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[Markets] The Dow dipped and the Nasdaq rose Wednesday ahead of the Thanksgiving holiday The Dow dipped and the Nasdaq rose Wednesday ahead of the Thanksgiving holiday Published:11/25/2020 3:18:35 PM
[Markets] US STOCKS-S&P 500, Dow pull back from all-time closing highs after grim jobless data The S&P 500 index closed lower on Wednesday as mounting U.S. layoffs in the wake of new mandated lockdowns to contain surging COVID-19 infections dampened investor risk appetite. The index and the Dow Jones Industrial Average retreated from record closing highs, pulled lower by cyclicals and small caps that drove the rally earlier in the week. Pandemic-resilient tech and tech-adjacent market leaders helped keep the Nasdaq afloat. Published:11/25/2020 3:18:34 PM
[Markets] US STOCKS-S&P 500, Dow retreat from record highs after bleak jobless data The S&P 500 and the Dow Jones Industrial Average retreated from record closing highs, pulled lower by cyclicals and small caps that drove the rally earlier in the week. Pandemic-resilient tech and tech-adjacent market leaders helped keep the Nasdaq afloat. "Days like we're seeing today on the heels of strong growth is a response to the ebb and flow of the market," said Matthew Keator, managing partner in the Keator Group, a wealth management firm in Lenox, Massachusetts. Published:11/25/2020 1:20:28 PM
[Markets] Global Stocks Set For Best Month Ever As Dollar Dumps Near 3-Year Lows Global Stocks Set For Best Month Ever As Dollar Dumps Near 3-Year Lows Tyler Durden Wed, 11/25/2020 - 13:00

With just a few days (of illiquid markets) to go, global stocks (MSCI World) is set for its greatest monthly return ever...

Source: Bloomberg

As the dollar dumps to its weakest against its fiat peers since April 2018...

Source: Bloomberg

Small Caps are outperforming this week (continuing an enormous month); Nasdaq is lagging but still up 2% this week...

The Dow is also having its best month since Jan 1987...

Source: Bloomberg

Which sent "Extreme" greed to "Extremer" greed...

Source: CNN

This is easy!!

Small Caps have dominated mega-tech this month... but did they stumble at resistance?

Source: Bloomberg

Energy stocks gave a little back today but remain up yuuuge in November. Utes are the laggards but are also up on the month...

Source: Bloomberg

Momentum staged a very small comeback relative to value today, but it's been an ugly month...

Source: Bloomberg

Treasury yields fell today but remain modestly higher on the week (2y unch, 30Y +8bps)...

Source: Bloomberg

Bitcoin was modestly lower on the day, back below $19,000, but still up large on the week...

Source: Bloomberg

Its been an ugly month for PMs as copper and crude exploded higher... hope!

Source: Bloomberg

Gold futs managed to bounce off their 200DMA and back above the $1800 level...

WTI surged back to almost $46 today - its highest in 8 months...

Finally, we note that investors should really be giving thanks to just one 'thing' this holiday... Global Central Banks!!

Source: Bloomberg

The best month ever for global stocks on the back of $14 trillion in global liquidity pukage for the last few months.

And you should probably ignore this too...

Source: Bloomberg

Oh and Maradonna died... I guess the 'hand of god' finally caught up with him.

Have a great Thanksgiving.

Published:11/25/2020 12:18:29 PM
[Markets] Fisker, Nordstrom Drive Higher as Stock Markets Pause The stock market took a pause on Wednesday morning, giving up a small portion of the gains that took the Dow Jones Industrial Average (DJINDICES: ^DJI) and S&P 500 (SNPINDEX: ^GSPC) to record heights on Tuesday. Citi also likes that the company's debut vehicle, the Fisker Ocean, is an SUV. Published:11/25/2020 11:43:35 AM
[Markets] Dow Falls Below 30,000; Salesforce Down on Report of Slack Interest Stocks are mostly lower Wednesday, a day after the Dow Jones Industrial Average and S&P; 500 close at record highs. Published:11/25/2020 11:11:26 AM
[Markets] Peter Schiff: The Real Villain Is The Fed Peter Schiff: The Real Villain Is The Fed Tyler Durden Wed, 11/25/2020 - 11:15

Via SchiffGold.com,

We’re approaching all-out market mania with optimism about a COVID vaccine and the ensuing economic renaissance that many seem convinced is right around the corner. On Tuesday (Nov. 24) the Dow Jones closed about 30,000 for the first time.

On his podcast, Peter Schiff talked about the big stock market rally. He said it’s not really about the presidential election, or the COVID vaccine, or excitement about Joe Biden. The rally is all about the Federal Reserve. And it always has been.

Pres. Donald Trump took the opportunity to call a press conference to tout the Dow record. “The stock market’s just broken 30,000 — never been broken, that number. That’s a sacred number, 30,000, and nobody thought they’d ever see it,” Trump said.

Peter reminds us that Trump said a Biden win would tank the market.

How can Donald Trump claim credit for those gains? Because the markets are forward-looking and the markets are looking forward to President Biden. Yet they’re rallying anyway. So, how can the rally be attributable to Trump?”

After Trump beat Hillary Clinton, he took credit for the rise in the stock market right after the election, saying the markets we’re optimistic about a Trump presidency. By that reasoning, wouldn’t this stock market rise in the wake of a Biden win mean the markets are optimistic about a Biden presidency? As Peter put it, Trump wants to have his cake and eat it too.

He wants to claim credit for the gains after he won and he also wants to claim credit for the gains that happened after he lost.”

But the reality is Trump is not the reason the market went up.

The real reason the market went up is the Fed. The market went up because of the Fed when Obama was president, and the market continued to go up on Trump’s watch because of the Fed.”

Peter said one of the reasons he thinks the markets are rallying this week is the announcement that former Fed chair Janet Yellen will be the next Treasury secretary.

It doesn’t matter whether it’s Trump or Biden. It’s that we have the continuation of this reckless monetary policy.”

Yellen heading up the Treasury Department strips away all pretense of Federal Reserve independence and will ensure that the Treasury will have close ties with the Fed and the two institutions can work closely together.

So, this is exactly what the market wants to hear. Janet Yellen is a super dove.”

Peter said that Yellen is perfect for the position which should really be called the “Secretary of the Debt.”

The Treasury is bare. We’ve got nothing in there buy IOUs. So, her real job is to manage the debt and to help America go deeper into debt by helping us sell our bonds to lenders around the world. But that’s going to be a very difficult thing to do right now because people are smartening up. They don’t want to buy our bonds. So, the buyer is going to be the Fed. And that’s why this cozy relationship is that much more dangerous because the Treasury is going to be selling its debt directly to the Federal Reserve because the Federal Reserve is the only one dumb enough to buy it.

So, this is what the markets are celebrating. It’s not that Biden won or Trump lost.

They don’t care that Biden’s president. They care about the Fed as long as that money machine keeps going. And in fact, anything that Biden does to weaken the economy just guarantees more monetary stimulus to supposedly deal with the weakness in the economy, and what’s supposedly bad for Main Street is great news for Wall Street, and that’s what’s being celebrated.”

In simplest terms – the real villain is the Federal Reserve.

And it needs to be held accountable for the fallout from the explosion of the bubbles they inflate.”

Peter also spent some time in this podcast comparing the 1920s with the 2020s. He argues that the 2020s are not going to be like the boom of the 1920s. It’s going to be more like a combination of the 1930s with low economic growth and the 1970s with high inflation.

Published:11/25/2020 10:17:46 AM
[Markets] Dow slides below 30,000 mark early Wednesday even with Nasdaq at record heights Dow slides below 30,000 mark early Wednesday even with Nasdaq at record heights Published:11/25/2020 9:10:20 AM
[Markets] Dow Slides a Day After Rising Above 30,000 Stocks are mostly lower Wednesday, a day after the Dow Jones Industrial Average and S&P; 500 close at record highs. Published:11/25/2020 9:10:20 AM
[Markets] Dow futures point to a pullback from the 30,000 level first achieved a day ago Dow futures point to a pullback from the 30,000 level first achieved a day ago Published:11/25/2020 7:12:23 AM
[Markets] Dow Drops Below 30,000, Global Rally Fizzles Ahead Of Data Deluge Dow Drops Below 30,000, Global Rally Fizzles Ahead Of Data Deluge Tyler Durden Wed, 11/25/2020 - 07:57

US index futures dropped alongside shares in Europe with Dow Jones futures sliding back under 30,000...

... as a furious three-day rally paused ahead of a slew of pre-holiday economic indicators. Data, from jobless claims to consumer confidence and personal income, are due before markets close and traders head off for Thanksgiving.Ppositive vaccine news and the formal start of President-elect Joe Biden’s transition to power - including the selection of Janet Yellen as Treasury secretary - have fueled optimism about the outlook helping global shares hit record highs earlier on Wednesday, and were on course for their best month ever. S&P 500 futures, which roll from the December to the March contract, rose as much as 0.6% before reversing gains.

"All eyes on U.S. data,” David Madden, an analyst at CMC Markets UK, wrote in a note. He cited durable goods, an advanced reading of the third quarter gross domestic product and jobless claims among some of the indicators traders will be looking at on Wednesday.

Joe Biden on Tuesday introduced his foreign policy and national security team which was basically extracted from the Obama administration, after President Donald Trump cleared the way to prepare for the start of his administration. Reports that Biden planned to nominate former Federal Reserve Chair Janet Yellen as Treasury Secretary, potentially easing the passage of a fiscal-stimulus package to counter COVID-19 damage, also cheered markets. As a result of the newly found optimism, the MSCI all world index rose to a record high of 622.12. It was last trading flat, on course for a record monthly gain, before the rally reversed overnight, although that will likely prove temporary: a Reuters poll found that the rally for global stocks is set to continue for at least six months.

"The world is going to look a lot better this time next year than it does now, and that’s what equity markets are reflecting," said Mike Bell, global market strategist at J.P. Morgan Asset Management. “The fact is the outlook has dramatically changed in the last month."

The Stoxx Europe 600 Index edged lower, as cyclicals such as mining and energy firms fell, offsetting advances in defensives including utility shares. ABN Amro Bank NV and Commerzbank AG dropped more than 4% and led euro-area lenders lower after the European Central Bank said the industry will probably have to set aside more money to soak up losses when government pandemic support ends. European banking stocks retreated reversing gains following good news on dividend prospects from an FT report, according to which bank dividends would be allowed in 2021. However, less promising headlines from the ECB’s financial stability review poured cold water on that . While the central bank hasn’t made its stance clear, consensus seems to be that banks with bigger buffers and strong capital generation will be allowed to pay out some of the excess cash. However, dividend futures are barely moving, which implies that markets remain cautious on the outlook for payouts and are probably awaiting more clarity on the path of the economy.

Still, optimism around vaccine developments and expectations of a recovery in corporate confidence and profitability should also push European stocks to near record highs next year, a separate Reuters survey found.

Earlier in the session, MSCI’s index of Asia-Pacific shares outside Japan fell 0.4% erasing a gain of 1.1%, with Chinese shares capped by worries about rising debt defaults. Japan’s Nikkei rose to a 29-year high, though analysts and fund managers polled by Reuters foresaw a correction in the near term. Markets in Taiwan and South Korea also retreated.

