Dow and major stock-market indexes book gains, snap 2-day losing streak, on fiscal relief hopes; Asia stocks set for muted open
IMF, G-20 warn recovery may be derailed, risks still very high; Oxford study confirms Astra Covid Shot’s response in elderly
GOP will move forward with stimulus once Trump exits, Biden says
Congress will be more likely to negotiate on a second coronavirus relief package after President Trump leaves office in January, president-elect Joe Biden said Wednesday. Speaking to a group of frontline workers, Biden said he thought Republicans would move forward with the bill – likely to include another round of direct payments to the public – once they no longer fear “retribution from the president.” “Hopefully, when he’s gone, they will be more willing to do what they know should be done – has to be done – in order to save the communities they live in,” Biden said. There is no indication, however, that the two sides are advancing any negotiations. At issue is the price tag, with Democrats pushing for as much as $2.2 trillion while the White House offered $1.9 trillion. Senate Leader Mitch McConnell, R-Ky., wants that sliced to around $500 billion. Biden is expected to take office on Jan. 20, 2021 and experts predict there likely won’t be additional direct payments until the first quarter of 2021. That could also depend on whether Republicans retain control of the Senate, something that won’t be decided until the Jan. 5 runoff for two U.S. Senate seats in Georgia.
Direct Brexit talks suspended after EU team member tests COVID positive
Chief Brexit negotiators suspended direct talks on Thursday after a member of the EU team tested positive for COVID-19, but officials continued working remotely to clinch an EU-UK trade deal that would come into force in just six weeks. Finland’s European affairs minister, Tytti Tuppurainen, said the talks could still succeed and a “comprehensive” deal be agreed in time before Britain’s transition out of the European Union completes on Dec. 31. “We are at a critical stage of the negotiations,” Tuppurainen told Reuters in a phone interview. “The time pressure is huge and we all realise that time is running out. … I haven’t given up faith.” “We all have to do our outmost in order to reach the agreement. That’s the aim of the EU. We want to have a comprehensive, a balanced agreement with the UK.” She spoke as the chief Brexit negotiators, the EU’s Michel Barnier and the UK’s David Frost, suspended direct talks after an EU team member tested positive for COVID-19.
EU leaders to continue talks on budget with Hungary, Poland: Merkel
European Union leaders will continue to discuss the bloc’s 1.8 trillion euro ($2.14 trillion) plan to recover from the recession caused by the COVID-19 pandemic, which has been vetoed by Poland and Hungary, German Chancellor Angela Merkel said. Hungary and Poland blocked the EU’s 2021-2027 budget and recovery plan on Monday because access to the funds would be conditional upon respecting the rule of law. “There is consensus on the EU budget, but not on the rule of law mechanism,” Merkel told journalists after a meeting with EU leaders late on Thursday. “This (veto) means …we have to continue talking with Hungary and Poland,” she added.
Fed’s Mester says lack of fiscal aid and rising infections concerning
While the U.S. economy came back stronger than expected in the third quarter, the rise in coronavirus infections is concerning and small businesses and households need more support from fiscal aid, Cleveland Federal Reserve Bank President Loretta Mester said Thursday. “The fact that we don’t have a fiscal package is very concerning,” Mester said during an interview with Bloomberg TV. “With the disparate impact of this pandemic that’s where fiscal policy plays a role because fiscal policy can be really targeted to the households and small businesses that really need the aid.”
Fed’s Kaplan says economy could shrink as virus surges
Dallas Federal Reserve Bank President Robert Kaplan on Thursday said the economy could shrink this quarter as consumers in more states and cities pull back from economic activity amid the record coronavirus case surge. “It is possible we could have negative growth if this resurgence gets bad enough and mobility falls off enough,” he said, pointing to a drop-in activity already visible in places like El Paso, Chicago, Utah, Wisconsin, and Colorado. “The next couple of quarters is going to be very challenging.”
Oxford study confirms Astra Covid Shot’s response in elderly
The University of Oxford confirmed that the Covid-19 vaccine it’s developing with AstraZeneca Plc produced strong immune responses in older adults in an early study, with key findings from the last phase of tests expected in the coming weeks. The results, published Thursday in The Lancet medical journal, shed more light on preliminary data released in recent months showing the experimental shot generated an immune response in the elderly, who are at highest risk of severe illness.
EU fights to save billions in aid as Lagarde demands action
The European Union is facing a gruelling battle to overcome a threat endangering billions of euros of pandemic-relief and budget funds as central bank chief Christine Lagarde warns of the dangers of a delay. “The Next Generation EU package must become operational without delay — this is critically important,” Lagarde, the European Central Bank president, said at a committee hearing in the European Parliament.
IMF, G-20 warn recovery may be derailed, risks still very high
Leaders of the global economy are warning that the recovery from this year’s recession is at risk and could be derailed as the resurgence of Covid-19 forces fresh restrictions on households and companies. Both the International Monetary Fund and the Group of 20 — which comprises the world’s richest nations — sounded the alert as leaders of the G-20 prepare for a virtual summit this weekend, hosted by Saudi Arabia. The IMF noted progress on a vaccine, but also said elevated asset prices point to a disconnect from the real economy and a potential threat to financial stability. “While global economic activity has picked up since June, there are signs that the recovery may be losing momentum, and the crisis is likely to leave deep, unequal scars,” officials at the Washington-based fund said in a report published Thursday. “Uncertainty and risks are exceptionally high.” The U.K., Germany and France as well as parts of the U.S. and Australia are among those with new curbs on movement and businesses to contain the pandemic. They’re not as stringent as the lockdowns imposed earlier in the year, but are still enough to damage growth.
