Monex Morning Report – Thur 12 Nov 2020

OVERNIGHT HIGHLIGHTS

Dow snaps 2-day win streak, Nasdaq gains as rotation fades with surging coronavirus cases; Asian stocks to open higher after U.S. tech rally

OPEC+ focuses on delay to oil-output hike of three to six months; EU-UK trade talks set to go past mid-November deadline: sources

OPEC+ focuses on delay to oil-output hike of three to six months

Talks between OPEC and its allies are zeroing in on a delay to next year’s planned oil-output increase of three to six months, according to several delegates. Saudi Arabia and Russia, leaders of the 23-nation coalition, have already indicated publicly that they are thinking twice about easing production cuts in January as the resurgent pandemic hits fuel demand. The presidents of both Russia and the Organization of Petroleum Exporting Countries have even mentioned the option of cutting production deeper. This idea hasn’t garnered widespread support so far among other members, one delegate said. Less than three weeks before members meet to take a final decision, the alliance is instead increasingly focused on maintaining the current cutbacks into early 2021, the delegates said, asking not to be identified as the talks are private. The alliance is keeping about 7.7 million barrels a day off-line right now, or 8% of global output.

Originating Source

OPEC cuts 2020 oil demand forecast again on rising Covid cases — sees slower recovery next year

OPEC on Wednesday trimmed its global oil demand forecasts for the remainder of this year and 2021, citing a weaker-than-expected economic outlook and a surge in coronavirus cases. In a closely watched report, the group of oil-producing nations said it now expects world oil demand to contract by around 9.8 million barrels per day year over year in 2020. That reflects a downward revision of 0.3 million barrels from last month’s assessment. For next year, OPEC said oil demand growth will rise by 6.2 million on an annual basis, representing a downward revision of another 0.3 million barrels from its October report. The group has steadily lowered its oil demand outlook for 2021 from an initial expectation of 7 million in July.

Originating Source

New Zealand central bank holds rates at 0.25%, launches funding programme

The Reserve Bank of New Zealand (RBNZ) held rates as expected at 0.25% on Wednesday and said additional monetary stimulus was needed to meet its consumer price inflation and employment remit. The bank also launched a funding-for-lending programme for banks that will commence in December and retained its large-scale asset purchase (LSAP) programme at NZ$100 billion ($66.32 billion).

Originating Source

ECB set to expand bond-buying and cheap loans, Lagarde signals

Financing costs for governments, households and businesses in the eurozone will stay “exceptionally favourable” until the economy recovers from the pandemic, European Central Bank president Christine Lagarde has said. The ECB will use its emergency bond-buying and ultra-cheap loans to banks as the main way of controlling financing costs, she told the ECB’s annual forum on central banking, which is being held online for the first time this year. The ECB president welcomed the “encouraging” news of a potential Covid-19 vaccine breakthrough that fuelled a market rally this week, but said the second wave of the pandemic still presented “new challenges and risks” for the eurozone economy.

Originating Source

Presidency transition continues despite challenges to election results

President-elect Joe Biden on Tuesday is outlining more details of his transition plan even as President Donald Trump and other top Republicans continue to challenge the results of last week’s election. At the top of Biden’s priorities is tackling the Covid-19 pandemic, which Trump faced strong criticism over throughout the campaign. Biden on Tuesday will also deliver remarks on the Affordable Care Act as the Supreme Court hears arguments on whether to overturn the landmark health care law. Joe Biden said Tuesday that he hoped to unveil some of his Cabinet picks in the next two weeks and predicted they would be confirmable by the Senate.

Originating Source

EU-UK trade talks set to go past mid-November deadline: sources

Britain and the European Union are likely to miss their mid-November deadline to clinch a post-Brexit trade deal, with talks in London to break a deadlock expected to run through the end of this week, sources on both sides told Reuters on Wednesday. Britain left the bloc last January. A status quo transition period expires at the end of the year, and talks on trade rules from the start of 2021 have yet to yield a breakthrough. Ambassadors of the 27 EU member states in Brussels will not be updated on the talks at a regular meeting on Wednesday and the issue is now tentatively pencilled in for their meeting on Nov. 18, a senior EU diplomat said. The pound wobbled against the U.S. dollar on the news that talks might go beyond the mid-month deadline. However, in a sign that the estranged allies are still pushing for an agreement, EU sources said they now expect negotiators to come up with an agreed text in the middle of next week, unless talks collapse or there is a breakthrough earlier.

Originating Source

Japan’s third extra budget for stimulus may exceed 15 trillion yen: lawmaker

Japan’s third extra budget for economic stimulus steps may need to be bigger than 15 trillion yen ($142.5 billion), a senior lawmaker in the ruling Liberal Democratic Party (LDP) said on Wednesday. Prime Minister Yoshihide Suga instructed his cabinet on Tuesday to compile a package of stimulus measures to revitalise an economy hit by the coronavirus pandemic. The package aims to cushion the blow from COVID-19, foster structural changes in the economy and boost productivity through digitisation. Hakubun Shimomura, the LDP’s policy research council chief, said the party wanted the extra budget to be compiled on Nov. 27, adding it may need to be “more than 10 trillion to 15 trillion yen”. Cabinet ministers have said the size of the new package had not been decided yet, but ruling party lawmakers have called for 10 trillion to 30 trillion yen in new measures. Shimomura also told reporters the size of the package would need to be substantial as it would include steps such as an extension or tweaks to subsidies for firms to keep people in employment, as well as a national campaign to boost travel and tourism.

