Monex Morning Report – Thur 19 Nov 2020

OVERNIGHT HIGHLIGHTS

Dow falls 345 points as New York City says public schools will close amid rising COVID-19 cases; Asia stocks to slip on virus curbs

Pfizer plans filing as vaccine proves 95% effective; NY Fed’s Williams says rapid increase in virus infections could hurt economy

Pfizer plans filing as vaccine proves 95% effective

Pfizer Inc. said a final analysis of clinical-trial data showed its Covid-19 vaccine was 95% effective, paving the way for the company to apply this week for the first U.S. regulatory authorization for a coronavirus shot. The U.S. drugmaker and partner BioNTech SE said their vaccine protected people of all ages and ethnicities, with no significant safety problems so far in a trial that includes almost 44,000 participants. Pfizer shares were up 2% at 11:25 a.m. in New York, with BioNTech American depositary receipts gaining 5.3%. The update is the latest in a string of promising developments on the vaccine front in recent days. Moderna Inc.’s rival shot appears equally effective, judging from data published earlier this week, and a third contender, from AstraZeneca Plc and the University of Oxford, is expected to release trial results soon. Pfizer and its German partner now plan a filing with the U.S. Food and Drug Administration by Friday at the latest, BioNTech Chief Executive Officer Ugur Sahin said in a Bloomberg Television interview. Documents have already been filed with the European Medicines Agency, which is conducting a rolling review, he said.

Originating Source

BoJ’s Kuroda: New deposit facility is prudence policy, not monetary;

Bank of Japan’s governor Kuroda has said that the Bank of Japan to provide support measures for regional banks as prudence policy, which is not subjected to monetary policy meeting. He explained that the BoJ’s support measures for regional banks won’t have impact on monetary policy. ”Too early to debate exit from current monetary easing.” ”Need to continue current easing for a while.” Meanwhile, Asian equities were starting out sluggish on Wednesday, on the heels of a subdued and down Wall Street session as concerns over rising coronavirus cases and fresh lockdowns dampened the euphoria from vaccine trial breakthrough.

Originating Source

NY Fed’s Williams says rapid increase in virus infections could hurt economy

The U.S. economy is now affected more by swings in coronavirus infections than it is by restrictions on certain activities, and a surge in infections could slow growth, New York Federal Reserve Bank President John Williams (NYSE:WMB) said on Wednesday. “If COVID spreads rapidly that’s going to hurt the economy,” Williams said during a virtual event organized by the Society for Advancing Business Editing and Writing. Positive news in the development of a potential vaccine bodes well for the economy, which has rebounded more strongly than anticipated, Williams said. “Overall, I’m feeling somewhat more optimistic,” he said. Still, it could be a few years before the economy fully recovers from the hit it took during the pandemic, Williams said. The U.S. unemployment rate declined to 6.9% in October after surging to 14.7% in the spring at the height of the shutdowns caused by the pandemic. But the economy is still short 10 million jobs when compared to February and some people have dropped out of the labor force to care for children or after struggling to find work. “We are still in a severe recession,” he said.

Originating Source

EU says: we are now in last moments to reach Brexit trade deal

Britain and the European Union are in the last moments to reach a trade deal that would regulate their relationship after Britain’s transition period ends on Jan 1, 2021, the EU’s Trade Commissioner Valdis Dombrovskis said on Wednesday. Dombrovskis would not speculate about any deadlines for ending the trade talks, saying the only deadline that could not be moved was Jan 1, 2021, when Britain’s transition period after its exit from the EU earlier this year ends.