As noted above, there is a literal tsunami of pre-holiday data on deck which includes everything from initial claims, to GDP, to capex, to new home sales, to the FOMC minutes:

  • 8:30am: Initial Jobless Claims, est. 730,000, prior 742,000; Continuing Claims, est. 6m, prior 6.37m
  • 8:30am: Advance Goods Trade Balance, est. $80.4b deficit, prior $79.4b deficit
  • 8:30am: Wholesale Inventories MoM, est. 0.4%, prior 0.4%; Retail Inventories MoM, est. 0.6%, prior 1.6%
  • 8:30am: GDP Annualized QoQ, est. 33.1%, prior 33.1%; Personal Consumption, est. 40.85%, prior 40.7%
  • 8:30am: Core PCE QoQ, est. 3.5%, prior 3.5%
  • 8:30am: Durable Goods Orders, est. 0.85%, prior 1.9%; Durables Ex Transportation, est. 0.5%, prior 0.9%
  • 8:30am: Cap Goods Orders Nondef Ex Air, est. 0.5%, prior 1.0%; Cap Goods Ship Nondef Ex Air, est. 0.4%, prior 0.5%
  • 10am: Personal Income, est. -0.1%, prior 0.9%; Personal Spending, est. 0.4%, prior 1.4%
  • 10am: PCE Deflator MoM, est. 0.0%, prior 0.2%; PCE Deflator YoY, est. 1.2%, prior 1.4%
  • 10am: U. of Mich. Sentiment, est. 77, prior 77; Current Conditions, prior 85.8; Expectations, prior 71.3
  • 10am: New Home Sales, est. 975,000, prior 959,000; New Home Sales MoM, est. 1.67%, prior -3.5%
  • 2pm: FOMC Meeting Minutes

“Now, there’s big event risk up ahead: FOMC minutes,” said Ilya Spivak, head Asia-Pacific strategist at DailyFX. “The worry is that the Fed will continue to signal that they’re keeping to a hands-off posture. No tightening, but no new easing either."

Despite the overnight market wobble, investors remain optimistic that upcoming virus vaccines would help the industries hit hardest by the pandemic, from tourism to energy. Global energy shares have risen almost 34% so far this month, on track for their best month on record as crude prices rally. Oil prices held near their highest levels since March on the improved global economic outlook. Brent futures were up 1.2% to $48.42 per barrel, touching a high last seen in March.

In FX, riskier currencies gained against safe havens, though the under-pressure dollar showed resilience as the morning went on. The Australian dollar moved to its highest since early September, already helped by investors unwinding bets on additional monetary easing. The Bloomberg Dollar Spot Index erased losses after dipping in early European hours and the dollar traded mixed versus G-10 peers, though most currencies were confined to narrow ranges ahead of the U.S. Thanksgiving holiday on Thursday. The dollar is expected to fall further as progress on a vaccine and the expected choice of Yellen as the next U.S. Treasury secretary relieved two big uncertainties for investors. The euro fell against the dollar, and was last down 0.1% at $1.18835, giving up an earlier gain to trade near the $1.19 handle while Norway’s krone led G-10 gains as oil prices continued to rally. The pound swung between gains and losses, as investors awaited more news on Brexit and U.K. Chancellor of the Exchequer Rishi Sunak’s spending review. The New Zealand dollar held up following the central bank governor’s clarification on negative interest rates and a round of quantitative easing purchases.

Risk-on moves played out in bond markets, too. Yields on benchmark euro zone debt rose from record lows, with German Bund yields edged to near their highest levels in almost a week before reversing.  In the US, Treasuries were slightly richer across the curve in early U.S. trading as S&P 500 futures retreated from near-record highs. Yields were lower by ~1bp at long end of the curve, flattening 2s10s and 5s30s spreads by less than 1bp; the 2- , 5- and 7-year notes sold at auction Monday and Tuesday trade at profits, and potential exists for large month-end buying flows. No coupon supply events are slated ahead of Thursday’s U.S. holiday, however a pending economic data dump includes 3Q GDP revision, October durable goods orders and Nov. 5 FOMC minutes.

Bitcoin edged up 0.8% to $19,1420, staying within sight of its record peak of $19,666 after notching gains of nearly 40% in November alone.

Looking at today's calendar, it's a shitshow, with data on everything from initial jobless claims, the second estimate of Q3 GDP, durable goods orders, personal income, personal spending and new home sales, along with the final University of Michigan sentiment reading for November. From central banks, the Fed will be releasing the minutes of their November meeting, the ECB will publish their Financial Stability Review, and the ECB’s Holzmann will be speaking. Finally, the aforementioned spending review in the UK will be taking place.

Market Snapshot

  • S&P 500 futures little changed at 3,632.50
  • STOXX Europe 600 down 0.2% to 391.65
  • MXAP down 0.06% to 191.33
  • MXAPJ down 0.4% to 630.98
  • Nikkei up 0.5% to 26,296.86
  • Topix up 0.3% to 1,767.67
  • Hang Seng Index up 0.3% to 26,669.75
  • Shanghai Composite down 1.2% to 3,362.33
  • Sensex down 1.6% to 43,813.45
  • Australia S&P/ASX 200 up 0.6% to 6,683.33
  • Kospi down 0.6% to 2,601.54
  • Brent futures up 1% to $48.34/bbl
  • Gold spot up 0.3% to $1,812.63
  • U.S. Dollar Index down 0.1% to 92.12
  • German 10Y yield fell 1.1 bps to -0.574%
  • Euro up 0.03% to $1.1896
  • Italian 10Y yield fell 1.2 bps to 0.501%
  • Spanish 10Y yield fell 1.0 bps to 0.064%

Top Overnight News from Bloomberg

  • Euro-area banks will probably have to set aside more money to soak up losses when government pandemic support ends and the economy grapples with massively increased debt, the European Central Bank said
  • European Commission President Ursula von der Leyen said the coming days will be “decisive” for trade negotiations with the U.K. and crucial differences between the two sides remain
  • As Treasury secretary, Janet Yellen is almost certain to pursue tighter coordination with the U.S. Federal Reserve next year -- repairing recent frictions -- though observers say she will be careful to avoid any specific move that could trigger a wave of Republican protests
  • German Chancellor Angela Merkel is proposing a further tightening of the country’s coronavirus restrictions, setting the stage for another tense round of discussions with the country’s state premiers who favor more lenient measures
  • The deadlock over the European Union’s $2 trillion spending package may not be resolved soon, potentially depriving Hungary of much of its funding from the bloc next year, Finance Minister Mihaly Varga told the Vilaggazdasag business daily
  • A ECB-backed committee is exploring options for a transition should Euribor, one of the cornerstones of the European Union’s financial system, cease to exist
  • A significant number of asset managers risk being locked out of the interest-rate swaps market early next year unless they sign on to a new protocol designed to smooth the transition away from Libor, warned the chairman of the U.S. Commodity Futures Trading Commission
  • Coronavirus restrictions in the U.K. will be eased over Christmas to allow as many as three households to meet indoors
  • BOE policy maker Michael Saunders warned that the turn of the year will be rocky under the twin impacts of the coronavirus and Brexit -- though the latter will ultimately be the bigger challenge

 

 

 

US Event Calendar

  • 8:30am: Initial Jobless Claims, est. 730,000, prior 742,000; Continuing Claims, est. 6m, prior 6.37m
  • 8:30am: Advance Goods Trade Balance, est. $80.4b deficit, prior $79.4b deficit
  • 8:30am: Wholesale Inventories MoM, est. 0.4%, prior 0.4%; Retail Inventories MoM, est. 0.6%, prior 1.6%
  • 8:30am: GDP Annualized QoQ, est. 33.1%, prior 33.1%; Personal Consumption, est. 40.85%, prior 40.7%
  • 8:30am: Core PCE QoQ, est. 3.5%, prior 3.5%
  • 8:30am: Durable Goods Orders, est. 0.85%, prior 1.9%; Durables Ex Transportation, est. 0.5%, prior 0.9%
  • 8:30am: Cap Goods Orders Nondef Ex Air, est. 0.5%, prior 1.0%; Cap Goods Ship Nondef Ex Air, est. 0.4%, prior 0.5%
  • 10am: Personal Income, est. -0.1%, prior 0.9%; Personal Spending, est. 0.4%, prior 1.4%
  • 10am: PCE Deflator MoM, est. 0.0%, prior 0.2%; PCE Deflator YoY, est. 1.2%, prior 1.4%
  • 10am: U. of Mich. Sentiment, est. 77, prior 77; Current Conditions, prior 85.8; Expectations, prior 71.3
  • 10am: New Home Sales, est. 975,000, prior 959,000; New Home Sales MoM, est. 1.67%, prior -3.5%
  • 2pm: FOMC Meeting Minutes

DB's Jim Reid concludes the overnight wrap

Well I heard “Fairytale of New York” for the first time in 2020 yesterday and my wife put on a Michael Buble Xmas album over dinner last night, but as regular readers know I don’t get into the Xmas spirit until I hear “Last Christmas” by Wham! Today marks a month until Xmas and only 22 trading days until the big day including today. If you assume that Thanksgiving tomorrow and Friday are near write offs then that leaves you with two less. So we are certainly getting to the end of a forgettable but ultimately unforgettable year.

The Santa Claus rally has already been underway since the election with the extra cyclical Santa treat coming in the form of the recent vaccine news. Indeed global equity markets rallied once again yesterday with the notional highlight being the Dow Jones breaking through the 30,000 barrier for the first time as investors were relieved by the prospect of a smooth presidential transition following the General Services Administration’s move to commence the process. Though President Trump said in a tweet yesterday that “the GSA does not determine who the next President of the United States will be”, the move has allayed market fears that the US will face extended political uncertainty in the coming weeks, and comes as increasing numbers of states have moved to certify their election results, with Pennsylvania the latest to announce yesterday. As well as this, another catalyst from after the previous day’s European close was the choice of former Fed Chair Yellen to be Biden’s Treasury Secretary, since she’s seen as someone who’ll coordinate well with the Federal Reserve and be market friendly.

As mentioned, the Dow Jones (+1.54%) moved to an all-time high, aided by a +4.56% move from Boeing. The S&P 500 was also up +1.62% to its own all-time high, though the NASDAQ lagged a little with a +1.31% rise as tech stocks underperformed the broader equity market. Our new favourite measure, namely the equal weight S&P 500, was +2.18% showing the bias to the non-mega caps. On this, in yesterday’s CoTD we showed how the top ten largest companies in the world were at that highest share relative to the next 90 largest since we have data and probably a lot further back than that. We think a vaccine will be the turning point towards normalising that relationship. See the graph here .

