Monex Morning Report – Tue 13 Oct 2020

OVERNIGHT HIGHLIGHTS

U.S. stock market books 4th straight gain ahead of earnings kick off; Asia stocks to track U.S. higher

China reportedly orders halt to imports of Australian coal; Trump tests negative for coronavirus for second straight day, doctor says

Top Market News

Amy Coney Barrett: Trump nominee testifies in Supreme Court hearing

US Supreme Court nominee Amy Coney Barrett has said she is “honoured and humbled” to be President Trump’s pick for a place in the top court during a tense Senate confirmation hearing. The 48-year-old conservative jurist vowed to judge legal cases impartially. But her selection so close to the 3 November presidential election has sparked a fierce political battle. The panel’s Republican chairman has predicted a “contentious week” of questioning ahead. Judge Barrett’s approval would cement a 6-3 conservative majority on the nine-member court, altering the ideological balance of the court for potentially decades to come. Mr Trump picked Judge Barrett to replace liberal Justice Ruth Bader Ginsburg, who died last month aged 87. “I have been nominated to fill Justice Ginsburg’s seat, but no one will ever take her place,” Mrs Barrett told senators in her opening statement on Monday. “I will be forever grateful for the path she marked and the life she led.”

Originating Source

Scott Morrison casts gloom on Australia’s prospects for quarantine-free travel with Europe and US

Scott Morrison has confirmed Australia will move “very cautiously” to reopen quarantine-free travel with a “handful” of countries, raising the prospect Europe and the United States will be excluded until 2022 unless a Covid vaccine is available. Morrison made the comments at a doorstop in Redbank, campaigning with Queensland’s Liberal National party leader, Deb Frecklington, and targeting the Labor premier Annastacia Palaszczuk over the state’s reluctance to remove its state border travel ban. On Sunday the federal tourism minister, Simon Birmingham, said that moves to establish quarantine-free travel with low-risk countries such as New Zealand “can’t be done at the expense of our health and economic strength at home”. “The prospects of opening up widespread travel with higher risk countries will remain very reliant on effective vaccination or other major breakthroughs in the management of Covid,” he told the Sun Herald.

Originating Source

China reportedly orders halt to imports of Australian coal

China’s customs authorities have told several Chinese state-owned steelmakers and power plants to stop importing Australian coal, according to two industry newswire services. The move comes amid ongoing tensions in the relationship between China and Australia and reportedly affects both thermal and coking coal. The trade minister, Simon Birmingham, said the government was aware of the reports and was discussing the issue with Australia’s resources industry, which had “previously faced occasional disruptions to trade flows with China”. “Australia will continue to highlight our standing as a reliable supplier of high-grade resources that provide mutual benefits,” Birmingham said. The Minerals Council of Australia said it was also aware of the reports but played down any extended impacts, insisting the outlook for Australian coal “remains positive” in the medium term.

Originating Source

More synchronized action needed to tackle COVID economic crisis, IMF’s Georgieva says

The international community must do more to tackle the economic fallout of the COVID-19 crisis, the head of the International Monetary Fund said on Monday, publicly calling on the World Bank to accelerate its lending to hard-hit African countries. Some of the key events of the virtual and elongated annual meetings of the IMF and World Bank take place this week, with the most pressing issue how to support struggling countries. “We are going to continue to push to do even more,” IMF Managing Director Kristalina Georgieva said during an online FT Africa summit. “I would beg for also more grants for African countries. The World Bank has grant-giving capacity. Perhaps you can do even more… and bilateral donors can do more in that regard,” Georgieva said in an unusual public display of discord between the two major international financial institutions.

