Monex Morning Report – Tue 17 Nov 2020

OVERNIGHT HIGHLIGHTS

Dow, S&P 500 end at record highs Monday as stock market rallies amid further vaccine progress;

Moderna says preliminary trial data shows its coronavirus vaccine is more than 94% effective, shares soar

Moderna’s covid vaccine found 94.5% effective in early analysis

Moderna Inc. said its Covid-19 vaccine was 94.5% effective in a preliminary analysis of a large late-stage clinical trial, another sign that a fast-paced hunt by scientists and pharmaceutical companies is paying off with potent new tools that could help control a worsening pandemic. The highly positive readout comes just a week after a similar shot developed by Pfizer Inc. and BioNTech SE was found to be more than 90% effective in an interim analysis. Both shots rely on a technology called messenger RNA that has never been used to build an approved vaccine. Soon, millions of people around the world could be spared from illness by the breakthroughs. A first analysis of data from more than 30,000 volunteers showed Moderna’s vaccine prevented virtually all symptomatic cases of Covid-19, the disease caused by the coronavirus, the company said in a statement on Monday. Moderna shares rose as much as 15% in New York. The rally in global shares following the news represented about $567 billion in market value added to the MSCI All Country World Index.

Originating Source

Faster recovery odds have risen with vaccine developments: Fed’s Clarida

Successful tests of two coronavirus vaccine candidates have increased the chance of a faster than expected U.S. economic recovery, Federal Reserve Vice Chair Richard Clarida said on Monday. “There is an upside … The momentum that the economy had going into the fourth quarter was very solid,” Clarida said in comments to a webcast panel on monetary policy organized by the Brookings Institution. He said his baseline outlook for 2021 had been that a vaccine would be deployed next year, and following positive results from Pfizer Inc PFE.N and Moderna Inc MRNA.O, “I have more conviction. “In addition, “there is an enormous quantity of pent-up saving” that people stuffed into bank accounts during months when spending on travel, entertainment and restaurants was curtailed, and that cash could be unleashed next year as the vaccine is deployed, Clarida said. So far there is no movement toward new government support programs to ensure families and businesses have a renewed safety net, and Clarida acknowledged the coming weeks could be “a challenging time.” But he also noted that so far financial markets are functioning well, and appeared to downplay investor speculation that the surge in infections might prompt the Fed to change its $120 billion program of monthly bond purchases as soon as December to better nurse the economy along.

Originating Source

Yellen tight-lipped on report she’s in mix as treasury secretary

Former Federal Reserve Chair Janet Yellen didn’t push back on reports that she’s in the running to become the next Treasury secretary, while voicing support for policies in tune with the man who’ll make that decision, President-elect Joe Biden. “I don’t have anything for you on that I’m sorry,” Yellen said Monday when asked at the New Economy Forum about the reports. Queried further if she thought she’d be good at the job, she said, “It’s for other people to decide, I think.” Bloomberg News reported on Nov. 13 that Yellen is under consideration to be Biden’s Treasury secretary, along with a number of others, according to people familiar with the matter. Participating in a panel discussion at the virtual forum, Yellen said it was critical for U.S. lawmakers to provide further help to an economy recovering from a pandemic-induced nose-dive because the Fed has limited monetary tools left after pushing interest rates to near zero.

Originating Source

Fixing jobs market means more than low unemployment, Fed’s Clarida says

The Federal Reserve will use a broad set of employment measures including the labour force participation rate to determine when the economy has returned to “maximum employment,” part of an aggressive new approach to repairing the U.S. job market, Fed Vice Chair Richard Clarida said on Monday. In an extensive elaboration on the new strategy, Clarida said the U.S. central bank was continuing to monitor the country’s economic progress during the coronavirus pandemic, and how its various programs – including the ongoing purchase of $120 billion per month in government securities – might best be deployed. The current surge in coronavirus cases has led to speculation the Fed might alter its asset-buying as soon as December to provide more support, though Clarida in his prepared remarks for a panel hosted by the Brookings Institution gave no direct indication of that.

Originating Source

Australia’s economy on a ‘road to recovery’, says RBA’s Lowe

Australia’s success in controlling the coronavirus has put the economy on a “road to recovery”, the country’s central bank governor said on Monday even as a new outbreak of COVID-19 threatens to darken the outlook. Reserve Bank of Australia (RBA) Governor Philip Lowe hailed recent better-than-expected data on employment, retail sales, housing, consumer sentiment and business confidence saying the early easing of restrictions has “lifted spirits.” “There is a lot of stimulus in the system, balance sheets are generally in good shape and governments are providing substantial incentives for firms to invest and employ people,” Lowe said at a dinner event in Sydney. “So, if we do get further good news on the health front, we could have a rapid rebound.

Originating Source

OPEC+ weighs oil cuts extension, sees weaker compliance

OPEC and allies including Russia are leaning towards postponement of a planned January increase to oil output by at least three months to support prices as the COVID-19 pandemic continues its second wave, sources told Reuters on Monday. The OPEC+ group of producers was due to raise output by 2 million barrels per day (bpd) in January – about 2% of global consumption – as part of a steady easing of record supply cuts implemented this year. But with demand for fuel weakening, OPEC+ has been considering delaying the increase or even making further cuts.