With the mega-cap tech stocks underperforming the story remains on the normalisation theme. US small caps stocks rose +1.94%, having gained in seven of the last eight sessions. The ratio of the Russell 2000 over the NASDAQ is just shy of its highest level of the pandemic so far with the small cap index on track for its best month ever. On the single stock level, the strong performances by Carnival (+11.28%), United Airlines (+9.85%), MGM Resorts (+8.80%) and Royal Caribbean Cruises (+7.72%) showed how the travel industry continues to respond positively to the vaccine headlines. In other back-to-normal moves, bank stocks continued improving on both sides of the Atlantic with S&P 500 Banks rising +5.53% and their European counterparts rising +4.66% yesterday as core yields continued to rise.

Big moves higher were also seen from energy stocks (+5.16% in US and +4.65% in Europe) as both Brent Crude and WTI oil prices rose to a post-pandemic high of $47.86/bbl and $44.91/bbl respectively. Europe missed out on the last legs of the US rally last night but the STOXX 600 rose +0.91% to reach a post-pandemic high, while the DAX rose +1.26% to move back into positive territory on a YTD basis.

Overnight, Xinhua has reported that Sinopharm has submitted an application in China to bring its Covid-19 vaccine to the market. The application is believed to include data on the company’s Phase III trials conducted in the Middle East and South America. This application will likely make Sinopharm the first developer outside of Russia to see its shots made available for general public use. Sinopharm’s vaccine already had emergency use authorisation in China and according to reports they have been given to hundreds of thousands of people so far. They have not released any public data on the efficacy of its shots though. A Chinese vaccine would be helpful for the ASEAN countries as most of them have pre-dose agreements with China. Elsewhere, we saw new information from AstraZeneca that showed that the more successful half dose/full dose measure was only given to those under 55 years old.

Asian markets are trading a little more mixed this morning after paring early larger gains. The Nikkei (+0.76%) and Hang Seng (+0.44%) are still up while the Shanghai Comp (-0.33%) and Kospi (-0.94%) have turned red. Meanwhile, futures on the S&P 500 are up a modest +0.08% and the US dollar index is down -0.14%.

In other overnight news, Bloomberg has reported that Treasury Secretary Steven Mnuchin will put $455bn in unspent Cares Act funding into the agency’s General Fund which will then require Treasury Secretary elect Yellen to seek congressional approval for using the monies. Most of this money had gone to support the Fed’s emergency-lending facilities. Elsewhere, the FT has reported that the ECB is signaling that it could lift the ban on bank dividends next year.

The flip side of the positive news yesterday was that safe havens struggled once again, and gold prices fell another -1.65% to a fresh 4-month low of $1,808/oz. In FX as well, the traditional safe-haven Japanese yen was the worst-performing G10 currency for the second day running. As referenced above, it was a similar story for core sovereign bonds, with yields on 10yr Treasuries (+2.6bps), bunds (+1.8bps) and gilts (+1.2bps) all rising, though there was a tightening of peripheral spreads in line with the broader rally in risk assets. Notably, yields on Italian 10yr BTPs fell to an all-time low yesterday of 0.61%, and their spread over 10yr bund yields fell to a 2-year low of 1.17%.

One asset that didn’t struggle yesterday was Bitcoin, which surged another +2.84%, closing at $18,945 which was just shy of the all-time closing high of $19,042. It didn’t quite breach its all-time intraday high in December 2017 of $19,511, but the cryptocurrency broke the $19,400 mark intraday. The move still leaves Bitcoin up +164.66% up on a YTD basis. Meanwhile Tesla rose +6.43% to a fresh record high that saw the company’s market cap surpass $500bn for the first time, with the share price having surged +564% since the start of the year.

Here in the UK, attention today will focus on the government’s Spending Review, as well as the Office for Budget Responsibility’s latest forecasts for the economy and the public finances. This is just a one-year review for 2021-22, but it will be interesting to see what the long-term fiscal picture looks like as well as the extent of tightening pencilled in for the year ahead. Fortunately for the government there have been signs that the latest lockdown is having an effect on the Covid numbers, with the number of daily confirmed cases falling to 11,299 yesterday, the lowest since October 2, while the latest 7-day average of 18,295 was also the lowest in just over a month.

Elsewhere on Covid, French ICU occupants which currently sits at just shy of 4500 is expected to fall below 3000 by the end of the month, and to under 1500 by the middle of December according to the Istitut Pasteur. The research centre added that they estimate that 11% of the overall French population has already been infected by the virus. This came as President Macron announced that the lockdown measures will be lifted gradually from this Saturday onward when small stores can reopen. Notably, restaurants will remain closed until January 20, but much of the lockdown is set to be lifted by December 15. However ski resorts will stay shut until the new year which means I now won’t be skiing at Xmas.

In an effort to contain the virus’s spread around the Thanksgiving holiday in the US, New York City will have checkpoints at specific bridges and crossings to enforce the travel quarantine and set up testing appointments. These will not be used for those travelling to contiguous states but the city’s measures will be enforced for those using the city’s airports and train stations.

On the data side, the Ifo’s business climate indicator from Germany fell to 90.7 in November (vs. 90.2 expected). That’s the second consecutive monthly decline and comes on the back of rising restrictions in Europe in response to the second wave of the pandemic. Over in the US, the Conference Board’s consumer confidence indicator also fell in November to 96.1 (vs. 98.0 expected), and the expectations indicator fell for a second month running to 89.5.

To the day ahead now, and there’s an array of US data releases ahead of tomorrow’s Thanksgiving holiday, including the weekly initial jobless claims, the second estimate of Q3 GDP, the preliminary reading of October’s durable goods orders, October’s personal income, personal spending and new home sales, along with the final University of Michigan sentiment reading for November. From central banks, the Fed will be releasing the minutes of their November meeting, the ECB will publish their Financial Stability Review, and the ECB’s Holzmann will be speaking. Finally, the aforementioned spending review in the UK will be taking place.

Published:11/25/2020 7:12:23 AM
[Markets] Dow 30,000, Gap, VMware, Coronavirus - 5 Things You Must Know Wednesday Stock futures wobble, a day after the Dow Jones Industrial Average and S&P; 500 close at record highs; Gap sinks as sales at its namesake brand and Banana Republic slump; jobless claims and consumer sentiment data to be released Wednesday. Published:11/25/2020 4:15:52 AM
[Markets] GLOBAL MARKETS-Stocks hit record high as Biden transition, vaccines brighten outlook Global shares reached record highs on Wednesday after the Dow Jones broke 30,000, with investors relieved at the prospect of a smooth handover of power after the U.S. presidential election and confident a COVID-19 vaccine would soon be ready. President-elect Joe Biden on Tuesday introduced his foreign policy and national security team after President Donald Trump cleared the way to prepare for the start of his administration. Reports that Biden planned to nominate former Federal Reserve Chair Janet Yellen as Treasury Secretary, potentially easing the passage of a fiscal stimulus package to counter COVID-19 damage, also cheered markets. Published:11/25/2020 3:37:47 AM
[Markets] Europe Markets: European stocks and U.S. equity futures post modest gains after record session on Wall Street European equities and U.S. stock futures were trading modestly higher on Wednesday, a day after the Dow industrials hit 30,000 for the first time. However, with a U.S. holiday looming for Thursday, investors appeared ready to head to the sidelines.
Published:11/25/2020 2:50:17 AM
[Markets] GLOBAL MARKETS-Stocks hit record high as Biden, vaccine lift investor outlook World shares rallied to a record peak on Wednesday following an overnight surge that saw the Dow Jones benchmark crack 30,000 for the first time as investors cheered a dramatically improved global outlook. The formal start of U.S. president-elect Joe Biden's transition to the White House and increasing confidence a COVID-19 vaccine would be ready soon ushered in renewed appetite for global shares. After weeks of waiting, President Donald Trump's administration on Monday cleared the way for Biden to prepare for the start of his administration, giving him access to briefings and funding. Published:11/25/2020 12:41:26 AM
[Markets] Global Stock Rally Extends After U.S. Records: Markets Wrap (Bloomberg) -- A global equity rally picked up steam on Wednesday after U.S. stocks climbed to fresh records, with cash continuing to flow into cyclical sectors. The dollar extended its decline.Shares rose across Asia Pacific, with energy and raw-materials stocks leading gains. Futures on the S&P 500 Index pushed higher after the index closed at an all-time high and the Dow Jones Industrial Average topped 30,000 for the first time. Helping sentiment overnight was the formal start of President-elect Joe Biden’s transition, a clearer sense of what his Treasury Department will have in policy preferences under Janet Yellen and a third promising vaccine candidate. The Treasury yield curve continued to steepen on Thursday. Oil held its surge above $45 a barrel in New York.Positive vaccine news has fueled optimism that the global economic recovery can continue despite more troubling news on the virus front, with cases rising and more U.S. states enacting restrictions ahead of the Thanksgiving holiday. Next up Wednesday comes a slew of American economic indicators, from jobless claims to readings on consumer confidence and personal income.“Looking three to six months out, we do think the recovery will maintain its momentum,” Anna Han, equity strategist at Wells Fargo Securities LLC, said on Bloomberg TV. “When you see that reflation trade coming back, it’s telling you that investors are gaining confidence in growth prospects looking forward.”Elsewhere, Bitcoin rose to a three-year high, topping $19,000 as it closed in on a record. In New Zealand, bond yields climbed to the highest since July following the central bank’s quantitative easing operation.Here are some key events coming up:Minutes of the most recent Federal Open Market Committee meeting are due Wednesday.U.S. jobless claims, GDP and personal spending data come Wednesday.U.K. Chancellor of the Exchequer will lay out spending plan on Wednesday.Thursday sees a policy decision and briefing from the Bank of Korea.U.S. celebrates the Thanksgiving holiday on Thursday.The week ends with Black Friday, the traditional start of the U.S. holiday shopping season.These are the main moves in markets:StocksS&P 500 Index futures added 0.5% as of 10:25 a.m. in Tokyo. The gauge rose 1.6% on Tuesday.Japan’s Topix index advanced 1.5%.Hang Seng rose 0.9%.Shanghai Composite added 0.4%.South Korea’s Kospi index gained 0.6%.Euro Stoxx 50 futures advanced 0.7%.CurrenciesThe Bloomberg Dollar Spot Index was flat after falling 0.4%.The euro bought $1.1901, up 0.1%.The yen was at 104.49 per dollar.The offshore yuan traded at 6.5707 per dollar.BondsThe yield on 10-year Treasuries rose one basis point to 0.89%.Australia’s 10-year yield climbed four basis points to 0.94%.CommoditiesWest Texas Intermediate crude rose 0.3% to $45.01 a barrel.Gold was at $1,811.34 an ounce, up 0.2%.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P. Published:11/24/2020 8:08:57 PM
[Markets] Stocks rise as vaccines, Biden presidency lift global confidence Asian stocks made early gains on Wednesday, following a world rally overnight that saw the Dow Jones benchmark crack 30,000 for the first time as investors cheered a dramatically improved global outlook. The main drivers of that exuberance were increasing confidence a COVID-19 vaccine would be ready soon and the formal start of U.S. president-elect Joe Biden's transition to the White House, which ends weeks of post-election political uncertainty. President Donald Trump's apparent willingness to comply with the formal transfer of power also boosted investor sentiment, following weeks of legal challenges to the election results. Published:11/24/2020 6:36:22 PM
[Markets] Stock market news live updates: Futures point to full steam ahead on Wall Street after Dow hits 30K Investors are unbowed from taking the market to fresh highs after the Dow set a new milestone. Published:11/24/2020 6:07:25 PM
[Markets] There Were Two Americas Today As Dow Struck 30,000  There Were Two Americas Today As Dow Struck 30,000  Tyler Durden Tue, 11/24/2020 - 18:50

The K-shaped economic recovery, one where the rich grow richer and the working-poor are crushed with job loss and insurmountable debts, was on full display Tuesday afternoon as the Dow Jones Industrial Average crossed 30,000 for the first time. 