Originating Source

ECB policymakers wary of following Fed’s route on inflation target, sources say

There is reluctance among European Central Bank policymakers to follow the U.S. Federal Reserve’s move to target an average inflation rate, fearing this could tie their hands, sources involved in a revamp of ECB policy said. The four central bank sources, including members of both the hawkish and dovish wings of the ECB’s policymaking governing council, also expressed doubts about whether orthodox inflation theory still applied in economies where prices have long stagnated despite interest rates close to or below zero. After missing its goal of keeping inflation “below but close to 2%” for a decade, the ECB is reviewing its strategy in the wake of a similar review by the Fed and just as a pandemic-induced recession is pushing euro zone inflation into negative territory. The euro zone’s central bank has been expected to follow the Fed, which said in August it would aim for 2% average inflation over an unspecified period, so that periods when prices grow too slowly need to be compensated by times of faster increases – and vice versa.

Originating Source

Euro zone economy losing momentum, ECB’s de Guindos says

The euro zone economy is losing momentum and the European Central Bank will react accordingly, ECB Vice President Luis de Guindos said on Monday, citing December’s macro-economic projections as a key guide for future policy moves. “High-frequency indicators point to (the economy) losing a certain momentum,” de Guindos told a live interview with the Institute for International Finance. “Our policy reaction will be consistent with the evolution of the situation.” “We will have new projections in December and will assess how adequate the package is according to new projections but we don’t have a concrete date… and we’re doing that continuously,” de Guindos added.

Originating Source

Bank of England has ‘absolutely open mind’ on negative rates: Haskel

Bank of England policymaker Jonathan Haskel said on Monday that the central bank had an “absolutely open mind” about the possibility of cutting interest rates below zero as part of its support for Britain’s economy during the coronavirus crisis. Haskel said negative rates might hit margins at banks, potentially deterring them from lending to businesses, but the impact of going below zero might have a positive effect for the economy as a whole. Earlier on Monday, the BoE asked banks how ready they are for zero or negative interest rates, following up its announcement last month that it was considering how to take rates below zero if necessary.

Originating Source

Kuroda says BOJ ready to ease more, has tools to cushion pandemic pain

Bank of Japan Governor Haruhiko Kuroda stressed on Monday his readiness to take additional monetary easing steps, saying the central bank had not run out of tools to cushion the economic blow from the COVID-19 pandemic. Kuroda said Japan’s economy had hit the bottom in April-June and that the general picture looked “much better” than a few months ago, with exports, output and capital expenditure “fairly robust.” But consumption, particularly for services, was quite weak and likely to stay so for some time, unless the world gets hold of an effective vaccine to contain COVID-19, he added. “We will closely monitor the impact of COVID-19 and not hesitate to take additional easing measures as necessary,” Kuroda told an online seminar hosted by the Institute of International Finance. “The BOJ hasn’t run out of policy tools. We have a lot of policy tools to counter (the damage from COVID-19). We are flexible, innovative when considering measures to take.”

Originating Source

Top Trump News

Tests negative for coronavirus

President Donald Trump’s White House doctor says Trump has tested negative for COVID-19 on consecutive days using a newer rapid test from Abbott Laboratories ABT, +1.27%. The assessment from Navy Cmdr. Sean Conley comes as Trump is traveling to Sanford, Florida, to headline his first campaign rally Monday since becoming infected with the coronavirus. Conley had said in a written memo released over the weekend that Trump is no longer at risk of spreading the virus to others. Conley says in a fresh update released Monday that Trump tested negative for COVID-19 on consecutive days using a newer 15-minute test. He did not say when Trump was tested. Trump announced Oct. 2 that he had tested positive for the disease caused by the coronavirus. He was admitted to Walter Reed military hospital that night and released on Oct. 5. Over the weekend, Trump addressed scores of supporters who crowded onto the White House lawn from a balcony.

Originating Source

Trump to resume campaign

President Donald Trump is seeking to put his bout with COVID-19 behind him with a return to the campaign trail in Florida on Monday, as new polls show him losing more ground to Democratic rival Joe Biden in two battleground states that could decide the Nov. 3 election. Trump’s evening rally at an airport in Sanford, Florida, will be his first since he disclosed on Oct. 2 that he tested positive for the disease caused by the novel coronavirus, and will kick off a three-week sprint to Election Day. Trump, who spent three nights in a military hospital for treatment, said on Sunday he had fully recovered and was no longer infectious, but did not say directly whether he had tested negative for the coronavirus. Biden tested negative for COVID-19 on Monday, his campaign said in a statement. The Democratic former vice president has tested negative a number of times since Trump announced his positive test.