Originating Source

BoE’s Haldane sees ‘materially brighter’ outlook for 2021

Bank of England Chief Economist Andy Haldane said the economic outlook for 2021 was “materially brighter” than he had expected just a few weeks ago despite short-term uncertainty from a renewed COVID-19 lockdown in England. Britain’s economy shrank by almost 20% in the second quarter of 2020 – more than any of its peers – and at the end of September it was still 8.4% smaller than it was a year earlier, again a bigger shortfall than in other large economies. Haldane, in an online speech to the financial sector trade body TheCityUK on Wednesday, struck a relatively positive note, in line with his previous assessments of Britain’s recovery. “The three R’s – recovery, rebalancing, revitalisation – are more important than ever. So too is the need for optimism about the opportunities this crisis will serve up, as all crises do,” he said. Haldane said he believed third-quarter growth had surpassed expectations, though the immediate outlook for the fourth quarter was darkened by a four-week lockdown in England and similar measures in other countries of the United Kingdom.

Originating Source

Fed’s Powell signals emergency credit programs should be extended

Federal Reserve Chair Jerome Powell said on Tuesday it was not time to shut down emergency programs aimed at battling the economic fallout from the coronavirus pandemic, with cases again surging and the economy left with “a long way to go” to recover. “I don’t think it is time yet, or very soon,” to shutter the suite of credit programs set up by the Fed last spring with the authorization of the Treasury Department and funding from Congress, Powell said in the clearest indication yet he feels the programs are likely needed beyond Dec. 31, when many are due to expire. Extending the programs would require Treasury’s approval under the “lame-duck” Trump administration. Some Republicans in Congress have balked at keeping them open, particularly the program of lending for local governments. But Powell and other Fed officials are concerned about how competing perceptions of where the economy stands may bog down debate over the proper policy response.

Originating Source

NYC reels on one-two punch from school shutdown, subway outlook

New York’s recovery from the coronavirus outbreak suffered twin blows on Wednesday, with the announcement of citywide school closings and the warning of massive cuts to public-transit service. Parents of hundreds of thousands of kids must find alternative child-care arrangements or adjust their work schedules by Thursday, after Mayor Bill de Blasio said the city had reached a 3% positivity rate that triggered a temporary halt to in-class instruction. Workers also face the prospect of longer commutes, after New York’s Metropolitan Transportation Authority said it will have to slash subways and buses by 40% and chop commuter rail service by half if aid doesn’t come from Washington. The moves threaten New York City’s economy just as it was showing signs of recovery. Before Covid-19 struck, the city’s unemployment rate was 3.4%. New York, the early center of the U.S. outbreak, saw the rate touch a high of 20.3% in June. By September, with the reopening of schools and many businesses, it had partly recovered to 14.1%.

Originating Source

House Democrats back Pelosi for speaker in next Congress

House Democrats nominated Nancy Pelosi to serve as speaker in the next session of Congress in leadership elections on Wednesday. A full House floor vote for the speakership will take place in January, and Pelosi is poised to remain in the top leadership post for House Democrats At a news conference, Pelosi appeared to affirm that she will stand by an earlier commitment to serve just two more years as speaker, though her answer was somewhat vague in response to a question about whether the next session of Congress will be her last in the leadership role “There was a move to put limits on the leadership and the chairs of committees. They said they were going to do it, they didn’t do it. But what I said then, was whether it passes or not, I will abide by those limits,” Pelosi said, adding, “I can’t wait to be working with Joe Biden … I don’t want to undermine any leverage I may have, but I made the statement.” Pelosi pledged in 2019 that she would only serve four more years as speaker, meaning the next Congress would be her last.

Originating Source

Top Trump News

Judy Shelton

“The path to the Federal Reserve for President Donald Trump’s controversial nominee Judy Shelton narrowed Tuesday after the Senate blocked a key procedural vote and a Republican senator who was one of her supporters said he came down with the coronavirus. Iowa’s Chuck Grassley, 87, said on Tuesday he has tested positive, adding in a tweet that he feels good and plans to work from home. He had been quarantining at home as he awaited the test result, while Florida Senator Rick Scott has been quarantining since the weekend. Their absence was one reason the Republican-controlled Senate earlier on Tuesday was unable to muster the votes to force an end to debate on her nomination, a key step before a confirmation vote. Also to blame were the “”no”” votes of a couple of Republicans worried that Shelton, a former economic adviser to Trump’s 2016 presidential campaign, could imperil the independence of the powerful interest-rate setting institution.”