By mid-afternoon, hours after the DJIA soared to new highs, Bloomberg tweeted a disturbing video of yet, another massive food bank line, something we've been highlighting this fall as an increasing occurrence as covid winter continues to crush the working-poor.   

Today's food bank lines were situated in Albuquerque, New Mexico, where hundreds of vehicles were lined up "at a local stadium parking lot," Bloomberg said. The lines snaked around a parking lot, with an overflow of vehicles pouring out onto the city street. 

On Monday, we noted that on Dec. 31, many of the key provisions in the CARES Act are set to expire if there is no action from Congress. This could be catastrophic for 12 million America who will lose access to their Emergency unemployment benefits activated in the aftermath of the covid pandemic, which alone could be a drag of up to 1.5% to growth in 1Q, according to a recent Bank of America report. 

Additionally, the expiration of eviction moratorium, mortgage forbearance programs, and suspension of student loan payments could compound the working poor's financial stresses, many of whom, about 21 million of them, are unemployed and receiving benefits from the government. 

In today's America, massive food bank lines are becoming a common occurrence once more - similar to what was seen in the early days of the pandemic. 

Earlier this month, the North Texas Food Bank (NTFB) handed out more than 600,000 pounds of food to 25,000 hungry people - one of the largest-ever food giveaways, explained NTFB officials. 

While other stimulus packages could be introduced under the Biden administration, America's working poor has been permanently scarred for years and financially set back a decade. 

The K-shaped recovery is getting worse - dropping helicopter money has yet to fix the economy as promised earlier in the year as millions of families are set to go without food this holiday season. 

Just a reminder, a rising stock market tide doesn't lift all boats. 

Published:11/24/2020 6:07:25 PM
[Markets] How investors should think about Dow 30,000 The Dow’s journey to 30,000 has been nothing short of remarkable.  It’s the latest milestone in a post-election rally that’s been fueled by promising results from three potential COVID-19 vaccines.    "The idea that we're hitting Dow 30,000 in a pandemic year, the same year where it almost hit 18,000, is utterly outrageous.” Oanda analyst Craig Erlam told the Wall Street Journal  The blue-chip index flirted with 30,000 in February, then the pandemic hit. In March, with much of the U-S in lockdown because of the virus, the Dow fell below 19,000.  Since then, the index has soared more than 60%, setting multiple records along the way. The Dow is now on track to close out its best month since 1987.  Published:11/24/2020 5:40:44 PM
[Markets] US STOCKS-Dow scales 30,000 on vaccine headway, Biden transition U.S. stocks rallied on Tuesday and the Dow breached the 30,000 level for the first time, as investors anticipated a 2021 economic recovery on coronavirus vaccine progress and the formal clearance for President-elect Joe Biden's transition to the White House. Of the 11 major S&P sectors, 10 gained ground, led by economically sensitive stocks such as financials, materials and energy, while industrials hit a record. President Donald Trump finally gave the green light for the formal transfer of power to begin on Monday, a process that was delayed for weeks despite Democrat Joe Biden emerging as the clear winner in the U.S. elections. Published:11/24/2020 4:12:33 PM
[Markets] US STOCKS-Dow scales 30,000 on vaccine headway, Biden transition U.S. stocks rallied on Tuesday and the Dow breached the 30,000 level for the first time, as investors anticipated a 2021 economic recovery coronavirus vaccine progress and the formal clearance for President-elect Joe Biden's transition to the White House. Each of the 11 major S&P sectors were higher, economically sensitive stocks such as the financials, materials and energy names, while industrials hit a record. President Donald Trump finally gave the green light for the formal transfer of power to begin on Monday, a process that was delayed for weeks despite Democrat Joe Biden emerging as the clear winner in the U.S. elections. Published:11/24/2020 3:05:27 PM
[Markets] Dow, S&P, & Bitcoin Soar To Record Close As Dollar & Gold Sink Dow, S&P, & Bitcoin Soar To Record Close As Dollar & Gold Sink Tyler Durden Tue, 11/24/2020 - 16:01

Consumer Confidence tumbled...

Source: Bloomberg

...COVID cases are soaring, lockdowns are crushing small businesses, and 'hope' is fading fast...

Source: Bloomberg

...so Buy The F**king Record Highs in stocks and dump the dollar, bonds, and gold (because who needs 'protection' when there is Yellen, vaccines, and stimulus-y hopes).

As we noted earlier, The Dow topped 30k for the first time today - all thanks to $14 trillion in global liquidity puked into the markets (not the economy)...

Source: Bloomberg

Bitcoin also closed at a record high (not quite intraday high), above the $19,100 close on Dec 16thm 2017...

Source: Bloomberg

The reopening/work-from-home trade continues to hold its recent rotation but is not extending...

Source: Bloomberg

Bank stocks soared today...

Source: Bloomberg

But energy stocks continued their massive surge (as healthcare lagged)...

Source: Bloomberg

Extending its month's massive gains...

Source: Bloomberg

Another day, another short-squeeze. This is just endless since the election!

Source: Bloomberg

Momentum continued its carnage relative to value...

Source: Bloomberg

This 13-day crash is the same 30.6% as we saw in May/June... which is equal to the 2009 collapse...

Source: Bloomberg

If "greed is good", then "extreme greed is better"...

Source: CNN

And no one needs any protection...

Source: Bloomberg

Which perhaps explains the plunge in gold, breaking below $1800 intraday...

...finding support at the 200DMA...

Source: Bloomberg

And the selling of bonds (30Y up 8bps in the last two days, 2Y flat)...

Source: Bloomberg

The correlation between bitcoin and gold has entirely reversed...

Source: Bloomberg

The dollar chopped around the last 24 hours, but ended down today...

Source: Bloomberg

...falling to its weakest against its fiat peers since April 2018...

Source: Bloomberg

While gold and silver sank today, oil prices jumped with WTI back above $45 (its highest since March)...

And copper soared back to 2018 highs...

Source: Bloomberg

The surge in copper sent the copper/gold ratio to its highest since January and implies 10Y Yields should be 120bps higher than they currently are (or copper/gold should plunge)....

Source: Bloomberg

Finally, it seemed appropriate to give John Hussman the final words today as The Dow reaches record highs amid capitulation in the face of overwhelming liquidity...

One of the remarkable features of financial television is the single-minded focus of its talking heads on the latest move – their full-fledged immersion in the now. In contrast, the thinking of a disciplined value-investor is primarily on the long-term and the complete cycle. Our measures of market internals are certainly helpful in navigating shorter periods of speculation and risk-aversion. Still, investors who abandon the Iron Law of Valuation are inviting a world of pain.

Take a set of future cash flows and the current price of those cash flows: the relationship between the two reflects the rate of return that investors can expect to attain over time. That’s not a theory, it’s just arithmetic.

The CNBC interview with Jeremy Grantham offered a striking example of the difference between long-term and short-term thinking. Even as Grantham reiterated the extreme valuation concerns he discussed a few months ago, the interviewer countered, “Markets have risen since then. Why are you still convinced?”

Grantham responded, “Actually, it works quite the other way around. The more spectacular the rise, and the longer it goes, the more certainty one can have that you’re in a real McCoy bubble.”

At the most extreme valuations in history, that proposition might, and should, be obvious, but it simply did not compute in the short-term thinking of the anchors – one whose furrowed brow and scrunched facial expressions vacillated between annoyance, ridicule, and derision. The post-interview discussion instead included this interchange:

“I mean, last time around when you talked to him and he called it a bubble, it did seem a little more plausible. It seems like he’s doubling down.”

“You start to weigh out the possibilities that he could be missing a further rally in the markets.”

Oh, man. The unwinding of this bubble is going to be painful.

Published:11/24/2020 3:05:27 PM
[Markets] Dow rallies over 450 points to end above milestone at 30,000 for first time ever Dow rallies over 450 points to end above milestone at 30,000 for first time ever Published:11/24/2020 3:05:27 PM
[Markets] US STOCKS-Dow tops 30,000 on vaccine progress, Biden transition U.S. stocks rallied on Tuesday, with the Dow piercing the 30,000 level for the first time, as investors anticipated a 2021 economic recovery on progress on coronavirus vaccines and the formal clearance for President-elect Joe Biden's transition to the White House. Each of the 11 major S&P sectors was higher, led by economically sensitive stocks such as industrials, which climbed to a record, along with the financials, up 2.8% and energy, up 4.2%. Published:11/24/2020 2:04:16 PM
[Markets] Dow Surpasses 30,000: What It Means for Real Estate Stocks The stock market made history on Nov. 24 as the Dow Jones Industrial Average soared past 30,000 for the first time. Each subgroup faced a specific pandemic-related headwind that has been weighing it down. Published:11/24/2020 1:38:33 PM
[Markets] Home Prices In Every Major City Jump More Than Double The Fed's Inflation Target Home Prices In Every Major City Jump More Than Double The Fed's Inflation Target Tyler Durden Tue, 11/24/2020 - 14:00

While various Fed speakers are vowing this week that there will be no rate hikes until at least 2023 or 2024, the Fed may be surprised to learn that if it were to broaden its definition of inflation, it would find it is quite ample already.

One month ago, we looked at the housing market which we said was in the middle of a buying "frenzy." Today's Case Shiller data merely confirmed this, with the 20-City Composite index surging at a stunning 6.6% Y/Y in September, more than 1% higher than August (and smashing expectations of a 5.3% print), and the highest in 30 months.

But the real shocker was looking at the component cities that make up the composite index. Here, not only is the housing bubble clearly back in certain Western cities such as Phoenic, Seattle, San Diego and LA, all of which posted a 9.5% or higher increase in annual home prices, but more remarkably even the lowest increase - that of New York - was no less than 4.3% (up from 2.8% just last month).

This means that every major US city saw home price increases that were more than double the Fed's stated 2% inflation target (although under the new Average Inflation Targeting, the Fed's so-called target is a fluid number and can be whatever the Fed decides it is).

But why should we - or central bankers for that matter - care about soaring home prices? For the answer look no further than New Zealand, whose central bank just 6 weeks ago warned that negative rates could be coming, yet where home prices have soared so much, overnight the Finance Minister Grant Robertson sent a letter to the central bank expressing concerns over how low rates have stoked home prices, and asking the RBNZ to include home prices to its monetary policy remit in order to halt the staggering surge in prices and force the central bank to consider tightening financial conditions only due to out of control home prices.

The result, as we reported earlier, was a surge in the New Zealand dollar as odds for a rate cut in 2021 collapsed and the market is on the verge of pricing in a rate hike.

