Monex Morning Report – Mon 7 Dec 2020

OVERNIGHT HIGHLIGHTS

U.S. stock indexes sweep to records as hope for fiscal relief overshadows weak jobs data; stocks in Asia to open higher

Biden says jobs report ‘grim,’ relief package needed now and in January; Australia sounds alarm on trade as China row slams farm exports

Biden says jobs report ‘grim,’ relief package needed now and in January

U.S. President-elect Joe Biden said in a statement on Friday the November U.S. jobs report underlined the need for urgent action on coronavirus relief but that any package passed by Congress now would not suffice and that more would be needed in January. “This is a grim jobs report. It shows an economy that is stalling,” he said, adding he was “encouraged” by bipartisan Senate efforts on a $900 billion relief package. “Congress and President Trump must get a deal done for the American people. But any package passed in the lame duck session is not enough. … Congress will need to act again in January.”

Originating Source

U.S. states scramble to curb COVID as California sets record before lockdown

California shattered records for coronavirus cases on Sunday as U.S. states scrambled to impose lockdowns to stem spikes in infections and the White House’s task force coordinator decried a lack of national leadership on curbing the disease. California reported 30,075 new cases, far more than its previous record of 21,986 on Dec. 4, as well as a new record for hospitalized COVID-19 patients. New Jersey, North Carolina, Virginia and West Virginia also announced record one-day rises in new infections. As the number of cases skyrockets in the nation’s most populous state, California authorities have ordered tough new restrictions to come into effect at 11:59 p.m. on Sunday in Southern California and the San Joaquin Valley. Bars, hair salons and barbershops must close, while restaurants can only offer takeout or delivery. The San Francisco Bay Area will also go into lockdown starting at 10 p.m. on Sunday, under a separate set of orders.

Originating Source

Pelosi: ‘we have time’ for stimulus, $908 billion framework ‘just a start’ and government will not shut down

Following months of deadlock in Washington over additional fiscal stimulus relief, House Speaker Nancy Pelosi (D-Calif.) on Friday insisted Congress will pass an omnibus spending bill this month to avoid a stopgap funding resolution–or government shutdown–and reiterated that she would support a new $908 billion stimulus framework as part of the bill before working to pass additional legislation for relief after President-elect Joe Biden takes office. Speaking at her weekly press briefing, Pelosi said the bipartisan stimulus framework introduced on Tuesday could take lawmakers “very close to something we put into the omnibus [spending bill],” which would head off a government shutdown and curb the need for a stopgap continuing resolution that simply extends government funding at current levels. She also echoed Biden’s Tuesday comments that passing a bill based on the $908 billion framework would be “at best, just a start,” adding that it’s less than Democrats (who’ve supported a $2.2 trillion stimulus package) want, but enough to temporarily temper need “with the hope that much more help is on the way.”

Originating Source

Australia sounds alarm on trade as China row slams farm exports

Australia issued a warning on trade, saying uncertainties from its souring ties with China and the lingering impact of an earlier drought will push down the value of its agriculture exports. The value of shipments is set to decline 7% in 2020-21 to the lowest level in five years, according to a report from the government forecaster Abares. While that’s a slight improvement from its September estimate of a 10% slump, the downturn comes in a year of solid domestic production growth. Australia’s agriculture industry has borne the brunt of escalating trade tensions between Beijing and Canberra that threaten serious disruption for an expanding number of exporters. The most recent hit came last month, when China slapped anti-dumping duties of up to 212% on Australian wine on top of trade measures that impact other commodities including timber, barley and lobster. “There are a number of risks present for the rest of 2021 that remain a watch point, including wine trade with China and labour shortages for the horticulture sector,” Abares executive director Steve Hatfield-Dodds said.

Originating Source

Brexit talks resume as officials seek to hammer out solution

Brexit negotiations resumed in Brussels amid signs that even as one of the biggest obstacles to a trade deal is on the way to being resolved, another key sticking point remained. As the U.K. and European Union strive to finalize a deal before Monday evening, a compromise on the longstanding stumbling block of access to British fishing waters is starting to emerge, two people with knowledge of the discussion on both sides said. That would leave the level competitive playing field as the main remaining issue. “Things are on a knife edge and it’s serious. My gut instinct is it’s 50-50,” Irish Prime Minister Micheal Martin said in an interview with broadcaster RTE on Sunday. “I don’t think one can be overly optimistic about a resolution emerging.” Sterling dropped in Asian trading, leading losses among G-10 currencies, before paring earlier declines. The pound, which climbed to its highest against the dollar in more than two-and-a-half years on Friday on expectations of a deal, fell as much as 0.6% and traded below $1.34 as of 8:30 a.m. in Sydney.

