Monex Morning Report – Wed 11 Nov 2020

OVERNIGHT HIGHLIGHTS

Dow gains 260 points, while Nasdaq slides as vaccine hopes spark rotation away from tech highfliers; Australia shares set to open higher for fifth session

Democrats are projected to lose House seats but keep their majority; McConnell and Pelosi are once again at odds over the size of a coronavirus stimulus package

Democrats are projected to lose House seats but keep their majority

Democrats will keep their U.S. House majority in the next Congress, according to NBC News. But after a series of rough early returns from the 2020 election, the party will likely have fewer seats in January than it does now. NBC estimates Democrats will hold 226 House seats, while Republicans will have 209. The figures could change, as NBC said the parties may ultimately end up with as many as eight seats more or less than those projections. (Eight fewer seats for Democrats would put them at 218, the minimum they need for a majority).

Originating Source

US plans to distribute Pfizer’s COVID-19 vaccine next month, Anthony Fauci says he would take it

The US Government plans to begin vaccinating Americans in December, as long as Pfizer submits the positive initial data from its COVID-19 vaccine trial to health regulators as quickly as expected. Top US infectious disease expert Anthony Fauci and Health Secretary Alex Azar both said high-priority groups would be the first to receive the vaccine. On Monday (local time), Pfizer said the vaccine it had been developing with German partner BioNTech SE was 90 per cent effective against COVID-19, based on an early look at results from its large, late-stage trial. The US drug maker said that as soon as next week it expected to have safety data needed to apply for emergency use authorization (EUA) with the US Food and Drug Administration (FDA).

Originating Source

McConnell and Pelosi are once again at odds over the size of a coronavirus stimulus package

The two most powerful people in Congress — at least for the next two months — renewed their calls for coronavirus stimulus on Friday. A relief deal could prove just as difficult to reach as it did before Election Day. Senate Majority Leader Mitch McConnell, R-Ky., again called for a targeted aid package. In Kentucky, he argued a better-than-expected October jobs report that saw the U.S. unemployment rate fall to 6.9% reduces the need for a sweeping stimulus bill. “I think it reinforces the argument that I’ve been making for the last few months, that something smaller – rather than throwing another $3 trillion at this issue – is more appropriate,” he told reporters, according to Reuters. McConnell noted that he will not necessarily lead the Senate in January: NBC News projects both Republicans and Democrats will hold at least 48 seats, with four races unsettled. Meanwhile, House Speaker Nancy Pelosi called for Republicans to restart aid talks that fell apart before the 2020 election. She told reporters that the “imperative to act could not be greater” after the U.S. posted a record of more than 120,000 new Covid-19 infections on Thursday. Still, she said a narrow bill “doesn’t appeal to me at all.” The chambers of Congress failed to find common ground on relief before the election, as Senate Republicans tried to pass a $500 billion aid bill and House Democrats approved a $2.2 trillion package. Areas of disagreement between the parties included state and local government aid, enhanced unemployment insurance and liability protections for businesses.

Originating Source

Fed’s Kaplan concerned about short-term economic risks due to virus

Dallas Federal Reserve President Robert Kaplan said on Tuesday he was “cautious and concerned” about downside economic risks in the short run because of the resurgence of the coronavirus, but more optimistic in the longer term. “The next two quarters are going to be very challenging, very difficult,” Kaplan told Bloomberg’s Future of Finance virtual conference. “Downside risks are growing with this resurgence.” The United States is experiencing a rise in cases, hospitalizations and deaths from COVID-19, the disease caused by the virus, with some state and local governments reimposing restrictions to slow the spread. With millions of out-of-work Americans dipping into savings built with government aid distributed earlier this year, Kaplan said, household income and spending will drop off “at some point” unless more fiscal aid is forthcoming. As long as the pandemic is ongoing, the U.S. central bank should not back away from its programs supporting economic growth, which include bond purchases totaling $120 billion a month and lending programs to corporate America, he said.