Is this relevant for the US? Well, if one takes Yellen at her word that she is worried about wealth inequality, what other more relevant sector is there to focus on boosting the net worth of lower and middle classes than housing, and specifically making it more affordable so that more Americans can afford buying a home rather than be stuck as renters all their lives.

Of course, if this becomes a concern for the Fed, and considering the unprecedented spike in home prices in recent months, the first rate hike will take place not in 2024 but some time in 2021 as the Fed continues to inject an unprecedented 0.6% of GDP into the market every single month, ensuring that the housing bubble gets bigger with every passing month.

Alas, none of this matters because Yellen is a "progressive" only to sycophant financial commentators and politicians who merely regurgitate talking points for political purposes and/or career advancement. As such, the only chart that matters is this one from Morgan Stanley.

With trillions more in liquidity injection on deck for the next several years, something the stock market has just priced in today with the Dow hitting 30,000 for the first time ever, we can't even imagine how fast home prices will be rising in a few months' time, let alone around the time the Fed is expected to proceed with its first rate hike, sometime in 2023 or 2024.

Published:11/24/2020 1:04:15 PM
[News] Analysis: Dow Cracks 30,000, a Psychological Boost During a Pandemic The Dow Jones Industrial Average clocked its fastest 10,000 point run up to cross 30,000 for the first time. Published:11/24/2020 12:08:16 PM
[Markets] Dow Jones Industrial Average surpasses 30,000 level for first time ever Dow Jones Industrial Average surpasses 30,000 level for first time ever Published:11/24/2020 11:36:24 AM
[Markets] Analysis: Dow cracks 30,000, a psychological boost during a pandemic At 30,000 points the Dow could lure in small investors still on the sidelines who are now eager to share in the market exuberance. The DJIA on Tuesday surged 1.45%, or 429 points, to trade at a record high 30,015 points, not quite four years after reaching the 20,000 mark on Jan 25, 2017. Catalysts included recent signs that a working COVID-19 vaccine could be available before the end of the year, based on promising trial results released by Pfizer, Moderna and AstraZeneca. Published:11/24/2020 11:36:24 AM
[Markets] Watch: President Trump Celebrates Dow 30k & The Great American People Watch: President Trump Celebrates Dow 30k & The Great American People Tyler Durden Tue, 11/24/2020 - 12:33

A day after allowing GSA to enable the transition process for Joe Biden, the sudden surprise timing of President Trump delivering remarks this morning (ahead of his 'pardoning' a pair of Turkeys) raises more than a few eyebrows.

Watch Live (due to start at 1230ET)...

Published:11/24/2020 11:36:24 AM
[Markets] Back-to-Normal Rally Drives Dow Above 30,000 for First Time (Bloomberg) -- Speculation that vaccines and a possibly peaceful presidential transition are steps toward normalization in the economy ignited another rally in shares ravaged by the pandemic, pushing the Dow Jones Industrial Average past 30,000 for the first time.Boeing Co., a chronic drag on the 124-year-old index most of the year, surged as much as 5%, while JPMorgan Chase & Co., American Express Co. and Chevron Corp. climbed at least 3%. Gains outside the blue-chip benchmark were even bigger: American Airlines Group Inc. and Carnival Corp. jumped more than 8% while movie theater operator AMC Entertainment Holdings Inc. jumped 15%.Once a laggard, the Dow and its cyclical components have shot up 13% since Halloween, putting it on track for the best month since 1987. Gains in the world’s most-famous equity index mirror a profound market reordering in November, when growing optimism about an economic reopening pushed up industries like energy and banking that suffered under stay-at-home restrictions and the policies enacted to cope with them.“Investors will continue to look through near-term noise and position for normalization next year,” said Dennis DeBusschere, head of portfolio strategy at Evercore ISI. “Cyclical will continue to lead into year end, basically on the idea that people realize they are still awesome companies and everything else has moved significantly.”The 30-member gauge climbed 1.7% to 30,085.53 as of 11:58 a.m. in New York as all its constituents advanced except for Amgen Inc. It’s been almost four years since the Dow first crossed 20,000 landmark. To analysts who follow charts to forecast prices, breaking above a big round number is seen as potential sentiment boost as bulls chase momentum.Searches for “Dow 30K” have picked up on Google trends in recent weeks as the market rally broadened. AstraZeneca Plc on Monday became the latest firm to deliver positive vaccine data, bolstering confidence in the economic recovery.The bounce in economically sensitive shares is helping the Dow make up ground in a market that for most of the year has been dominated by the safe, stay-at-home trade of technology companies. Extending its 2020 gain to 5%, the Dow has narrowed its performance gap to the S&P 500 to 7 percentage points.“30,000 makes headlines, it does tend to generate interest, and interest generates money coming into the market,” said Bill Callahan, investment strategist at Schroders. “Investors and institutions and fund managers are still heavily overweight to defensive and growth sectors. There’s still a lot of money that needs to come into these cyclical sectors before the move is over. I think it’ll continue to go higher.”(Adds fresh investor comment in last paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P. Published:11/24/2020 11:07:57 AM
[Markets] Dow Jones hits 30,000 as Wall Street bets on 2021 bounce While U.S. economic activity is reeling from the damage inflicted by lockdowns and employment is at levels last seen in 2015, a raft of monetary and fiscal stimulus has powered Wall Street's main indexes back to record highs. For the blue-chip Dow, the journey to 30,000 from the 20,000-mark took less than four years, a much faster climb than the previous 10,000-point clamber, which took nearly two decades. The rise from 29,000 to 30,000 took the Dow about 10 months. Published:11/24/2020 10:43:04 AM
[Markets] Dow Tops 30k (After Flood Of $14 Trillion In Global Liquidity) Dow Tops 30k (After Flood Of $14 Trillion In Global Liquidity) Tyler Durden Tue, 11/24/2020 - 11:25

Mission Accomplished?

For the first time ever, The Dow Jones Industrial Average has reached 30,000 (and all it took was $14 trillion in global liquidity)...

That's quite a run...and quite an inflection after Nixon and Greenspan...

It turns out Barron's cover in January 2017 was not a curse after all...

Or its cover in January 2020...

Because, it's not the economy, stupid!!

It's The Fed and their global central planning pals!!

So, when do we reach Dow 300,000?

Published:11/24/2020 10:32:01 AM
[Markets] Dow industrials come within 4 points of 30,000 level early Tuesday Dow industrials come within 4 points of 30,000 level early Tuesday Published:11/24/2020 10:03:44 AM
[Markets] Three-hundred-plus-point advance Tuesday puts Dow just 100 points from 30,000 Three-hundred-plus-point advance Tuesday puts Dow just 100 points from 30,000 Published:11/24/2020 9:05:25 AM
[Markets] US Home Prices Accelerate At Fastest Pace In Over 30 Months US Home Prices Accelerate At Fastest Pace In Over 30 Months Tyler Durden Tue, 11/24/2020 - 09:03

Analysts expected US home prices to continue their re-acceleration in September (the latest monthly data from Case-Shiller), but the actual data crushed expectations, soaring 6.57% YoY (20-City Composite) versus +5.3% expected (and +5.33% in August)...

Source: Bloomberg

Phoenix, Seattle, San Diego reported highest year-over-year gains among 19 cities surveyed (Detroit excluded from report due to virus-related reporting constraints)

"This month’s increase may reflect a catch-up of COVID-depressed demand from earlier this year," Craig J. Lazzara, global head of index investment strategy at S&P Dow Jones Indices, said in a statement. 

"It might also presage future strength, as COVID encourages potential buyers to move from urban apartments to suburban homes."

As we detailed earlier, three factors are driving home prices higher:

  1. Buyers kept on benefiting from favorable market conditions with mortgage rates reaching the lowest level on record

  2. Demand for second homes skyrocketed amid pandemic

  3. Housing supply remained limited

As Freddie Mac's Chief Economist (@TheSamKhater) noted:

"While economic growth remains unstable, strong housing demand continues to have a domino effect on many other segments of the economy.”

And given the collapse in rates, and the lagged effect of that drop, some might argue that home prices will continue to accelerate for a while longer...

Source: Bloomberg

Of course, there is always the possibility of no stimulus raining on the housing market's parade as Lockdown 2.0 strikes.

Published:11/24/2020 8:05:29 AM
[Markets] Stock market news live updates: Futures add to gains, investors look to extend vaccine rally The Dow is now on the cusp of a new record, as investors look beyond the COVID-19 spike to a vaccine. Published:11/23/2020 5:47:34 PM
[Markets] US STOCKS-Cyclical gains lift stocks, Yellen news gives brief boost U.S. stocks closed higher in a choppy session on Monday as hopes for a COVID-19 vaccine lifted economically sensitive sectors such as energy and industrials, but a pullback in megacap shares curbed gains on the S&P 500 and Nasdaq. Energy shares got a boost from another gain in oil prices, which have risen on anticipation a vaccine will help demand recover. "As they move out of those growth names, it's still this continued move into larger cyclical, value names which is why you see the Dow performing so well and the Nasdaq under some pressure." Published:11/23/2020 3:51:05 PM
[Markets] Dow ends up over 300 points as vaccine optimism bolsters Wall Street Dow ends up over 300 points as vaccine optimism bolsters Wall Street Published:11/23/2020 3:19:44 PM
[Markets] Dow Posts Solid Gains as Vaccine Optimism Boosts Wall Street Stocks rose Monday as investors welcomed further progress on the development of a coronavirus vaccine but remained cautious amid rising infection rates and worries that curbs on businesses to stem the spread of the virus could hamper an economic recovery. The Dow Jones Industrial Average rose 210 points, or 0.72%, to 29,474, the S&P 500 gained 0.39% and the Nasdaq was up 0.11%. The Covid-19 vaccine candidate being developed by AstraZeneca and the University of Oxford was found in a large trial to have prevented a majority of people from getting the disease. Published:11/23/2020 10:16:32 AM
[Markets] NewsWatch: The Dow has completely recovered its 2020 bear-market loss. Here’s what comes next Dow’s recovery since March is impressive but says nothing about how long the bull market will run, writes Mark Hulbert.
Published:11/22/2020 4:10:00 PM
[Markets] NewsWatch: The Dow has completely recovered its 2020 bear-market loss. Here’s what comes next Dow’s recovery since March is impressive but says nothing about how long the bull market will run, writes Mark Hulbert.
Published:11/22/2020 11:14:05 AM
[Markets] NewsWatch: The Dow has completely recovered its 2020 bear-market loss. Here’s what comes next Dow’s recovery since March is impressive but says nothing about how long the bull market will run, writes Mark Hulbert.
Published:11/22/2020 8:07:40 AM
[Markets] NewsWatch: The Dow has completely recovered its 2020 bear-market loss. Here’s what comes next Dow’s recovery since March is impressive but says nothing about how long the bull market will run, writes Mark Hulbert.
Published:11/21/2020 4:21:21 PM
[Markets] 10 Best Stocks in the Dow This Past Week: Boeing Rises The top 10 best-performing stocks in the Dow Jones Industrial Average over the past week included Boeing, Nike and Disney among others. Published:11/20/2020 4:46:26 PM
[Markets] NewsWatch: The Dow has completely recovered its 2020 bear-market loss. Here’s what comes next Dow’s recovery since March is impressive but says nothing about how long the bull market will run, writes Mark Hulbert.
Published:11/20/2020 4:20:37 PM
[Markets] GLOBAL MARKETS-Stocks, bonds fall, dollar flat as Fed fears subside Stock prices and bond yields fell in relatively light trading on Friday as investors reacted to dwindling aid for the U.S. economy and rising coronavirus infection rates. The Dow Jones Industrial Average fell 219.75 points, or 0.75%, to 29,263.48, the S&P 500 lost 24.33 points, or 0.68%, to 3,557.54 and the Nasdaq Composite dropped 49.74 points, or 0.42%, to 11,854.97. The S&P 500 and the Dow posted marginal losses for the week, while the tech-laden Nasdaq settled a bit higher from last Friday's close. Published:11/20/2020 4:20:37 PM
[Markets] Stocks Dip, Crypto Rips As 'Dark Winter' Trumps 'Spring Reopening' Stocks Dip, Crypto Rips As 'Dark Winter' Trumps 'Spring Reopening' Tyler Durden Fri, 11/20/2020 - 16:00

For all the hype about vaccines returning us to normal, it appears to be more a "sell the news" event as vaccine good news is stimulus bad news (and Mnuchin's move didn't help the latter's hype). So, in spite of all the good news on vaccines and treatments, stocks were mixed with S&P and Dow red on the week (Dark Winter?), Small Caps best (value rotation), Nasdaq tumbled into the red in the last few minutes (mixed picture)...