Originating Source

Asian leaders to sign China-backed trade deal amid U.S. election uncertainty

Southeast Asian leaders start meetings on Thursday that are expected to lead to an ambitious China-backed trade deal at a time the still uncertain election result in the United States leaves questions over its engagement in the region. Leaders of the 10-member Association of South East Asian Nations (ASEAN), China, Japan, South Korea, Australia and New Zealand are scheduled to conclude talks on the Regional Comprehensive Economic Partnership (RCEP) this Sunday. The deal, which is expected to be signed later on Sunday on the sidelines of a mostly online, four-day ASEAN summit in Hanoi, will take years to complete but will progressively lower tariffs across many areas and could become the world’s biggest trade agreement. The 15 participating RCEP countries make up nearly a third of the world’s people and account for 29% of global gross domestic product. China is already the biggest source of imports and destination for exports for would-be RCEP members.

Originating Source

Top Trump News

Trump’s vote fraud claims

False or misleading claims of electoral fraud are going viral on Twitter, Facebook and YouTube, even as the platforms continue to implement special measures aimed at reducing the spread of misinformation around the US presidential election. however, claims about voting irregularities have become among the most-shared content on Facebook. The top three posts are all from Donald Trump, according to CrowdTangle: one alleges “Fake Votes” in Nevada, where Trump trails Joe Biden by 36,000 votes; another claims Georgia, where Trump trails by 13,000 votes pending a recount, will be a “big presidential win”; and a third says “a very large number of ballots” will be affected by “threshold identification”, the meaning of which is unclear.

Originating Source

Trump Sues Michigan

Donald Trump’s presidential campaign on Wednesday sued Michigan to block the U.S. state from certifying last week’s election results, where the president has trailed Democrat Joe Biden. According to a complaint filed in a federal court in western Michigan, many people have submitted affidavits describing alleged misconduct in the voting, with the focus on the Democratic stronghold of Wayne County, which includes Detroit.

Originating Source

Long-shot legal strategy

President Donald Trump’s campaign on Wednesday took another step in its long-shot legal strategy to upend his election loss with a Michigan lawsuit while Georgia announced a recount and President-elect Joe Biden worked on laying the foundation of his administration. The Republican president’s team went to federal court to try to block Michigan, a U.S. Midwestern battleground state that he won in 2016 but lost to Biden in media projections, from certifying the Nov. 3 election results. Trump trailed by roughly 148,000 votes, or 2.6 percentage points, in unofficial Michigan vote totals, according to Edison Research. The lawsuit made allegations of voting misconduct, with the focus on the Democratic stronghold of Wayne County, which includes Detroit. Jake Rollow, a spokesman for the Michigan Department of State, said the Trump campaign was promoting false claims to erode public confidence in the election. “It does not change the truth: Michigan’s elections were conducted fairly, securely, transparently, and the results are an accurate reflection of the will of the people,” Rollow said in a statement.

Originating Source

Economic Indicators

United States API Crude Oil Stock Change

Stocks of crude oil in the United States dropped by 5.15 million barrels in the week ended November 6th of 2020, following a 8.01 million drop in the previous week and marking the second straight weekly loss, data from the American Petroleum Institute showed.

China Money Supply M2

Money Supply M2 in China increased 10.5 percent year-on-year to 214970 CNY Billion in October of 2020, easing from a 10.9 percent gain in the previous month.

China New Yuan Loans

Chinese banks extended CNY 689.9 billion in new yuan loans in October of 2020, the least in a year and well below CNY 1.9 trillion in September and market expectations of CNY 800 billion. Bank lending usually slows in October as the week-long National Day holiday affects business activity and banks have already used most of their annual quotas. Still, PBOC Governor Yi Gang recently said new loans are likely to hit a record of nearly CNY 20 trillion this year, as policymakers try to boost growth after the coronavirus-hit. Household loans, mostly mortgages, fell to CNY 433.1 billion from CNY 960.7 billion in September, while corporate loans dropped to CNY 233.5 billion from CNY 945.8 billion. Outstanding yuan loans grew 12.9% from a year earlier, slightly lower than 13% in September and forecasts of 13%. Total social financing, a broad measure of credit and liquidity in the economy, fell sharply to CNY 1.42 trillion from CNY 3.48 trillion but in line with forecasts of CNY 1.4 trillion.

Economic Calendar

Thursday

UK Manufacturing Production (MoM) (Sep)

Friday

US Core CPI (Oct)

Friday

US Initial Jobless Claims

Friday

US Crude Oil Inventories