Originating Source

Fed policy is in a really good place, Daly says

The U.S. Federal Reserve’s monetary policy is in a “really good place,” San Francisco Federal Reserve Bank President Mary Daly told CNBC in an interview Tuesday, even as she noted the central bank is discussing what more it might need to do to help. “We are discussing what more could we do if more is needed, and what should we do in terms of communicating a plan for our asset purchases going forward,” Daly said in the interview. Fed policy is positioned react to the economy, which will likely slow further as cases of the coronavirus surge, she said.

Originating Source

Fed’s Quarles sees formidable, complex challenge ahead

Federal Reserve Governor Randal Quarles said on Monday that while the initial market stress from the coronavirus crisis has passed, a “distinct, formidable, and complex” challenge remains. “The surprise of the COVID event is gone, replaced by a clearer view of its economic consequences,” Quarles said in testimony prepared for a Congressional appearance Tuesday, adding that businesses and households continue to face significant burdens, borne unevenly.

Originating Source

US plans to distribute Pfizer’s COVID-19 vaccine next month, Anthony Fauci says he would take it

The US Government plans to begin vaccinating Americans in December, as long as Pfizer submits the positive initial data from its COVID-19 vaccine trial to health regulators as quickly as expected. Top US infectious disease expert Anthony Fauci and Health Secretary Alex Azar both said high-priority groups would be the first to receive the vaccine. On Monday (local time), Pfizer said the vaccine it had been developing with German partner BioNTech SE was 90 per cent effective against COVID-19, based on an early look at results from its large, late-stage trial. The US drug maker said that as soon as next week it expected to have safety data needed to apply for emergency use authorization (EUA) with the US Food and Drug Administration (FDA).

Originating Source

German ZEW investor morale falls on virus, Brexit, US election worries

German investor sentiment fell by more than expected in October as a triple whammy of coronavirus, Brexit and U.S. election angst increased uncertainty about the outlook for Europe’s largest economy, the ZEW economic research institute said. The survey of investors’ economic sentiment fell to 56.1 from 77.4 points the previous month, ZEW said on Tuesday. A Reuters poll had pointed to a fall to 73.0. “The recent sharp rise in the number of COVID-19 cases has increased uncertainty about future economic development, as has the prospect of the UK leaving the EU without a trade deal,” ZEW President Achim Wambach said in a statement.

Originating Source

Top Trump News

Attorney General William Barr

Attorney General William Barr has authorized Justice Department officials to open inquiries into potential irregularities in the presidential election, while acknowledging there’s no conclusive evidence. Barr issued a memo on Monday evening allowing U.S. attorneys across the country, as well as his top lieutenants, to “pursue substantial allegations of voting and vote tabulation irregularities prior to the certification of elections in your jurisdictions in certain cases.” “While serious allegations should be handled with great care, specious, speculative, fanciful or far-fetched claims should not be a basis for initiating federal inquiries,” Barr wrote. “Nothing here should be taken as any indication that the department has concluded that voting irregularities have impacted the outcome of any election.” After the memo was released, Richard Pilger, who led the Justice Department’s Election Crimes branch, resigned from that post on Monday night. His decision was reported by the New York Times and confirmed by his email announcing it, which was tweeted out by Vanita Gupta, who headed the department’s civil rights division under President Barack Obama

Originating Source

Trump accuse Pfizer

President Donald Trump and his son Donald Trump Jr. claimed on Monday that Pfizer deliberately waited until after the US election to announce the promising early results from its COVID-19 vaccine’s late-stage clinical trial. Though it was Pfizer that made the announcement, Trump tweeted Monday night attacking the US Food and Drug Administration and Democrats, which he said “didn’t want to have me get a Vaccine WIN, prior to the election.” He added that Pfizer “didn’t have the courage” to issue the statement earlier. Pfizer spokesperson told Business Insider that the timing had nothing to do with the election.