Donald Trump has mounted an all-out assault on the election result in Michigan, reportedly planning to fly state lawmakers to meet with him in Washington and phoning county officials in an apparent attempt to derail the certification of Democrat Joe Biden’s 150,000-vote victory in the state. On Tuesday night, Trump placed phone calls to two Republican members of a county-level vote certification board the night before the pair tried to reverse their previous endorsement of a large chunk of the vote in Michigan. The news emerged as Republican lawmakers in Michigan prepared to fly to Washington on Friday to meet with Trump at his request, the Washington Post first reported. While no explanation for the meeting has been given, Trump has been pressuring Republican state lawmakers to try to hijack the electoral college by advancing slates of electors that could compete with those selected by the states’ voters. There was no indication that Trump’s strategy, which in addition to the consent of legislatures would require a string of highly unlikely court victories and ultimately participation by Democrats in Congress to succeed, had any remote chance of overturning the election.
Donald Trump’s legal team have held an extraordinary press conference on Thursday to make their case for overturning the election results, claiming it was stolen by “crooks” and infiltrated by “Communist money”. The President’s legal team, headed by former New York Mayor Rudy Giuliani and Former Assistant US Attorney Sidney Powell, along with lawyers Jenna Ellis, Joe DiGenova and Victoria Toensing, outlined various cases the campaign was bringing in key swing states where Mr Trump narrowly lost to Joe Biden. Mr Giuliani, hair dye dripping down the side of his face at one point, repeated claims of massive absentee ballot fraud, including during the counting in key Democrat-controlled urban centres where Republican poll watchers say they were illegally prevented from observing the process. “In the states we have indicated in red, Georgia, Pennsylvania, Michigan, Wisconsin, Nevada and Arizona, we have more than double the number of votes needed to overturn the election in terms of provable, illegal ballots,” Mr Giuliani told reporters at the Republican National Committee headquarters in Washington DC.
China has described a US report on how Washington should confront and contain Beijing as having been “concocted by Cold War fossils” who are destined to be “swept into the garbage dump of history”. The comments by the foreign ministry came after the administration of outgoing US President Donald Trump released a 74-page framework document that also outlines what it says are China’s ambitions to displace the United States as the world’s superpower.
Employment in Australia unexpectedly soared by 178,800 people between October and September 2020, easily beating market expectations of a 30,000 decline and reflecting a large flow of people from outside the labour force back into employment. Both full-time employment (97,000) and part-time employment (81,800) surged.
U.K. CBI Industrial Trends Orders
The Confederation of British Industry’s order book balance fell 6 points to -40 in November of 2020, and slightly worse than market expectations of -39. Export orders also declined (-51 vs -46) and output expectations worsened (-10 vs +15) “Output volumes have declined at their slowest pace in over a year in our November survey. But order books have softened again as global demand has been hit by intensified lockdowns, and manufacturers have trimmed their expectations,” CBI deputy chief economist Anna Leach said.
United States Initial Jobless Claims
The number of Americans filing for unemployment benefits rose to 742 thousand in the week ended November 14th, from the previous week’s revised level of 711 thousand and well above market expectations of 707 thousand. It was the first rise in initial claims in over a month amid rising COVID-19 cases and new lockdowns across the country. On a non-seasonally adjusted basis, the number of claims were up to 743 thousand, compared with 725 thousand in the previous week. Also, more than 320 thousand people applied for help from the Pandemic Unemployment Assistance scheme, which covers workers that do not qualify for initial claims, compared with 296 thousand in the previous period.
United States Continuing Jobless Claims
The number of continuing jobless claims in the US, which measure the number unemployed people who have been receiving unemployment benefits for a while, fell to 6.37 million in the week ended November 7th, compared with market expectations of 6.47 million and the lowest level since the negative effects of the coronavirus pandemic started to being felt in late March.
U.S. Philadelphia Fed Manufacturing Index
The Philadelphia Fed Manufacturing Index in the US fell to 26.3 in November of 2020 from 32.3 in October which was the highest since February, before the coronavirus crisis. Figures came above market expectations of 22. Indicators for general activity, new orders, and shipments remained positive for the sixth consecutive month but fell from their readings in October. However, employment increases were more widespread this month. Most future indexes also moderated this month but continue to indicate that firms expect growth over the next six months.
United States Existing Home Sales
Sales of previously owned houses in the US unexpectedly jumped 4.3% from the previous month to 6.85 million units in October of 2020, beating market forecasts of a 1.2 percent drop to 6.45 million. It is the highest reading since November of 2005, amid record-low interest rates and as sales of suburban homes remain strong as people try to move away from the big cities due to the coronavirus pandemic. The median existing-home price was $313,000, almost 16% more than in October of 2019. Total housing inventory declined from the prior month and one year ago to 1.42 million, enough to last 2.5 months – a record low – at the current sales pace. “With news that a COVID-19 vaccine will soon be available, and with mortgage rates projected to hover around 3% in 2021, I expect the market’s growth to continue into 2021”, said Lawrence Yun, NAR’s chief economist. Yun forecasts existing-home sales to rise by 10% to 6 million in 2021.
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