Originating Source

Trump campaign ad

Dr. Anthony Fauci said on Sunday he wasn’t happy about being part of a campaign ad for President Donald Trump.“In my nearly five decades of public service, I have never publicly endorsed nor do I now endorse any political candidates,” he said in a statement, according to CNN and NBC News. “The comments attributed to me without my permission in the GOP campaign ad were taken out of context from a broad statement I made months ago about the efforts of federal public health officials.”

Originating Source

Economic Indicators

Japan Domestic Corporate Goods Price Index

Producer Prices in Japan decreased to 100.10 points in September from 100.30 points in August of 2020.

Japan Bank Lending

The value of loans in Japan increased 6.40 percent in September of 2020 over the same month in the previous year.

Germany Wholesale Prices

Wholesale prices in Germany decreased by 1.8 percent year-on-year in September 2020, following a 2.2 percent drop in the previous month. There were declines in cost of petroleum products (-17.1 percent), used and residual materials (-4.5 percent), live animals (-13.4 percent), information, computers, equipment, software (-4.5 percent). By contrast, prices rose for grain, raw tobacco, seeds and animal feed (3.6 percent), fruit, vegetables and potatoes (2.5 percent), and tobacco products (4.7 percent). On a monthly basis, wholesale prices were unchanged in September, following a 0.4 percent fall in August.

Economic Calendar

Tuesday

U.K. Average Earnings Index +Bonus

Tuesday

U.K. Claimant Count Change

Tuesday

Germany ZEW Economic Sentiment

Tuesday

U.S. Core Consumer Price Index (CPI) MoM

Wednesday

Australia Employment Change

Wednesday

China Industrial Production YoY

Thursday

U.S. Import Price Index MoM

Thursday

Australia HIA New Home Sales MoM

Friday

U.S. Retail Sales MoM

Friday

Australia Employment Change

Top Market News

Amy Coney Barrett: Trump nominee testifies in Supreme Court hearing

US Supreme Court nominee Amy Coney Barrett has said she is “honoured and humbled” to be President Trump’s pick for a place in the top court during a tense Senate confirmation hearing. The 48-year-old conservative jurist vowed to judge legal cases impartially. But her selection so close to the 3 November presidential election has sparked a fierce political battle. The panel’s Republican chairman has predicted a “contentious week” of questioning ahead. Judge Barrett’s approval would cement a 6-3 conservative majority on the nine-member court, altering the ideological balance of the court for potentially decades to come. Mr Trump picked Judge Barrett to replace liberal Justice Ruth Bader Ginsburg, who died last month aged 87. “I have been nominated to fill Justice Ginsburg’s seat, but no one will ever take her place,” Mrs Barrett told senators in her opening statement on Monday. “I will be forever grateful for the path she marked and the life she led.”

Originating Source

Scott Morrison casts gloom on Australia’s prospects for quarantine-free travel with Europe and US

Scott Morrison has confirmed Australia will move “very cautiously” to reopen quarantine-free travel with a “handful” of countries, raising the prospect Europe and the United States will be excluded until 2022 unless a Covid vaccine is available. Morrison made the comments at a doorstop in Redbank, campaigning with Queensland’s Liberal National party leader, Deb Frecklington, and targeting the Labor premier Annastacia Palaszczuk over the state’s reluctance to remove its state border travel ban. On Sunday the federal tourism minister, Simon Birmingham, said that moves to establish quarantine-free travel with low-risk countries such as New Zealand “can’t be done at the expense of our health and economic strength at home”. “The prospects of opening up widespread travel with higher risk countries will remain very reliant on effective vaccination or other major breakthroughs in the management of Covid,” he told the Sun Herald.