It appears winter is coming before spring can sprung...

Last night's headlines on Mnuchin ending various fed programs sparked some early selling that the machines bid back overnight. However, today's opex weighed as gamma pins were lifted but again we saw the chaotic last hour as stocks initially tanked then were panic-bid, then reversed to the lows of the day (aside for Small Caps)...

Airlines rallied this week (but faded the last couple of days)...

Source: Bloomberg

Similar picture for banks as they eked out gains after a strong start...

Source: Bloomberg

Momentum fell relative to value for the second week in a row...

Source: Bloomberg

Notably, however, the momo/value rotation drastically decoupled from bond yields this week...

Source: Bloomberg

HY bond prices dropped today, but modestly, not reacting very violently to Mnuchin's Fed punchbowl pull...

But spreads did decouple today from equity risk...

Source: Bloomberg

Despite the mixed bag in stocks, bonds were bid aggressively with the long-end yield dropping over 11bps...

Source: Bloomberg

30Y Yields tumbled, erasing all of the Pfizer vaccine spike...

Source: Bloomberg

The Dollar drifted lower all week, back at the post-election, pre-Pfizer-vaccine lows...

Source: Bloomberg

Cryptos had a big week with Litecoin and Ripple outperforming...

Source: Bloomberg

Bitcoin neared its record high...

Source: Bloomberg

And Ethereum surged back above $500...

Source: Bloomberg

Bitcoin has erased most of the DeFi boom outperformance of Ethereum...

Source: Bloomberg

Copper and Crude rallied on the week as PMs limped lower...

Source: Bloomberg

Gold bounced off the Pfizer vaccine plunge lows...

Oil (WTI) ended the week above $42...

Copper has soared to a two year high on vaccine 'return to normal' hopes, but the copper/gold ratio remains entirely decoupled from bonds...

Source: Bloomberg

Finally, as Bloomberg reports, the world's stock of negative-yielding debt climbed to a record $17.1 trillion as pandemic-spurred economic damage and monetary stimulus continued to grip bond investors even as news of progress on a vaccine lifted equity markets. The frenzy for China's first sovereign-bond sale with a sub-zero yield only underscored the unwavering demand for the asset class.

And that is supportive for gold (and maybe one reason for Bitcoin's surge)...

Source: Bloomberg

And in stock-land, Nomura's Charlie McElligott warns that the data suggests a significant amount of the aggregate options position $Gamma to run-off across SPX / SPY, QQQ, IWM and EEM as per standard options expiration cycle - and in-light of such extreme “long $Delta,” the end of day today into early next week is the window for the market to “un-pin,” especially as recent and incredibly supportive Dealer Vanna- and Charm- flow is gone.

Trade accordingly.

Published:11/20/2020 3:14:29 PM
[Markets] Mark Hulbert: The Dow has completely recovered its 2020 bear-market loss. Here’s what comes next Dow’s recovery since March is impressive but says nothing about how long the bull market will run, writes Mark Hulbert.
Published:11/20/2020 2:44:56 PM
[Markets] US STOCKS-S&P 500, Dow dip as spiking COVID-19 infections eclipse vaccine hopes The S&P 500 and the Dow edged lower on Friday as investors headed into the weekend grappling with disappointing fiscal stimulus news and uncertain efforts to combat a spiraling COVID-19 pandemic with vaccines. The S&P 500 and the Dow were on track to post marginal losses for the week, while the tech-laden Nasdaq appeared set to settle a bit higher than last Friday's close. Published:11/20/2020 1:14:23 PM
[Markets] US STOCKS-S&P 500, Dow dip on concerns over rising COVID-19 infections The S&P 500 and the Dow slipped on Friday with a surge in coronavirus cases threatening to derail a fragile economic recovery, even as plans were announced for ending several of the Federal Reserve's economic support programs. The Nasdaq edged 0.2% higher, boosted by a rise in shares of stay-at-home darlings Zoom Video Communications Inc and Amazon.com Inc. Published:11/20/2020 11:50:30 AM
[Markets] Mark Hulbert: The Dow has recovered its 2020 bear-market loss — so what's next? Mark Hulbert: The Dow has recovered its 2020 bear-market loss — so what's next? Published:11/20/2020 7:50:37 AM
[Markets] U.S. Index Futures Fall as Mnuchin Seeks Unused Funds From Fed (Bloomberg) -- U.S. stock index futures fell after Treasury Secretary Steven Mnuchin and the Federal Reserve publicly disagreed Thursday over whether to extend the central bank’s emergency pandemic lending programs.December contracts on the S&P 500 dropped 0.5% at 2:49 p.m. in Tokyo. Futures declined 0.7% on the Dow Jones Industrial Average and were little changed on the Nasdaq 100 Index. Mnuchin sought a 90-day extension for four of the central bank’s emergency lending programs, but requested other programs expire on schedule on Dec. 31 and the Fed return $455 billion to the Treasury so Congress can spend the money elsewhere. But the central bank pushed back and said the programs served a vital role.“I think traders are concerned that the Fed backstop is being compromised by a Treasury secretary who’ll be out of a job in a few months,” said Max Gokhman, Pacific Life Fund Advisors’ head of asset allocation. “It’s very hard to make decisive day-to-day calls in a market like this where there are so many sources of volatility.”On Thursday, tech shares led U.S. equity indexes higher, with the stay-at-home trade gaining appeal as investors weighed the impact of tougher virus restrictions on economic growth along with the outlook for widespread vaccine distribution within months. The S&P 500 Index ended the day up 0.4%.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P. Published:11/20/2020 12:11:00 AM
[Markets] Stocks wobble after Mnuchin pulls plug on Fed stimulus World financial markets stalled on Friday as news U.S. Treasury was ending emergency loans programmes dealt a blow to economic recovery hopes just as California announced curfews to try and fight surging coronavirus infections. S&P500 futures slipped 0.5% while Dow futures fell 0.6%, cancelling out a firmer lead from a strong Wall Street session overnight. The dollar was slightly weaker and the 10-year Treasury yield slipped to the lowest in 10 days at 0.818%. Published:11/19/2020 11:40:20 PM
[Markets] Value Rotation Stalls As Bond Yields, Dollar Slide Value Rotation Stalls As Bond Yields, Dollar Slide Tyler Durden Thu, 11/19/2020 - 16:01

Stocks have never been more expensive, but that doesn't stop the machines panic-buying them to record-erer expensive levels.

The major US equity indices were loitering with no intent for much of the day, gently unwinding the recent value-rotation when headlines hit on Schumer-McConnell talks (stimulus!!!! buy mortimer buy!)... The machines the headline, figured stimulus and were insta-bid...

But, the algos ignored the fact that Republicans said the meeting was about the government funding deadline, not COVID relief.

And after all that, all the majors ended higher on the day, with Nasdaq and Small Caps outperforming, Dow lagging...

This market has gone to '11' in terms of utter irrationality.

The value rotation unwound a little today...

Source: Bloomberg

The Russell 2000 / Nasdaq 100 pair reverted a little today...

Energy stocks surged once again today (despite a marginal move in crude), pushing the Energy sector to its best Q4-to-date in at least 30 years...

Source: Bloomberg

Banks were higher today...

Source: Bloomberg

As VIX fell back to a 22 handle once again, implied correlation has tumbled to pre-COVID crisis levels (no systemic risk priced in to macro overlays)...

Source: Bloomberg

Cyclicals outperformed Defensives (pushing to their highest since Jan 2020), completely decoupled from bonds...

Source: Bloomberg

Treasuries were bid (with yields down around 2-3bps at the long-end, flat at the short-end)...

Source: Bloomberg

30Y Yields dropped below pre-Pfizer vaccine levels...

Source: Bloomberg

The Dollar roller-coastered higher then tumbled lower intraday, accelerating weaker on the Schumer headlines...

Source: Bloomberg

This is the lowest close for the dollar since April 2018...

Source: Bloomberg

Bitcoin held steady around $18,000...

Source: Bloomberg

Oil prices clung to positive gains on the day, closing just above $42...

 

Gold traded lower, back near Pfizer vaccine lows...

Finally, we note John Hussman's latest note  highlighting the fact that the valuation of U.S. stocks has never been more extreme, even at the 1929 and 2000 market peaks. Hussman points out that he has intentionally excluded the impact of pandemic GDP and profit weakness, which would otherwise make this measure even more extreme.

Hussman continues to expect the S&P 500 Index to lose two-thirds of its value over the completion of the current market cycle. That loss would not even breach historical valuation norms, but it would at least bring estimates of long-term expected S&P 500 returns closer to their historical average, in contrast to the negative 10-12 year prospects we observe at present.

"...we’re also well aware of how closely the speculative features of this market resemble the pre-crash peaks of August 1929 and March 2000, as well as lesser ones like January 1972 August 1987, and October 2007."

Still, there's always the overnight session to make the big bucks...

Published:11/19/2020 3:04:47 PM
[Markets] The Dow has joined other indexes in the green after a report of new relief talks The Dow has joined other indexes in the green after a report of new relief talks Published:11/19/2020 2:07:05 PM
[Markets] Hundreds Of Companies That Got PPP Loans Have Gone Bankrupt Hundreds Of Companies That Got PPP Loans Have Gone Bankrupt Tyler Durden Thu, 11/19/2020 - 08:50

Authored by Mike Shedlock via MishTalk,

Recipients of PPP loans have filed for bankruptcy after the money ran out.

At least a Half Billion in PPP Loans Won't Be Repaid 

Hundreds of companies employing 23,400 people went Bankrupt after PPP Funds Ran Out.

