Monex Morning Report – Tue 15 Dec 2020

OVERNIGHT HIGHLIGHTS

Dow books worst day in two weeks as COVID lockdowns intensify amid U.S. vaccine rollout; Asian stocks set for muted start

Biden captures electoral votes from all states Trump contested; First Americans vaccinated as U.S. death toll passes 300,000

Top Market News

Biden captures electoral votes from all states Trump contested

Electoral College members in all six battleground states where President Donald Trump most fiercely contested the results cast their ballots for Democrat Joe Biden on Monday, effectively cutting off the president’s path to overturning the election. The vote marks the watershed moment some Republican lawmakers have said would signal the end of their support for attempts to overturn the Nov. 3 election. The 16 electors in Michigan voted for Biden, following the 63 votes cast for him earlier in Arizona, Georgia, Nevada, Pennsylvania and Wisconsin. Biden will have enough electoral votes to be officially declared president-elect when members have cast 270 ballots, which is expected after California votes. Congress will officially count the votes on Jan. 6. Electors in 50 U.S. states and District of Columbia are voting for president and vice president in time-honored constitutional ceremonies that have drawn new attention this year after Trump refused to concede and insisted without evidence that the election was “rigged.” Many Republicans have refused to recognize Biden’s victory, indulging Trump’s baseless claims about a stolen election and saying he had a right to pursue legal challenges and to let the process play out. And now, with electors casting their votes, it has.

Originating Source

New York is on a path toward a second full shutdown, Cuomo says

New York is headed toward a second full shutdown if Covid-19 cases and hospitalizations continue at their current pace, Governor Andrew Cuomo said. “If we do not change the trajectory, we could very well be headed to shut down” all non-essential businesses, Cuomo said Monday at a virus briefing. The state reported 5,712 hospitalizations, an increase of more than 1,000 in the past week. If that pace continues, it will be at 11,000 in a month, and some regions may be overwhelmed, Cuomo said. The increase is of particular concern in dense regions like New York City, the governor said. Cuomo shut down the city’s indoor dining on Monday, even as he cited statistics showing that three-fourths of new cases come from private gatherings. Mayor Bill De Blasio warned residents to be prepared for a shutdown, and urged employees who don’t need to be going into a workplace to work remotely “as much as they could.”

Originating Source

Bipartisan group releases Covid relief bill

A bipartisan group hopes to spur movement toward legislation that can get through the GOP-controlled Senate and Democratic-held House. Lawmakers from both chambers released a $908 billion rescue package Monday, split into two bills as the negotiators did not agree across the board. Rep. Josh Gottheimer, a New Jersey Democrat and co-chair of the bipartisan House Problem Solvers Caucus that helped to spark the deal, said he hoped the bill would help to shape a proposal Congress can pass this week. “It doesn’t have to be every single word that we hand [congressional leaders] … but this is a clear road map for them,” he told CNBC on Monday morning before the legislation was unveiled.

Originating Source

With eye on exchange rate, Panetta says ECB ready to do more

The European Central Bank is committed to lifting the euro zone out of its recession and can provide still more stimulus if needed to counter any drag, including from the firming euro, ECB board member Fabio Panetta said on Monday. With the bloc heading back into recession this quarter, the ECB approved more support last week but remarks from ECB chief Christine Lagarde that not all of its allotted firepower may be used raised some doubts about its commitment. “We can guarantee our commitment to support the recovery,” Panetta said in a speech. “We stand ready to adjust all our instruments if downside risks to the outlook materialise, including those stemming from exchange rate dynamics.”

Originating Source

OPEC cuts 2021 oil demand outlook again as pandemic impact lingers

Global oil demand will rebound more slowly in 2021 than previously thought because of the lingering impact of the coronavirus pandemic, OPEC said on Monday, hampering efforts by the group and its allies to support the market. Demand will rise by 5.90 million barrels per day (bpd) next year to 95.89 million bpd, the Organization of the Petroleum Exporting Countries said in a monthly report. The growth forecast is 350,000 bpd less than expected a month ago. The group has steadily lowered its 2021 demand growth forecast in recent months.

Originating Source

Australia ‘deeply troubled’ by China coal import ban report

Australia’s Trade Minister Simon Birmingham says he is “deeply troubled” by reports that China has formally banned imports of Australian coal, in the latest sign the dispute between the nations is worsening. More than 50 ships carrying Australian coal have been stranded off China after ports were verbally told in October not to offload such shipments. That ban appears to have been formalized, with the National Development and Reform Commission on Saturday giving power plants approval to import coal without restrictions, except from Australia, the Global Times reported. If true that would “indicate discriminatory trade practices,” Birmingham said. “The risk profile of trading with China has grown significantly during the course of this year,” he said in an interview Tuesday with Australian Broadcasting Corp. radio. The diplomatic row between China and Australia just keeps getting worse, with no obvious off-ramp to the downward spiral in relations between the two key trading partners.