Originating Source

Fed’s Evans: comfortable with current bond-buying, not opposed to more easing

Chicago Federal Reserve Bank President Charles Evans said on Friday he is “comfortable” with the Fed’s current pace of asset purchases and would likely be so for the next several months, until there’s more clarity on the outlook for the economy. “I am not opposed to more accommodation – I’m just not exactly sure what the right timing is,” Evans told reporters, adding that it may be too early for him to even give further guidance on the Fed’s bond-buying plan. But Evans did signal that, once a coronavirus vaccine rollout is underway and there’s more clarity on the approach to fiscal spending under the new Congress, probably by spring, he could see the need for doing more with the bond-buying program, especially if inflation expectations are too low.

Originating Source

White House’s Kudlow says U.S. economy still strong despite jobs report

White House economic adviser Larry Kudlow said on Friday the U.S. economy is still strong despite a jobs report this week that was softer than analysts had expected. “When you look at the whole economic landscape, I would say it’s still very strong and I would say it’s still a V-shaped recovery,” Kudlow said in an interview with Fox Business Network.

Originating Source

Pfizer, BioNTech near 2020 vaccine target, easing output concern

BioNTech SE said it’s on track to produce 50 million doses of Covid-19 vaccine with partner Pfizer Inc. this year, easing concerns that they might miss production targets. As of Friday, the companies had made the majority of the promised supply for this year, BioNTech said in a statement to Bloomberg. For next year, they’re looking for ways to increase production capacity beyond a promised 1.3 billion doses. The companies’ output is under close scrutiny after Pfizer and BioNTech won the Western world’s first marketing approval for a Covid vaccine with sign-off from the U.K this week. The U.S. and Europe may follow later this month. The partners had originally hoped to produce as many as 100 million doses this year, a target they cut in half on Nov. 9 after changes in regulatory and approval timelines, among other factors, BioNTech said. A Wall Street Journal report Thursday on the adjustment prompted concerns about whether the companies would be able to meet their goals.

Originating Source

Top Trump News

Trump lawyer Rudy Giuliani positive for COVID-19 after wave of lawmaker lobbying

President Donald Trump’s lawyer Rudy Giuliani has tested positive for COVID-19, Trump said on Sunday, after a wave of travel by the former New York mayor seeking to persuade Republican state lawmakers to overturn the election results. The 76-year-old Giuliani is the latest in a long string of people close to the White House, including Trump himself, sickened in a pandemic that has killed more than 280,000 Americans. “@RudyGiuliani, by far the greatest mayor in the history of NYC, and who has been working tirelessly exposing the most corrupt election (by far!) in the history of the USA, has tested positive for the China Virus,” Trump said, using a term for COVID-19 that has drawn backlash. Giuliani did not immediately respond to a request for comment.

Originating Source

Trump, McConnell expected to back relief bill, Senator says

President Donald Trump and Senate Majority Leader Mitch McConnell will come “on board” with a $908 billion package to provide pandemic relief, according to a member of a bipartisan group that’s seeking legislation before the end of the year. “President Trump has indicated that he would sign a $908 billion package — there’s only one $908 billion package out there and it’s ours,” Senator Bill Cassidy, a Republican from Louisiana, said on “Fox News Sunday.” “The pain of the American people is driving this and I’m optimistic that both of those leaders will come on board.” House Speaker Nancy Pelosi and Senate Democratic leader Chuck Schumer have endorsed using the bipartisan proposal as the basis for negotiations. A bipartisan group of 10 senators that’s been holding talks for the last two weeks will have another call on Sunday, Democratic Senator Mark Warner said on CNN’s “State of the Union.”

Originating Source

Biden: Trump should attend inauguration for country, personally doesn’t care

President-elect Joe Biden said in a new interview that he didn’t personally care whether President Donald Trump would attend his inauguration but thought such attendance would be important for the country. Talking to CNN on Thursday, Biden was asked whether he thought it’s important for Trump to attend his inauguration on January 20” a customary gesture by outgoing presidents that Trump has not confirmed he will be doing. In fact, Trump is still refusing to concede the 2020 election to Biden” despite Biden’s victory becoming clear nearly a month ago. The Daily Beast reported last month that Trump might hold a rally on the day of Biden’s inauguration, and the president has continued to hint at a possible 2024 run for the White House.

