Monex Morning Report – Thur 29 Oct 2020

OVERNIGHT HIGHLIGHTS

U.S. stocks swoon, Dow ends 942 points lower as COVID cases and election concerns rise

Germany, France announce new Covid restrictions as outbreaks surge across Europe; Pelosi hopes stock-market tumble pushes Trump on stimulus deal

Top Market News

Germany, France announce new Covid restrictions as outbreaks surge across Europe

Germany and France announced tough new restrictions on businesses Wednesday meant to curb the spread of the coronavirus as the countries respond to worsening outbreaks. German Chancellor Angela Merkel said Wednesday that the country will implement a four-week shutdown of restaurants, bars, cinemas, theaters and some other such facilities beginning Nov. 2 to try to wrestle the virus under control. Merkel told reporters that the number of Covid-19 patients in intensive care across the country has doubled over the past 10 days. She added that Germany’s hospitals will hit capacity in the coming weeks if that pace continues. “These are tough measures,” she said. “We must act, and now, to avoid an acute national health emergency.” Shops, schools and day cares will remain open, she said, but will face new restrictions on capacity. Restaurants will stay open for takeout, Merkel said. She implored citizens to avoid unnecessary travel.

Originating Source

Lockdown restrictions lift in Melbourne

Lockdown restrictions in Melbourne lifted as of midnight last night with people able to leave their home for any reason. Cafes, restaurants, pubs and bars can reopen subject to patron limits while beauty services, tattoo parlours and any other service where you can wear a mask will be able to resume. Up to 10 people from any number of households will be able to gather outdoors, however, Victorians are still required to wear a face mask in public. Metropolitan Melbourne has been subject to Stage 4 restrictions since 2 August 2020 with residents under stay at home orders following a second wave of COVID-19 cases in the community.

Originating Source

Pelosi hopes stock-market tumble pushes Trump on stimulus deal

House Speaker Nancy Pelosi said Wednesday that she hopes the current selloff in U.S. stocks will motivate President Donald Trump to agree to Democratic demands in stalled stimulus talks and end a three-month stalemate. “What the president cares a lot about is the stock market,” Pelosi said on MSNBC. “As he sees the market react to the spread of the virus and sees the market react to the fact that we do not have an agreement — which could inject resources into the economy — hopefully now he will come to the table in a serious way.” Trump has blamed Pelosi for the impasse, saying she is holding up an agreement to provide aid to Democrat-run states and cities.

Originating Source

Ex-N.Y. Fed chief Dudley says economic outlook is deteriorating

The U.S. economy faces “slow going” with no additional fiscal support likely for several months, said former New York Fed President William Dudley.“The outlook for the economy is deteriorating,” Dudley said Wednesday in an interview on Bloomberg Television with Joe Weisenthal, Romaine Bostic and Caroline Hyde. “The most likely scenario is that we continue to have a recovery with some downside risk of a double dip” recession amid worsening levels of coronavirus infections.

Originating Source

Canada says pandemic aid has limits as central bank warns of long-slog to recovery

Canada’s finance minister on Wednesday said for the first time that federal pandemic aid to households and businesses has limits as the Bank of Canada warned of a “long slog” toward a post-pandemic economic recovery. Chrystia Freeland, speaking at a Toronto economic forum after the central bank announced it expected interest rates to stay at a record low until sometime in 2023, said “there are no blank cheques … no free lunches.” “Our fiscally expansive approach to fighting the coronavirus cannot and will not be infinite. It is limited and temporary,” she added. But later this year the government will deliver “targeted, carefully thought-out investment – on a meaningful scale”, she said after the central bank, in an update of its economic projections, said a second wave of coronavirus infections would hurt Canada’s near-term growth.

Originating Source

BOJ set to keep massive stimulus, ready to act if pandemic causes more economic damage

The Bank of Japan is set to maintain its massive stimulus programme on Thursday and vow to take further action if the economic fallout from the coronavirus shock threatens a return to deflation. But the rising cost of prolonged easing and a dearth of policy tools may mean there is not much the BOJ can do beyond rolling over its crisis-response package, or count on the government to unveil another spending package to re-ignite growth, analysts say. Given the need to keep in place some restraints to economic activity to prevent the spread of the virus, the BOJ is not in a position now to push prices higher with further easing, said Naoya Oshikubo, senior economist at SuMi TRUST. “As a result, the key policy drivers under Prime Minister (Yoshihide) Suga will be fiscal policy, deregulation and growth strategies, leaving monetary policy on the sidelines,” he said.

Originating Source

Big Tech CEO Senate hearing ends with little discussion on how to fix companies’ liability shield

The CEOs of Facebook, Google and Twitter testified before the Senate Commerce Committee on Wednesday to defend their legal liability shield. Bipartisan members of the committee are eager to reform Section 230, which protects tech platforms from liability from their users’ posts and also allows them to moderate and remove posts they find objectionable. The shield has come under attack from Republicans who accuse platforms of using it to shield them from claims of bias and Democrats who accuse them of failing to effectively remove harmful content. After nearly four hours, the hearing wrapped up with little discussion of how to move forward on legislation to reform Section 230 or enact a national digital privacy law.