Originating Source

Trump discussing 2024 run

President Trump has already told advisers he’s thinking about running for president again in 2024, two sources familiar with the conversations tell Axios. This is the clearest indication yet that Trump understands he has lost the 2020 election to Joe Biden — even as the president continues to falsely insist that he is the true winner, that there has been election fraud and that his team will fight to the end in the courts.

Originating Source

Economic Indicators

U.S. JOLTs Job Openings

The number of job openings in the US increased by 84,000 from a month earlier to 6.4 million in September 2020, missing market expectations of 6.5 million and recovering further from an over five-year low hit in April. Still, vacancies remained below their pre-pandemic level of 7 million. Job openings decreased in federal government (-20,000). The number of job openings was little changed in all four regions. Meanwhile, the number of hires declined by 81,000 to 5.9 million, while total separations including quits, layoffs and discharges, and other separations decreased by 25,000 to 4.7 million. Within separations, the quits rate was little changed at 2.1 percent while the layoffs and discharges rate decreased to a series low of 0.9 percent.

U.S. API Weekly Crude Stock

Stocks of crude oil in the United States dropped by 5.15 million barrels in the week ended November 6th of 2020, following a 8.01 million drop in the previous week and marking the second straight weekly loss, data from the American Petroleum Institute showed.

China Consumer Price Index (CPI) YoY

China’s annual inflation rate eased to 0.5 percent in October 2020, the lowest since October 2009 and below market expectations of 0.8 percent. There was a sharp slowdown in prices of food (2.2 percent vs 7.9 percent in September), with pork prices falling for the first time in over 1-1/2 years. Meantime, there were falls in cost of transport (-3.9 percent vs -3.6 percent); rent, fuel, and utilities (-0.7 percent vs -0.8 percent); household goods and services (-0.1 percent vs -0.1 percent); and clothing (-0.3 percent vs -0.4 percent). At the same time, prices rose for health (1.5 percent vs 1.5 percent); and education (1.1 percent vs 0.7 percent); and other goods and services (2.4 percent vs 4.3 percent). On a monthly basis, consumer prices unexpectedly fell by 0.3 percent, the first drop in four months, missing consensus of a 0.2 percent rise.

Germany ZEW Current Conditions

The ZEW Indicator of Economic Sentiment for Germany dropped by 17.1 points from the previous month to 39.0 in November 2020, moving further away from September’s 20-year high and missing market expectations of 41.7. Investors were concerned about the economic impact of the second wave of COVID-19 and about the prospect of the German economy falling back into recession. According to survey respondents, neither the Brexit negotiations nor the outcome of the US presidential election currently were having an impact on the economic expectations for Germany. The assessment of the economic situation in Germany has slightly worsened, and currently stands at -64.3 points, 4.8 points lower than in October.

Eurozone ZEW Economic Sentiment

The ZEW Indicator of Economic Sentiment for the Euro Area fell by 19.5 points to 32.8 in November of 2020, the lowest since April. In November, 17.2 percent of the surveyed analysts expected a deterioration in economic activity, 32.8 percent expected no changes while 50 percent predicted an improvement. Meantime, the indicator of the current economic situation went up by 0.2 points to -76.4 while inflation expectations fell by 4.7 points to 22.6.

U.K. Claimant Count Change

The number of people claiming for unemployment benefits in the United Kingdom fell by 29.8 thousand to 2.6 million in September of 2020, following a revised 40.2 thousand decrease in the previous month and beating market expectations of a 50 thousand rise. Despite the decrease, it still represents a 112.4 percent or 1.4 million increase from March 2020.

Economic Calendar

Wednesday

NZ RBNZ Interest Rate Decision

Wednesday

UK GDP (Q3)  

Thursday

UK Manufacturing Production (MoM) (Sep)

Friday

US Core CPI (Oct)

Friday

US Initial Jobless Claims

Friday

US Crude Oil Inventories