Originating Source

Wisconsin

The Trump campaign on Wednesday filed a petition for a partial recount in Wisconsin, where President Donald Trump trails President-elect Joe Biden, the apparent winner of the state, by more than 20,000 votes. The campaign wired $3 million to the Wisconsin Election Commission for the long-shot bid to overturn the state results. In a statement, the campaign said it was asking for recounts in Milwaukee and Dane counties, mostly Democratic areas in which Biden defeated Trump by large margins. Biden captured more than 75 percent of the vote in Dane and more than 69 percent of the vote in Milwaukee. “These two counties were selected because they are the locations of the worst irregularities,” the campaign said in a release, charging that they were areas where there were “illegally altered absentee ballots, illegally issued absentee ballots, and illegal advice given by government officials allowing Wisconsin’s Voter ID laws to be circumvented.” The state’s top elections chief and local officials have said there were no reports of widespread problems or wrongdoing.

Originating Source

52% Of Republicans

Slightly more than half of Republicans believe that President Donald Trump “rightfully won” the election and 68% think it may have been “rigged,” a new Reuters/Ipsos poll conducted Nov. 13 to 17 finds, showing how Trump’s refusal to concede and baseless claims of voter fraud are landing with his supporters despite a lack of concrete evidence to back them up. 73% of respondents overall said that President-elect Joe Biden won the election, but 52% of Republicans believe Trump was the actual victor while only 29% of Republicans said Biden “rightfully won.” 55% of respondents believe the presidential election was “legitimate and accurate,” including 16% of Republicans. That number is a sharp decrease from 2016, when 62% said Hillary Clinton’s loss to Trump was “legitimate and accurate,” including 52% of Democrats.

Originating Source

Economic Indicators

Japan Balance of Trade

Japan recorded a trade surplus of JPY 872.9 billion in October of 2020, compared with a JPY 11.2 billion surplus a year earlier and market expectations of a JPY 250 billion surplus. It was the fourth straight month of surplus and the largest since February, as exports fell by 0.2 percent year-on-year to JPY 6.57 billion while imports dropped at a faster 13.3 percent to JPY 5.69 billion. Considering the first ten months of the year, Japan posted a trade gap of JPY 420.5 billion, narrowing from a JPY 1,420.3 billion shortfall in the same period of 2019.

United Kingdom CPI

Annual inflation rate in the United Kingdom increased to 0.7% in October of 2020 from 0.5% in September, above forecasts of 0.6%. It is the highest reading in three months, amid a rebound in prices of clothing (0% vs -1.5% in September) ; food (0.6% vs -0.1%); and furniture, furnishings and carpets (0.1% vs -0.5%). Prices increased faster for transport (1.2% vs 0.9%; and miscellaneous goods and services (0.8% vs 0.7%) while cost of recreation and culture eased (2% vs 2.4%) and housing and utilities declined (-1.3% vs -0.9%). On a monthly basis, consumer prices stalled, following a 0.4% rise in September and compared to market expectations of a 0.1% drop.

Euro Area CPI MoM

The Consumer Price Index In the Euro Area increased 0.20 percent in October of 2020 over the previous month.

United States Cushing Crude Oil Stocks

US crude oil stocks at Cushing, Oklahoma, rose by 1.2 million barrels in the week ended November 13th, 2020, following a 0.518 million decrease in the previous period, according to the EIA Petroleum Status Report.

United Kingdom Retail Price Index YoY

Retail price inflation in the United Kingdom rose to 1.3 percent in October of 2020 from 1.1 percent in September, above forecasts of 1.2 percent. The monthly rate was 0 percent.

Economic Calendar

Thursday

AU Employment Change

Thursday

US Building Permits (Oct)

Thursday

US Crude Oil Inventories

Friday

US Initial Jobless Claims

Friday

“US Existing Home Sales (Oct) ”