Originating Source

ECB’s De Guindos: Risks are clearly tilted to the downside

“Risks are clearly tilted to the downside,” the European Central Bank (ECB) Vice President Luis De Guindos warned on Monday. “News about a potential vaccine fosters hope of a faster return to pre-pandemic growth levels.” “Economic impact of the pandemic is highly skewed at the sector level.” “Further actions on NPLs might include guidance on best practices for government-sponsored securitization schemes, or new solutions that would help troubled but viable firms to restructure outstanding debts and raise new equity. ““A premature withdrawal of loan guarantee schemes may induce banks to tighten credit standards. ““It will be essential for banks to be willing to make use of the available capital buffers to absorb losses without excessive deleveraging.”

Originating Source

Tesla jumps 9%, company to join S&P 500

Shares of Tesla TSLA.O surged 9% in extended trade on Monday after S&P Dow Jones Indices announced that the electric car maker would join the S&P 500 index .SPX. Tesla will join the S&P 500 prior to the opening of trading on Dec. 21, S&P Dow Jones Indices said in a press release.

Originating Source

Top Trump News

Joe Biden said “more people may die”

President-elect Joe Biden said on Monday “more people may die” if outgoing President Donald Trump continues to block efforts to plan for a U.S. transition of power as the coronavirus pandemic worsens, and added that he would not hesitate to get vaccinated. Biden also said business and labor leaders had signaled willingness to cooperate to fix the pandemic-battered U.S. economy but stressed COVID-19 first must be brought under control and urged Congress to pass relief legislation. The Democratic president-elect delivered a speech and took questions from journalists in Wilmington, Delaware, after consulting with the CEOs of top U.S. companies and labor leaders on Monday. He welcomed further progress in COVID-19 vaccine development.

Originating Source

O’Brien says looks now that Biden has won

U.S. President Donald Trump’s national security adviser, Robert O’Brien, said on Monday he will ensure a professional transition to the team led by Democrat Joe Biden if Biden is deemed the winner of the 2020 presidential election and “obviously things look like that now.” The Republican Trump has insisted the Nov. 3 election was “rigged” and that he will be declared the winner after a series of legal challenges in several states. Speaking to the Global Security Forum, O’Brien said that while he hoped Trump would turn out to have won a second four-year term, he would work with a new administration headed by Biden and his vice presidential running mate, Kamala Harris. “If there is a new administration, look, they deserve some time to come in and implement their policies,” O’Brien said. “If the Biden-Harris ticket is determined to be the winner, and obviously things look like that now, we’ll have a very professional transition from the National Security Council, there’s no question about it.” Trump has so far failed to produce evidence that could overturn Biden’s 306-232 victory over Trump in the state-by-state Electoral College vote. States face a Dec. 8 “safe harbor” deadline to certify their elections and choose electors who will officially select the new president on Dec. 14.

Originating Source

Trump said ‘I won’

President Donald Trump worked to take back an apparent acknowledgment that Joe Biden won the White House and was making clear he would keep trying to overturn the election result. Trump’s earlier comments Sunday had given some critics and supporters hope that the White House was ready to begin working on a transition with Biden’s team. Not so fast, Trump soon assured. Trump, without using Biden’s name, said that “He won” as part of a tweet that made baseless claims about a “rigged” election. But as the Republican president saw how his comments were being interpreted as his first public acknowledgment of a Biden victory, he quickly reversed course. “He only won in the eyes of the FAKE NEWS MEDIA,” Trump subsequently tweeted. “I concede NOTHING! We have a long way to go. This was a RIGGED ELECTION!”

Originating Source

Economic Indicators

Japan GDP Growth Rate

The Japanese economy advanced 5 percent on quarter in the three months to September 2020, partially recovering from a record slump of 8.2 percent in the previous period and beating market consensus of 4.4 percent, a preliminary estimate showed. This was the first quarterly growth rate in a year, as activity and demand rebounded from the severe damage caused by the COVID-19 crisis. Private consumption rose for the first time in four quarters (4.7 percent vs -8.1 percent in Q2), while capital expenditure contracted at a softer pace (-3.4 percent vs -4.5 percent). In addition, net external demand added 2.9 percentage points to the GDP as exports grew for the first time in three quarters (7 percent vs -17.4 percent) while imports tumbled (-9.8 percent vs 2.2 percent). On an annualized basis, the economy grew at a record 21.4 percent in Q3, after a record plunge of 28.8 percent in Q2.

China Industrial Production

China’s industrial production increased by 6.9 percent year-on-year in October 2020, unchanged from the previous month’s nine-month high and above market expectations of 6.5 percent, as activity continued to recover from the COVID-19 shock. Production rose for manufacturing (7.5 percent vs 7.6 percent in September), mining (3.5 percent vs 2.2 percent) and utilities (4.0 percent vs 4.5 percent). Among major industries, production grew for machinery (17.6 percent vs 15.9 percent), general equipment (13.1 percent vs 12.5 percent), chemicals (8.8 percent vs 7.5 percent), communication (5 percent vs 8 percent), ferrous metals (11.2 percent vs 9 percent), non-metal minerals (9.3 percent vs 9 percent), power equipment (3.6 percent vs 4.2 percent), and textiles (9.5 percent vs 5.6 percent). For the first ten months of the year, industrial output rose by 1.8 percent.

Economic Calendar

Tuesday

AU RBA Meeting Minutes

Wednesday

US Retail Sales (OCT)

Wednesday

UK CPI (OCT)

Wednesday

EU CPI (OCT)

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) ”