Originating Source

China reportedly orders halt to imports of Australian coal

China’s customs authorities have told several Chinese state-owned steelmakers and power plants to stop importing Australian coal, according to two industry newswire services. The move comes amid ongoing tensions in the relationship between China and Australia and reportedly affects both thermal and coking coal. The trade minister, Simon Birmingham, said the government was aware of the reports and was discussing the issue with Australia’s resources industry, which had “previously faced occasional disruptions to trade flows with China”. “Australia will continue to highlight our standing as a reliable supplier of high-grade resources that provide mutual benefits,” Birmingham said. The Minerals Council of Australia said it was also aware of the reports but played down any extended impacts, insisting the outlook for Australian coal “remains positive” in the medium term.

Originating Source

More synchronized action needed to tackle COVID economic crisis, IMF’s Georgieva says

The international community must do more to tackle the economic fallout of the COVID-19 crisis, the head of the International Monetary Fund said on Monday, publicly calling on the World Bank to accelerate its lending to hard-hit African countries. Some of the key events of the virtual and elongated annual meetings of the IMF and World Bank take place this week, with the most pressing issue how to support struggling countries. “We are going to continue to push to do even more,” IMF Managing Director Kristalina Georgieva said during an online FT Africa summit. “I would beg for also more grants for African countries. The World Bank has grant-giving capacity. Perhaps you can do even more… and bilateral donors can do more in that regard,” Georgieva said in an unusual public display of discord between the two major international financial institutions.

Originating Source

ECB policymakers wary of following Fed’s route on inflation target, sources say

There is reluctance among European Central Bank policymakers to follow the U.S. Federal Reserve’s move to target an average inflation rate, fearing this could tie their hands, sources involved in a revamp of ECB policy said. The four central bank sources, including members of both the hawkish and dovish wings of the ECB’s policymaking governing council, also expressed doubts about whether orthodox inflation theory still applied in economies where prices have long stagnated despite interest rates close to or below zero. After missing its goal of keeping inflation “below but close to 2%” for a decade, the ECB is reviewing its strategy in the wake of a similar review by the Fed and just as a pandemic-induced recession is pushing euro zone inflation into negative territory. The euro zone’s central bank has been expected to follow the Fed, which said in August it would aim for 2% average inflation over an unspecified period, so that periods when prices grow too slowly need to be compensated by times of faster increases – and vice versa.

Originating Source

Euro zone economy losing momentum, ECB’s de Guindos says

The euro zone economy is losing momentum and the European Central Bank will react accordingly, ECB Vice President Luis de Guindos said on Monday, citing December’s macro-economic projections as a key guide for future policy moves. “High-frequency indicators point to (the economy) losing a certain momentum,” de Guindos told a live interview with the Institute for International Finance. “Our policy reaction will be consistent with the evolution of the situation.” “We will have new projections in December and will assess how adequate the package is according to new projections but we don’t have a concrete date… and we’re doing that continuously,” de Guindos added.

Originating Source

Bank of England has ‘absolutely open mind’ on negative rates: Haskel

Bank of England policymaker Jonathan Haskel said on Monday that the central bank had an “absolutely open mind” about the possibility of cutting interest rates below zero as part of its support for Britain’s economy during the coronavirus crisis. Haskel said negative rates might hit margins at banks, potentially deterring them from lending to businesses, but the impact of going below zero might have a positive effect for the economy as a whole. Earlier on Monday, the BoE asked banks how ready they are for zero or negative interest rates, following up its announcement last month that it was considering how to take rates below zero if necessary.