Originating Source

Boeing to Cut 7,000 More Jobs as Hopes for Cash Comeback Fade

Boeing Co. is almost doubling its planned job cuts as the coronavirus pandemic and prolonged grounding of the 737 Max jet dim prospects for a financial recovery next year. With the outlook for aircraft sales still uncertain, executives abandoned a forecast that Boeing would stop burning cash next year and said they would eliminate an additional 7,000 jobs. That will bring the expected loss from layoffs, retirements and attrition to 30,000 people by the end of 2021 — or 19% of the pre-pandemic workforce. Boeing announced a 10% cut earlier this year. The planemaker is “taking tough but necessary action to adapt to the new market reality and transform our business to be sharper and more resilient for the long term,” Chief Executive Officer Dave Calhoun told analysts after the company reported earnings. “Covid-19’s continued impacts have had a more prolonged and deeper impact on our industry, and we’ll have to further reduce our workforce.”

Originating Source

Top Trump News

Election website defaced

The presidential election campaign of Donald Trump says its official website was defaced earlier on Tuesday and that it is working with law enforcement to investigate the source of the attack. The campaign said in an emailed statement there was “no exposure to sensitive data because none of it is actually stored on the site.” The FBI declined to comment. The Trump website seemed to be fully functional Tuesday. Screenshots circulating online appeared to show that the site had briefly displayed a bogus message spoofing a law enforcement announcement.

Originating Source

Person campaign

With less than a week of voting left, President Donald Trump on Wednesday held an in-person campaign rally in Arizona despite a U.S. surge in COVID-19 cases and mounting criticism that he is prioritizing his re-election above the health of his supporters.

Originating Source

New U.S. refugees

The Trump administration has slashed the number of refugees it will allow to resettle in the United States in the coming year, capping the number at 15,000, a record low in the history of the country’s modern refugee program. “Newly admitted refugees should be placed, to the maximum extent possible, in States and localities that have clearly expressed their willingness to receive refugees” and “resettled in communities that are eager and equipped to support their successful integration into American society and the labor force,” Trump said.

Originating Source

Economic Indicators

Australia Consumer Price Index (CPI) QoQ

Consumer prices in Australia rose by 0.7% year-on-year in the third quarter of 2020, after a 0.3% fall in the previous period and in line with market consensus, amid the reopening of the economy from the COVID-19 lockdown. Cost of education rebounded (1% vs -1% in Q2), as free childcare ended on July 13th. Additionally, prices fell less for transport (-4% vs -7.5%); furnishings & household equipment (-0.1% vs -9.8%); and communication (-3.3% vs -3.6%). On the other hand, prices slowed for food (3.4% vs 4.1%); alcohol & tobacco (8.1% vs 8.4%); and insurance & financial services (1.6% vs 1.7%). Also, cost of housing (-0.2% vs 0.1%); and clothing & footwear (-0.5% vs 0.5%) dropped. In addition, prices of recreation & culture declined at a faster pace (-0.7% vs -0.3%). On a quarterly basis, consumer prices went up by 1.6%, rebounding from a 1.9% decrease in the prior period and above forecasts of a 1.5% gain

Germany Import Prices

Import prices in Germany fell 4.3 percent year-on-year in September of 2020, faster than 4 percent in August, but lower than market expectations of a 4.8 percent drop. Excluding crude oil and mineral oil products, prices went down 1.9 percent. On a monthly basis, import prices increased 0.3 percent month-over-month, following a 0.1 percent gain in August and compared to forecasts of a 0.3 percent drop

United States MBA 30-Yr Mortgage Rate

The average fixed 30-year mortgage rate went down 2 bps to a record low of 3.00 percent in the week ended October 23rd, data from the Mortgage Bankers Association showed.

United States Goods Trade Balance

The goods gap in the US narrowed to USD 79.37 billion in September of 2020 from USD 83.1 billion in August. Exports went up 2.7 percent to USD 122 billion, driven by sales of capital goods (3.6 percent), consumer goods (1.3 percent) and autos (2.5 percent), while those of industrial supplies including petroleum fell 0.8 percent. Imports went down 0.2 percent to USD 201.4 billion, with purchases of consumer goods (-4 percent) and industrial suplies declining 4.6 percent.

United States Crude Oil Stocks Change

US crude oil inventories rose by 4.32 million barrels in the week ended October 23rd, 2020, following a 1.001 million decrease in the previous period and compared to market expectations of a 1.23 million increase, according to the EIA Petroleum Status Report. Also, crude production rose by 1.2 million barrels per day, the largest weekly gain on record. Gasoline inventories were down by 0.892 million barrels, while markets had forecast a bigger decline of 0.961 million.

Economic Calendar

Thursday

Japan Retail Sales YoY

Thursday

Japan Interest Rate Decision

Thursday

Eurozone Interest Rate Decision

Friday

Germany Consumer Price Index (CPI) MoM

Friday

U.S. Pending Home Sales MoM

Friday

Germany Gross Domestic Product (GDP) QoQ