Originating Source

China fines Alibaba, Tencent Unit under anti-monopoly laws

China’s antitrust watchdog fined Alibaba Group Holding Ltd. and a Tencent Holdings Ltd. unit over a pair of years-old acquisitions and said it’s reviewing an impending Tencent-led merger, signaling Beijing’s intention to tighten oversight of internet sector deals. The State Administration for Market Regulation said Monday it’s reviewing the combination of DouYu International Holdings Ltd. with Huya Inc., which could create a Chinese game streaming leader akin to Amazon’s Twitch. It fined Alibaba 500,000 yuan ($76,500) for failing to seek approval before increasing its stake in department store chain Intime Retail Group Co. to 73.79% in 2017, while China Literature Ltd., the e-books business spun off by Tencent, was also censured over a previous deal, according to a statement. The penalties come after regulators last month declared their intention to increase scrutiny of China’s largest tech corporations with new anti-monopoly rules. Beijing in November unveiled draft regulations that establish a framework for curbing anti-competitive behavior such as colluding on sharing sensitive consumer data, alliances that squeeze out smaller rivals and subsidizing services at below cost to eliminate competitors. Shares in Alibaba and Tencent extended losses and closed down more than 2.5%.

Originating Source

EU to unveil landmark law curbing power of tech giants

The European Union is set to unveil landmark legislation that lays out strict rules for tech giants to do business in the bloc, according to several media reports on Monday. The draft legislation, dubbed the Digital Services Act and the Digital Markets Act, outlines specific regulations that seeks to limit the power of global internet firms on the EU market. Companies including Google, Apple, Amazon, Facebook and others could face hefty penalties for violating the rules. The draft law sets out a list of do’s, don’ts and penalties for internet giants, EU sources told news agencies Reuters and AFP. Firms could be fined up to 10% of their annual turnover for violating competition rules. Tech giants could be entirely banned from the EU market over “serious and repeated breaches of law,” AFP reported. Large tech firms would be designated as internet “gatekeepers” — making them subject to stricter regulations. Etc.

Originating Source

Top Trump News

Nasdaq to remove shares of 4 Chinese companies after U.S. order

Index provider Nasdaq said on Friday it will remove shares of four Chinese construction and manufacturing companies after a U.S. order restricting purchase of their shares.

Originating Source

First Americans vaccinated as U.S. death toll passes 300,000

An intensive care unit nurse became the first person in the United States to receive the Pfizer/BioNTech COVID-19 vaccine on Monday, calling it a sign that “healing is coming,” as the U.S. coronavirus death toll crossed a staggering 300,000 lives lost. Sandra Lindsay, who has treated some of the sickest COVID-19 patients for months, was given the vaccine at Long Island Jewish Medical Center in the New York City borough of Queens, an early epicenter of the country’s COVID-19 outbreak, receiving applause on a livestream with New York Governor Andrew Cuomo. Minutes after Lindsay received the injection, President Donald Trump tweeted: “First Vaccine Administered. Congratulations USA! Congratulations WORLD!”

Originating Source

After Supreme Court dismisses Texas case, Trump says his efforts to challenge election results are ‘not over’

President Trump signaled that he will continue to challenge the results of the 2020 election even after the electoral college meets Monday in most state capitols to cast votes solidifying Joe Biden’s victory. In a Fox News interview that aired Sunday morning, Trump repeated his false claims of election fraud and said his legal team will continue to pursue challenges, despite the Supreme Court’s recent dismissal of a long-shot bid to overturn the results in four states Biden won.

Originating Source

Economic Indicators

Euro Area Industrial Production MoM

Eurozone industrial production rose 2.1 percent from a month earlier in October 2020, a sixth consecutive month of growth and compared with market expectations of a 2.0 percent increase. Output of durable consumer goods, such as televisions and washing machines, rebounded 1.5 percent after posting a steep decline in September; and energy production was also up by 1.8 percent. In addition, there were increases in production of capital (2.6 percent) and intermediate goods (2.1 percent). Output of non-durable consumer goods was unchanged. Among the bloc’s largest economies, Germany, France, Italy and Spain all recorded output gains.

Germany Wholesale Prices

Wholesale prices in Germany fell 1.7 percent year-on-year in November 2020, the 10th consecutive annual decline. Biggest downward pressure came from cost of petroleum products (-18.1 percent), live animals (-22.9 percent), data processing equipment, peripheral devices and software (-3.7 percent), and iron, steel, iron and steel semi-finished products (-1.6 percent). In contrast, prices rose for residual materials (7.5 percent), grain, raw tobacco, seeds and animal feed (7.2 percent) and fruit, vegetables and potatoes (2.0 percent). On a monthly basis, wholesale prices inched up 0.1 percent. 

China Newly Built House Prices YoY Change

Average new home prices in China’s 70 major cities increased by 4.0 percent year-on-year in November 2020, after a 4.3 percent rise in the previous month. This was the slowest pace of growth in home prices since February 2016, as the government stepped up its efforts to deleverage the highly indebted sector to reduce financial risk. Among China’s biggest cities, Shenzhen recorded the largest increase (4.9 percent vs 5.1 percent in October), followed by Chongqing (4.7 percent vs 5.4 percent), Shanghai (4.1 percent vs 4.4 percent), Guangzhou (4.1 percent vs 2.7 percent), Beijing (2.4 percent vs 4.2 percent), and Tianjin (1.1 percent vs 0.8 percent). On a monthly basis, new home prices edged up 0.1 percent in November, the least since March. 

United States Consumer Inflation Expectations

Inflation Expectations in the United States increased to 2.96 percent in November from 2.84 percent in October of 2020.

Economic Calendar

Tuesday

CN Industrial Production (YoY)

Tuesday

UK Average Earnings Index +Bonus (Oct)

Wednesday

DE German Manufacturing PMI (Dec)  

Wednesday

UK CPI

Thursday

US Core Retail Sales (MoM) (Nov)

Thursday

US Fed Interest Rate Decision

Thursday

US Crude Oil Inventories

Thursday

AU Employment Change

Friday

US Initial Jobless Claims