Capitol Hill with Democrats and Trump administration officials walking away after talks broke down on Friday and devolved into partisan finger-pointing. At a hastily scheduled news conference at his Bedminster, New Jersey, golf club Friday evening, President Donald Trump laid out the executive actions he said he would pursue if Congress does not reach a deal. No additional discussions are planned after nearly two weeks of daily meetings, and lead White House negotiators Mark Meadows and Treasury Secretary Steve Mnuchin said they were recommending Trump move ahead with a series of executive orders. Trump said Friday the actions would include a payroll tax deferment, extending unemployment benefits, extending an eviction moratorium and deferring student loan payments and forgiving their interest.

Originating Source

RBA August Statement on Monetary Policy: Sees unemployment at 10% by end of year

The Reserve Bank of Australia is releasing the full detail of its updated forecasts in the August Statement on Monetary Policy. This follows Tuesday’s statement, whereby the Governor, Phillip Lowe, revealed that the forecast of -6%yr contraction by end 2020 has not changed, though they trimmed 2021 growth slightly, to +5%. Markets are looking to the assessment of the risks ahead, especially with respect to the forever higher Aussie dollar. RBA says he board will not increase the cash rate target until progress is being made towards full employment, the inflation target. Forecasts YoY GDP at -6% for June, -6% for dec, +5% dec 2021, +4% dec 2022. Forecasts unemployment 10% for dec, 8.5% dec 2021, 7% dec 2022.

Originating Source

Japan unsuccessful in lifting auto tariffs early in UK trade deal: media

Japan and Britain agreed to lift auto tariffs for a post-Brexit trade agreement in 2026 despite Japan’s push to lift the tariffs earlier, the Nikkei Asian Review reported on Sunday. Japanese Foreign Minister Toshimitsu Motegi is currently in negotiations with British Trade Minister Liz Truss in London. British Trade Minister Lizz Truss said in a statement that they “have reached consensus on the major elements of a deal,” and both have announced that they will agree on the principles of a trade deal by the end of August.

Originating Source

Trump cracks down on TikTok, WeChat

President Donald Trump signed an executive order banning U.S. residents from transacting with video service TikTok and its owner Bytedance, citing concerns about the security of U.S. users’ data. Trump also issued a similar ban on Chinese messaging app WeChat, but didn’t extend the ban to the app’s U.S.-listed owner, Tencent Holdings (OTC:TCEHY). That didn’t stop Tencent’s stock falling by 5.0% in Hong Kong. Coincidentally, China’s trade surplus – the initial cause of Trump’s hostility to the country and its companies – surged in July to its second-highest monthly total ever, as exports recovered while the price and volume of energy imports stayed at depressed levels.

Originating Source

UK says it’s confident of Brexit trade deal as EU changing tone

Britain’s top minister overseeing Brexit talks said on Friday he was confident a free trade deal would be clinched with the European Union as there had been a distinct change of tone from the bloc in recent weeks allowing progress to be made. The United Kingdom left the EU on Jan. 31 but the main terms of its membership remain in place – including being in the EU customs union and single market – during a transition period until the end of this year, during which time both sides hope to negotiate a new free trade accord. “I’m confident that there will be a deal, I think there has been a welcome change in tone over the last few weeks,” Michael Gove told reporters in Portadown in the British province of Northern Ireland.

Originating Source

Fed’s Powell continued regular meetings with Treasury’s Mnuchin in June

Federal Reserve Chair Jerome Powell continued to stay in frequent contact with Treasury Secretary Steven Mnuchin and top lawmakers in June, a month when the economy appeared to be recovering sharply from the coronavirus-induced recession, Fed records released Friday showed. Powell logged 16 meetings with Mnuchin in June, the same as in May, a readout of Powell’s calendar for the month showed. He also met with Senate Majority Leader Mitch McConnell and was on a conference call with House Majority Leader Steny Hoyer’s leadership council.

Originating Source

Qualcomm lobbies U.S. to sell chips for Huawei 5G phones: WSJ

Chipmaker Qualcomm (NASDAQ:QCOM) Inc is lobbying the U.S. government to revoke restrictions on sale of components to Huawei Technologies Co [HWT.UL], after the Chinese company was blacklisted by the United States, The Wall Street Journal reported on Saturday. Qualcomm is lobbying to sell chips to Huawei that the Chinese company would include in its 5G phones, according to the report, citing a presentation by Qualcomm. With these restrictions, the U.S. has handed Qualcomm’s foreign competitors a market worth as much as $8 billion annually, the report said.

Originating Source

Hong Kong regulators see limited sanctions impact as banks weigh action

Hong Kong financial regulators sought to calm market fears on Saturday as global financial firms in Hong Kong weighed cutting ties with local clients after the United States imposed sanctions on senior Hong Kong and Chinese officials. Washington imposed sanctions on Hong Kong Chief Executive Carrie Lam and 10 other top officials for what it calls their role in curtailing political freedoms in the territory, prompting a sharp rebuke from Beijing. The escalation in U.S-China tensions comes after Beijing imposed sweeping national security legislation on the financial hub in late June. Western governments condemned the law, while supporters said it would restore stability after a year of often-violent pro-democracy, anti-China protests.