The total number of companies that failed despite getting PPP loans is likely far higher. The Journal only analyzed the big borrowers from the program, which accounted for about half of the overall loans though only about 13.5% of the total participants. And many small businesses simply liquidate when they run out of cash rather than file for bankruptcy.

The SBA has only released data on the largest borrowers, which the Journal linked to bankruptcy filings.

About $525 billion in loans were distributed to over 5 million companies between April 3 and Aug. 8.

At least 285 medium-sized companies went under. Undoubtedly thousands of smaller companies did as well.

PPP Program Fatally Flawed

I never understood giving money to corporations so they could pay workers. 

The workers were covered by state unemployment insurance, plus pandemic assistance. 

Many people made more money being unemployed than than they did working thanks to $600 in weekly pandemic assistance checks.

Moreover, the program was fertile grounds for fraud. Many companies opened businesses to take advantage of the guarantees. 

Evidence of PPP Fraud Mounts

Please consider Evidence of PPP Fraud Mounts, Officials Say

The Small Business Administration’s inspector general, an arm of the agency that administers the PPP, said last month there were “strong indicators of widespread potential abuse and fraud in the PPP.”

The watchdog counted tens of thousands of companies that received PPP loans for which they appear to have been ineligible, such as corporations created after the pandemic began, businesses that exceeded workforce size limits (generally 500 employees or fewer) or those listed in a federal “Do Not Pay” database because they already owe money to taxpayers.

Several hundred PPP-related investigations have been opened, involving nearly 500 suspects and hundreds of millions of dollars of loans, according to the Federal Bureau of Investigation.

Some Democratic lawmakers and others have voiced concerns that the SBA’s refusal to release the names of all borrowers would make detecting fraud more difficult.

That issue might have been resolved last week, however, when a federal judge sided with news organizations including Dow Jones & Co., publisher of The Wall Street Journal, that argued the SBA was legally required to disclose the borrowers.

More Shutdowns Means More Bankruptcies

  1. Ohio Gov. Restricts Weddings, Threatens to Close Businesses

  2. 24 States Reach Their Highest Level of Covid Hospitalizations

  3. Utah Governor Mandates Masks and Restricts Gatherings

  4. El Paso Shut Down as 10 Mobile Morgues Fill Up

Also note 83% of Passengers Will Not Return to Old Travel Habits

States are increasing lockdowns again except this time there is no program in place to deal with the mess.

Bankruptcy counts will soar. What a disaster.

Published:11/19/2020 8:00:56 AM
[Markets] Dow futures point to third day of losses on COVID-19 concerns Dow futures point to third day of losses on COVID-19 concerns Published:11/19/2020 6:31:26 AM
[Markets] Dow finishes down over 340 points as stock market skids lower Dow finishes down over 340 points as stock market skids lower Published:11/18/2020 3:36:54 PM
[Markets] Dow industrials down 300 points in final minutes of session Dow industrials down 300 points in final minutes of session Published:11/18/2020 3:00:01 PM
[Markets] Bitcoin Jumps, Stocks Dump After Vaccine-Pop Flops Bitcoin Jumps, Stocks Dump After Vaccine-Pop Flops Tyler Durden Wed, 11/18/2020 - 16:00

A hope-filled vaccine headline redux from Pfizer (95% efficacy... that's better than MRNA's 94.5%...) sparked another algo-buying-panic but de Blasio battered those dreams by shutting down NY schools as COVID cases soar. The machines tried to ramp 'em after the de Blasio bust but that rip was dumped...

This has erased all the week's gains for Nasdaq, Dow, and S&P...

95% effective... it's like 90% effective but better...

Specifically, NYC-exposed stocks (Office and Apartment REITs) were hit...

Today's move erased all of the S&P 500's gains relative to Russell 2000 since the COVID crisis began...

Source: Bloomberg

Cyclicals and Defensives were both sold today...

Source: Bloomberg

Momo and value unwound their early moves to end unch...

Source: Bloomberg

Treasury yields ended modestly higher on the day, but still well below last week's cycle highs (the belly underperformed 5Y-10Y +2bps, 2& & 30Y unch)...

Source: Bloomberg

30Y Yields have erased all the spike from Pfizer's vaccine news last week...

Source: Bloomberg

The Dollar continued it slide to post-election, pre-Pfizer-vaccine lows...

Source: Bloomberg

Bitcoin surged above $18,000 intraday (just shy of $18,500)...

Source: Bloomberg

Bitcoin was the highest since the peak in Dec 2017...

Source: Bloomberg

As Bitcoin has soared, it decouple from gold, with correlation actually going negative...

Source: Bloomberg

Oil prices managed to hold on to modest gains, ending the day around $42...

Gold investors bought the dip again as 'someone' monkeyhammered the precious metal again on the Pfizer news...

 

Finally, the weekly put-call ratio has plunged (exuberantly) to its most complacent since Jan 2011 (and below the extremes of Aug 2020)...

Source: Bloomberg

Now this is a spurious correlation... (or is it? Is Bitcoin anticipating massive stimulus as COVID cases explode before Biden comes to the rescue in the new year?)

Source: Bloomberg

Published:11/18/2020 3:00:01 PM
[Markets] The Dow and S&P 500 have turned negative in afternoon stock trading The Dow and S&P 500 have turned negative in afternoon stock trading Published:11/18/2020 12:45:09 PM
[Markets] Stock market news live updates: Stock futures tick lower as investors eye virus spread Stock futures opened slightly lower Tuesday evening after a drop in the three major averages during the regular session, as the S&P 500 and Dow pulled back slightly from their record closing levels earlier this week. Published:11/17/2020 5:30:09 PM
[Markets] Dow ends down over 160 points as stocks retreat from records Dow ends down over 160 points as stocks retreat from records Published:11/17/2020 3:28:14 PM
[Markets] US STOCKS-Wall Street closes lower as shutdown worries loom U.S. stocks retreated from record closing highs on Tuesday, ending lower as surging COVID-19 cases, the growing threat of a fresh round of economic lockdowns and weak retail sales data dampened the euphoria caused by potential vaccine breakthroughs. The sell-off was a reversal of Monday's rally, in which the blue-chip Dow reached its first record closing high since before the pandemic. The Nasdaq's loss was capped by surging Tesla Inc shares, and small cap stocks outperformed, with the Russell 2000 reaching a new record closing high. Published:11/17/2020 3:28:13 PM
[Markets] Quant Carnage Hammers Iconic Hedge Funds Renaissance, Two Sigma Quant Carnage Hammers Iconic Hedge Funds Renaissance, Two Sigma Tyler Durden Tue, 11/17/2020 - 15:17

Last Monday, when momentum stocks suffered a spectacular collapse as the Dow Jones Market Neutral Momentum index plunged the most on record...

... a move which Nomura's Charlie McElligott quantified as a 15 sigma drawdown, or one which normally would take place every several billions years...

... we said that "what was already a dismal year for quant funds is about to get absolutely catastrophic."

We were right, because as Bloomberg reports today the carnage spread as far as some of the most iconic quant powerhouses: Jim Simons' Renaissance Technologies and its peer, Two Sigma Advisors.

According to Bloomberg, the two quant investing giants, both of which rely heavily on factor investing, have seen losses across several of their funds in 2020, "a sign of how unprecedented market volatility caused by the Covid-19 pandemic hurt even the most sophisticated traders."

The reason: not only did momentum stocks, which virtually all quants had been riding since the March lows as a result of the chronic underperformance of the value factor, tumbled...

... but the VIX exploded higher, and has averaged 33 since the end of February, 14 points higher than the average over the prior 30 years. That has upended performance from firms that in recent years have been among the best on Wall Street, and normally thrive during periods of heightened volatility.

But the real reason for the quant carnage is that backtests and historical trade relationships which quants rely on to formulate investment strategist, have failed miserable in 2020: "Quants rely on data from time periods that have no reflection of today’s environment," said Adam Taback, CIO at Wells Fargo Private Wealth Management. "When you have volatility in markets, it makes it extremely difficult for them to catch anything because they get whipsawed back and forth."

As a result, Renaissance saw a decline of about 20% through October in its long-biased fund, with the $75 billion firm’s market-neutral fund tumbling 27% and its global-equities fund losing about 25%. Amusingly, the firm "explained" its dismal performance to investors claiming that its losses are due to being under-hedged during March’s collapse and then over-hedged in the rebound from April through June. That happened because models that had "overcompensated" for the original trouble.

One would think such excuses are moot when one's fund has a "hedge" adjective behind it, but apparently not.

"It is not surprising that our funds, which depend on models that are trained on historical data, should perform abnormally (either for the better or for the worse) in a year that is anything but normal by historical standards," Renaissance told clients in a September letter. According to Bloomberg, the firm said it has redirected additional personnel to work on the funds, and that its leadership "made it clear to the research staff that understanding and addressing the situation with these funds is our company’s highest priority."

Yeah, well, in a world in which central bankers have no idea what they are doing, we wish the "research staff" all the best as they go back to the drawing board with their investing models.

Another legendary quant firm, the $58 billion Two Sigma, saw its risk-premia strategy lose 11.5% this year through last month, Bloomberg reported. The firm’s absolute-return fund declined 2.7%, while its absolute-return macro fund slumped 23%.

While we have yet to hear of more pronounced casualties, it's only a matter of time before far greater losses are unearthed. The reason is that for quant funds which specialize in factor-investing - picking securities based on traits such as recent performance or volatility - November may have added to the bruising, according to Neuberger Berman Group’s Ian Haas who oversees quantitative and directional strategy research.

"This could be a very bad month" for firms that had been betting on so-called momentum stocks, said Haas based on preliminary performance data from some of those hedge funds on Nov. 9. That’s when Pfizer Inc. announced the results of its vaccine trial, which spurred an unprecedented rotation out of growth, tech and momentum companies that had been benefiting from the pandemic and the lowflation environment into value stocks.

Ironically, even quants such as Cliff Asness' AQR Capital Management, which have a pro-value tilt in many of its portfolios, the pullback from momentum exposure was simply too big. In fact, the overall hit was so big that the AQR Equity Market Neutral Fund added to its losses without barely a rebound, and is down 19% this year through Monday, just off the worst levels of the year.

To be sure, not every quant has had a miserable year: D.E. Shaw’s main hedge fund, The Composite Fund, made 0.4% in October, bringing gains for the first 10 months to about 15%, Bloomberg reported, adding that its macro-oriented Oculus Fund jumped 2% in October, extending 2020 gains to 23%.