Originating Source

Kuroda says BOJ ready to ease more, has tools to cushion pandemic pain

Bank of Japan Governor Haruhiko Kuroda stressed on Monday his readiness to take additional monetary easing steps, saying the central bank had not run out of tools to cushion the economic blow from the COVID-19 pandemic. Kuroda said Japan’s economy had hit the bottom in April-June and that the general picture looked “much better” than a few months ago, with exports, output and capital expenditure “fairly robust.” But consumption, particularly for services, was quite weak and likely to stay so for some time, unless the world gets hold of an effective vaccine to contain COVID-19, he added. “We will closely monitor the impact of COVID-19 and not hesitate to take additional easing measures as necessary,” Kuroda told an online seminar hosted by the Institute of International Finance. “The BOJ hasn’t run out of policy tools. We have a lot of policy tools to counter (the damage from COVID-19). We are flexible, innovative when considering measures to take.”

Originating Source

Top Trump News

Tests negative for coronavirus

President Donald Trump’s White House doctor says Trump has tested negative for COVID-19 on consecutive days using a newer rapid test from Abbott Laboratories ABT, +1.27%. The assessment from Navy Cmdr. Sean Conley comes as Trump is traveling to Sanford, Florida, to headline his first campaign rally Monday since becoming infected with the coronavirus. Conley had said in a written memo released over the weekend that Trump is no longer at risk of spreading the virus to others. Conley says in a fresh update released Monday that Trump tested negative for COVID-19 on consecutive days using a newer 15-minute test. He did not say when Trump was tested. Trump announced Oct. 2 that he had tested positive for the disease caused by the coronavirus. He was admitted to Walter Reed military hospital that night and released on Oct. 5. Over the weekend, Trump addressed scores of supporters who crowded onto the White House lawn from a balcony.

Originating Source

Trump to resume campaign

President Donald Trump is seeking to put his bout with COVID-19 behind him with a return to the campaign trail in Florida on Monday, as new polls show him losing more ground to Democratic rival Joe Biden in two battleground states that could decide the Nov. 3 election. Trump’s evening rally at an airport in Sanford, Florida, will be his first since he disclosed on Oct. 2 that he tested positive for the disease caused by the novel coronavirus, and will kick off a three-week sprint to Election Day. Trump, who spent three nights in a military hospital for treatment, said on Sunday he had fully recovered and was no longer infectious, but did not say directly whether he had tested negative for the coronavirus. Biden tested negative for COVID-19 on Monday, his campaign said in a statement. The Democratic former vice president has tested negative a number of times since Trump announced his positive test.

Originating Source

Trump campaign ad

Dr. Anthony Fauci said on Sunday he wasn’t happy about being part of a campaign ad for President Donald Trump.“In my nearly five decades of public service, I have never publicly endorsed nor do I now endorse any political candidates,” he said in a statement, according to CNN and NBC News. “The comments attributed to me without my permission in the GOP campaign ad were taken out of context from a broad statement I made months ago about the efforts of federal public health officials.”

Originating Source

Economic Indicators

Japan Domestic Corporate Goods Price Index

Producer Prices in Japan decreased to 100.10 points in September from 100.30 points in August of 2020.

Japan Bank Lending

The value of loans in Japan increased 6.40 percent in September of 2020 over the same month in the previous year.

Germany Wholesale Prices

Wholesale prices in Germany decreased by 1.8 percent year-on-year in September 2020, following a 2.2 percent drop in the previous month. There were declines in cost of petroleum products (-17.1 percent), used and residual materials (-4.5 percent), live animals (-13.4 percent), information, computers, equipment, software (-4.5 percent). By contrast, prices rose for grain, raw tobacco, seeds and animal feed (3.6 percent), fruit, vegetables and potatoes (2.5 percent), and tobacco products (4.7 percent). On a monthly basis, wholesale prices were unchanged in September, following a 0.4 percent fall in August.

Economic Calendar

Tuesday

U.K. Average Earnings Index +Bonus

Tuesday

U.K. Claimant Count Change

Tuesday

Germany ZEW Economic Sentiment

Tuesday

U.S. Core Consumer Price Index (CPI) MoM

Wednesday

Australia Employment Change

Wednesday

China Industrial Production YoY

Thursday

U.S. Import Price Index MoM

Thursday

Australia HIA New Home Sales MoM

Friday

U.S. Retail Sales MoM

Friday

Australia Employment Change