Originating Source

TOP TRUMP NEWS

Absurdly unconstitutional

House Speaker Nancy Pelosi on Sunday called President Donald Trump’s executive actions on coronavirus relief “absurdly unconstitutional.” “Well, the fact is, is that whether they’re legal or not takes…

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Executive orders

US President Donald Trump has signed four executive orders to provide economic relief to millions of Americans amid the coronavirus pandemic. The orders include $400 weekly unemployment aid for millio…

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“Attacks on Joe Biden ,US election ”

The President’s attacks on Mr Biden lack the one crucial factor that made his campaign against Hillary Clinton so effective four years ago. “ Sleepy Joe Biden just agreed with the Radical Left Democra…

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ECONOMIC INDICATORS

U.S non-farm payrolls

Hiring in the US continued to outpace forecasts last month with most economists bedeviled by all the distortions in the official data in the wake of disruptions from the Covid-19 pandemic, including to statisticians’ work. According to the Department of Labor, non-farm payroll growth in the States printed at 1.763m in July, down from 4.791m for June. The consensus forecast was for an increase of 1.635m but the so-called ‘whisper’ number in financial markets was around 1.1m. Meanwhile, the unemployment rate, which is derived from a separate survey, known as the Household survey, to that used for payrolls, dropped from 11.1% in June to 10.2% for July (consensus: 10.5%).

U.S. Wholesale Inventories MoM

Wholesale inventories in the US decreased 1.4 percent month-over-month to USD 633.3 billion in July of 2020, following a 1.2 percent drop in May and compared to preliminary estimates of a 2 percent fall. Stocks of durable goods declined 1.7 percent, less than initial estimates of a 2.1 percent decrease, with stocks of prof. equip (-3.6 percent) and metals (-3 percent) falling the most. Nondurable goods went down 1 percent, below preliminary estimates of a 1.7 percent fall, with apparel (-6.5 percent) recording the largest decline

U.S. Consumer Credit

Consumer credit in the United States rebounded by $8.95 billion in June 2020 after declining by $18.2 billion in the previous month, missing market expectations of a $10 billion increase. Total revolving credit declined by $2.3 billion after falling by $24.7 billion in May, whereas non-revolving credit by $11.3 billion after rising by $10.3 billion. On an annual basis, consumer credit climbed by 2.6 percent after decreasing 4.2 percent in the previous month.growth accelerated to the fastest pace since September 2014. Commercial work and civil engineering activity also rose at a faster pace. Overall new orders increase the most since February, with survey respondents commenting on a boost to sales from easing lockdown measures and the restart of work on site. However, employment continued to contract at a sharp rate.

China Consumer Price Index (CPI) YoY

China’s annual inflation rate rose to 2.5 percent in June 2020 from a 14-month low of 2.4 percent in the prior month and in line with market expectations. Food inflation accelerated to 11.1 percent from 10.6 percent in May as pork prices continued to rise (81.6 percent vs 81.7 percent). On the other hand, non-food prices slowed (0.3 percent vs 0.4 percent in May), due to healthcare (1.9 percent vs 2.1 percent), education, culture & recreation (1.9 percent vs 2.2 percent), and other goods & services (5.1 percent vs 5.3 percent). Meantime, cost fell for transport (-4.6 percent vs -5.1 percent), rent, fuel, and utilities (-0.6 percent vs -0.5 percent) and clothing (-0.4 percent, the same as in May). On a monthly basis, consumer prices dropped 0.1 percent, after a 0.8 percent decline in May and compared with forecasts of a flat reading

“China Producer Price Index (PPI) YoY ”

China’s producer prices declined by 3.0 percent year-on-year in June 2020, after a 3.7 percent drop a month earlier and compared with market estimates of a 3.2 percent fall. This was the fifth straight month of fall in factory prices, underlining damage caused by the coronavirus outbreak. Cost of means of production fell less (-4.2 percent vs -5.1 percent in May) due to extraction (-10.5 percent vs -14.8 percent), raw materials (-8.5 percent vs -9.9 percent) and processing (-2 percent vs -2.4 percent). At the same time, consumer goods price inflation rose to 0.6 percent from 0.5 percent in May, with cost of food productions rising faster (3.2 percent vs 2.9 percent) while prices of clothing declined at a slower rate (-0.8 percent vs -0.6 percent). Meantime, cost fell more for both daily use goods (-0.3 percent vs -0.2 percent) and consumer durables (-1.8 percent vs -1.7 percent). For the first half of the year, producer prices fell 1.9 percent compared to the same period of 2019.

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Economic Calendar

Monday

China CPI (MoM) (Jul)

Tuesday

US JOLTs Job Openings (Jun)

Tuesday

Germany German ZEW Economic Sentiment (Aug)

Tuesday

US PPI (MoM) (Jul)

Wednesday

New Zealand RBNZ Interest Rate Decision

Wednesday

US Core CPI (MoM) (Jul)

Thursday

US Crude Oil Inventories

Thursday

Australia Employment Change (Jul)

Friday

China Industrial Production (YoY) (Jul)

Friday

US Core Retail Sales (MoM) (Jul)