Originating Source

Economic Indicators

Australia Retail Sales MoM

Retail sales in Australia rose by 1.4 percent month-over-month in October 2020, compared with an initial estimate of a 1.6 percent gain and shifting from a final 1.1 percent drop a month earlier. This was the first increase in retail trade since July, boosted by the reopening of retail stores in Victoria at the end of October. Sales grew for cafes, restaurants and takeaway food services (5.4 percent vs 3.5 percent in September), clothing, footwear and personal accessory retailing (6.8 percent vs -1.1 percent), other retailing (2 percent vs -0.7 percent), and department stores (4.5 percent vs 1 percent). In contrast, sales fell for both household good retailing (-1 percent vs -3.6 percent), and food retailing (-0.1 percent vs -1.5 percent).

Germany Factory Orders

New orders for German manufactured goods jumped 2.9 percent month-over-month in October of 2020, following an upwardly revised 1.1 percent increase in September and well above market expectations of 1.5 percent. Orders in the auto sector increased 1 percent and orders for intermediate goods went up 2.3 percent and those for capital goods 3.8 percent. In contrast, orders for consumer goods fell 2.2 percent. Domestic orders rose 2.4 percent and foreign orders 3.2 percent, with those from the Euro Area rising 0.5 percent and those from other countries 4.8 percent. Compared with February, the month before the coronavirus pandemic, factory orders were 0.8 percent higher.

Euro Area Construction PMI

The IHS Markit Eurozone Construction PMI rose to 45.6 in November 2020, from a five-month low of 44.9 in the previous month. The latest reading marked the ninth consecutive monthly fall in activity, although the pace of contraction eased from that seen in October, and was only marginal overall. New business received by eurozone construction companies fell by the most since May amid reluctance among many clients towards new investments, alongside fewer public projects coming to tender across the region. At the same time, employment continued to fall, but the pace of job shedding slowed. On the price front, the rate of cost inflation accelerated from the previous survey period to the joint-fastest pace since February. Looking ahead, Eurozone construction companies remained pessimistic regarding the outlook for activity over the coming year.

United States Balance of Trade

The US trade deficit widened to USD 63.1 Billion in October of 2020 from a revised USD 62.1 billion in the previous month and compared to market expectations of USD 64.8 billion. Exports increased 2.2 percent to USD 182 billion in 2020, while imports rose 2.1 percent to $245.1 billion, reflection both the ongoing impact of the COVID-19 pandemic and the continued recovery from the sharp declines earlier this year.

United States Non Farm Payrolls

The US economy added 245K jobs in November, easing from a downwardly revised 610K in the previous month, and well below market expectations of 469K. It is the smallest employment gain since the job market started to recover in May from a record 20.787 million loss in April. In November, nonfarm employment was below its February level by 9.8 million, or 6.5 percent. Employment declined in government and retail trade while gains occurred in transportation and warehousing, professional and business services, and health care. The outlook for the labour market remains challenging as coronavirus infections continue to rise and more states introduced restrictions while the new stimulus bill which would provide support to millions of Americans hasn’t yet been approved.

United States Factory Orders

New orders for U.S.-made goods increased more than expected in October and business investment on capital was a bit stronger than initially thought as the manufacturing sector continues its steady recovery from the pandemic. The Commerce Department said on Friday that factory orders rose 1.0% after increasing 1.3% in October. Economists polled by Reuters had forecast factory orders increasing 0.8% in October. Manufacturing, which accounts for 11.3% of the U.S. economy, is being supported by a shift in demand towards goods from services because of the COVID-19 pandemic. But there are clouds gathering for the sector. The Institute for Supply Management (ISM) reported this week that its index of national factory activity dropped in November because of the coronavirus. The Commerce Department also reported that orders for non-defense capital goods excluding aircraft, which are seen as a measure of business spending plans on equipment, increased 0.8% in October instead of 0.7% as reported last month. Shipments of core capital goods, which are used to calculate business equipment spending in the GDP report, accelerated 2.4%.

Economic Calendar

Monday

CN Trade Balance (USD) (Nov)

Tuesday

DE ZEW Economic Sentiment (Dec)

Wednesday

US Nonfarm Productivity

Thursday

US JOLTs Job Openings (Oct)

Thursday

US Crude Oil Inventories

Thursday

UK GDP

Thursday

UK Manufacturing Production (MoM) (Oct)

Thursday

EU ECB Interest Rate Decision (Dec)

Friday

US Core CPI (MoM) (Nov)

Friday

US Initial Jobless Claims