Published:11/17/2020 2:30:25 PM
[Markets] US STOCKS-S&P 500, Dow drop from record levels as coronavirus cases spike Wall Street's main indexes fell on Tuesday with the S&P 500 and the Dow retreating from record closing highs hit a day earlier, following disappointing retail sales data and a spike in COVID-19 cases across the country. The Nasdaq's losses were limited by a 7.6% jump in Tesla Inc's shares on news the electric-car maker would join the benchmark S&P 500 in December. Published:11/17/2020 11:27:12 AM
[Markets] French Bars, Restaurants Expected To Stay Closed Until Mid-January: Live Updates French Bars, Restaurants Expected To Stay Closed Until Mid-January: Live Updates Tyler Durden Tue, 11/17/2020 - 10:21

Summary:

  • French bars, restaurants expected to remain closed until mid-January
  • Moderna strikes deal with the UK to sell 5MN doses
  • Grassley to quarantine after exposure
  • Global cases top 55 million
  • US hospitalizations at new record
  • US seeing 150k new cases per day
  • India outbreak continues to slow
  • Australian PM heads to Tokyo
  • Illinois, Michigan more than 10k+ new cases

* * *

Update (1000ET): Continuing to follow the pattern from last week's Pfizer data release, Moderna on Tuesday announced a deal to 5 million doses of the COVID-19 vaccine.

Sen. Grassley, meanwhile, said he's been exposed to someone with the virus, and that he will "follow my doctor's orders" and "immediately quarantine" according to a statement published to twitter.

In the biggest news out of Europe Tuesday morning, French-language media outlets France Info radio reported that French bars and restaurants will likely remain closed until mid-January as the government tries to tampe down on the resurgent coronavirus outbreak.

Goverment officials are planning to review the situation next month, but "for now, there's no calendar set", one anonymous official said. Health Minister Olivier Veran said on BFM TV that bars and restaurants wouldn't reopen in December. Even as the number of new cases declines, some shop owners are pushing the gvernment ot allow them to reopen for the weekend after Friday Nov. 27, according to Bloomberg.

For now, at least, it looks like Macron's Dec. 1 goal is already beyond reach.

"For now, the prime minister has announced that we’ve set a goal of Dec. 1 to let them reopen if the health situation continues to improve," Veran said. "There’s encouraging news, but it remains serious. We still have more patients in the hospital today than at the peak of the first wave."

As the holidays approach, florists will be able to sell Christmas trees outside their shops starting Friday, said Agriculture Minister Julien Denormandie in an interview with RMC radio. Florists now are only allowed to sell flowers if customers order them in advance.

* * *

From California to New Jersey, states are reimposing strict new lockdown measures with roughly a week and a half to go before the holiday, with California pulling the partial-lockdown "emergency break" and Michigan adopting one of its own to last at least 3 weeks.

The new restrictions follow an unprecedented surge, with the US reporting a million new infections during the first ten days of November, prompting health experts like Dr. Anthony Fauci to warn that both Thanksgiving and Christmas should be cancelled this year. On Monday, Dr. Deborah Birx, a member of the White House task force, said she isn't seeing a plateau in new cases.

New cases are averaging 150k new cases per day in the US, an increase of 37% over the past week, with hospitalizations hitting a new peak of 73k. Additionally, the 7-day average for deaths has climbed to 1,128, the highest level since the summer. All of this, of course, follows news that Moderna's mRNA-based COVID-19 vaccine is even more effective than Pfizer's, creating that "light at the end of the tunnel" that recently helped push the Dow to a new record.

But reality was setting back in on Tuesday, as US futs pointed to a drop at the open. According to data from Bloomberg, Pennsylvania has seen a 14% jump in total cases, while Ohio’s have surged 19%, Washington state’s climbed 11% and Illinois’s are up 18%. Michigan’s cases have increased 20%, the most since April.

After VP Mike Pence insisted that plenty of hospital beds remain open around the country, hospitalizations per million people has topped 500 in ND an SD. 8 states have more than 400 per million hospitalized.

Illinois and Michigan reported more than 10k new cases yesterday, as the present wave of the outbreak remains centered on the midwest.

Global cases have topped 55 million as of Tuesday morning, thanks to the latest numbers out of Europe and Asia. Deaths worldwide have reached 1,329,556. The world added more than half a million new cases yesterday, down from record highs seen earlier this month, but still higher than at any time during the spring and summer.

Here's some more news from overnight and Tuesday morning:

India continues to report a dip in cases, with 29,163 infections in the last 24 hours a day after recording a four-month low of 30,548. Total infections in the country have hit 8.87 million while the death toll has jumped by 449 to 130,519 (Source: Nikkei).

Pfizer says it is starting a pilot program for COVID-19 immunization in four U.S. states to help refine a plan to deploy its vaccine candidate. The U.S. drugmaker has selected Rhode Island, Texas, New Mexico and Tennessee (Source: Nikkei).

Australian Prime Minister Scott Morrison arrives in Tokyo to discuss with Japanese counterpart Yoshihide Suga about strengthening ties, including establishing a framework for each country's troops to train together and conduct joint military operations. Morrison will be the first foreign leader to meet Suga and is expected to spend the nationally mandated two weeks in quarantine when he returns home (Source: Nikkei).

Published:11/17/2020 9:34:09 AM
[Markets] Walgreens is Dow's biggest loser early Tuesday in wake of Amazon pharmacy news Walgreens is Dow's biggest loser early Tuesday in wake of Amazon pharmacy news Published:11/17/2020 8:57:45 AM
[Markets] Market Snapshot: Stock futures slip after record-breaking session for Dow, S&P 500 Stock-index futures pull back Tuesday, indicating a lower start for equities a day after the S&P 500 and Dow Jones Industrial Average closed at records in a rally fueled by progress toward a COVID-19 vaccine.
Published:11/17/2020 6:20:45 AM
[Markets] Amazon Starts Selling Prescription Drugs To Prime Customers Amazon Starts Selling Prescription Drugs To Prime Customers Tyler Durden Tue, 11/17/2020 - 06:41

There's an old saying: Never waste a good crisis. Well, Amazon CEO Jeff Bezos, the world's richest man, isn't letting COVID-19 pass without wringing all the juice from the lemon.

After years of quiet and consistent preparation, from acquiring PillPack, to filing for licenses and trademarks, Amazon is finally ready to launch its online pharmacy business. The company announced Tuesday that it will start selling prescription drugs to its prime customers, a move that was widely seen as the logical next step for the e-commerce behemoth.

In a surprise move, the online pharmacy is opening Tuesday, marking an aggressive move into the pharmacy industry in the middle of an unparalleled health crisis. Starting Tuesday, the company plans to start offering common items including creams, pills, and medications. But the real key here: Amazon will also be shipping prescriptions like insulin, which has temperature requirements (it needs to stay cold) like Pfizer's COVID-19 vaccine.

Prime members who don't have insurance can buy generic or brand name drugs - presumably with a prescription - at a 'prime' discount, the company said. Though most insurance will be accepted.

Walgreens, CVS and Rite Aid tumbled in pre-market trading on the news, leaving them set to open lower, as stocks look to give back some gains after the Dow (of which Walgreens is a member) reached record highs yesterday. Pharmacy stocks have sold off on every piece of news surrounding Amazon's pharmacy gambit, as Jeff Bezos' track record of success when moving into a new industry is unparalleled.

With state governors across the US imposing new coronavirus restrictions, we imagine millions of customers will scramble to switch their prescriptions over from CVS and Walgreens to Amazon, which could create problems for both in the near-term.

Published:11/17/2020 5:51:17 AM
[Markets] RPT-GLOBAL MARKETS-Asia stocks gain after vaccine hopes push Wall Street to record highs Asian stocks opened firmer on Tuesday after the S&P 500 and Dow Jones indexes hit record highs on news of another promising coronavirus vaccine, which supported hopes of a quicker economic recovery. Investor sentiment shot up after Moderna Inc said its experimental COVID-19 vaccine was 94.5% effective in preventing infection based on interim late-state data. The Cambridge, Massachusetts-based firm became the second drugmaker, after Pfizer Inc, to announce promising trial data in the development of a vaccine to defeat the pandemic. Published:11/16/2020 7:12:47 PM
[Markets] Asian Stocks Drift After Vaccine News; Dollar Dips: Markets Wrap (Bloomberg) -- Asian stocks drifted at the open Tuesday as a rally that propelled them to record highs on optimism about a vaccine eased. The dollar extended a decline.Shares were little changed in Japan, Australia and South Korea, compared to the U.S. where the S&P 500 closed at an all-time high after Moderna Inc.’s vaccine was shown to be 94.5% effective in a preliminary analysis of a large late-stage clinical trial. S&P 500 futures fluctuated. Stocks poised to benefit from a reopening, such as cruise lines and air carriers, were among the day’s best performers on Wall Street. Benchmark Treasury yields ticked back above 0.90%. Oil held gains.Elsewhere, Tesla Inc. shares jumped more than 10% in after-hours trading after an announcement that Elon Musk’s upstart carmaker will join the S&P 500 Index on Dec. 21.The vaccine news adds yet another driver to a global stocks rotation into value and cyclical sectors that have been hardest hit by the pandemic, and out of more defensive industries like technology. Investors are betting that vaccines will allow economies to reopen next year.“We might be transitioning from a defensive bull market to a more cyclically offensive one but more clarity is required in terms of when social mobility will normalise,” Chris Iggo, chief investment officer of AXA Investment Managers Core Investments, said in a note. “That isn’t clear yet. The euphoria created by the presidential election result and the vaccine announcement will give way to a more sober analysis of how long and smooth the road to recovery will be.”Concerns about a sustainable economic recovery persist amid a flare-up in virus cases around the world. The pandemic continues to escalate in Europe and the U.S. The seven-day average of new cases in the U.S. was climbing in every state on Sunday.Here are some events to watch out for this week:Brexit talks look set to continue as the U.K. and EU approach the latest deadline.Bloomberg New Economy Forum virtually convenes global leaders to discuss trade, growing political populism, climate change, and the pandemic. Through Nov. 19.OPEC+ Joint Ministerial Monitoring Committee meets Tuesday.U.S. retail sales due Tuesday.Bank Indonesia rate decision Thursday.These are the main moves in markets:StocksS&P 500 futures were flat as of 9:16 a.m. in Tokyo. The S&P 500 Index climbed 1.2%. The Dow Jones Industrial Average advanced 1.6%.Topix index rose 0.1%.The S&P/ASX 200 Index rose 0.4%.Kospi index was little changed.Hong Kong’s Hang Seng Index contracts gained 0.3% earlier.CurrenciesThe yen rose 0.1% to 104.50 per dollar.The offshore yuan was at 6.5654 per dollar, up 0.1%.The Bloomberg Dollar Spot Index decreased 0.1%.The euro traded at $1.1861, up 0.1%.The British pound rose 0.2% to $1.3219.BondsThe yield on 10-year Treasuries was at 0.90%.Australia’s 10-year bond yield rose four basis points to 0.93%.CommoditiesWest Texas Intermediate crude rose 0.2% to $41.40 a barrel.Gold was steady at $1,890.84 an ounce.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P. Published:11/16/2020 6:42:26 PM
[Markets] GLOBAL MARKETS-Asia stocks gain after vaccine hopes push Wall Street to record highs Asian stocks opened firmer on Tuesday after the S&P 500 and Dow Jones indexes hit record highs on news of another promising coronavirus vaccine, which supported hopes of a quicker economic recovery. Investor sentiment shot up after Moderna Inc said its experimental COVID-19 vaccine was 94.5% effective in preventing infection based on interim late-state data. The Cambridge, Massachusetts-based firm became the second drugmaker, after Pfizer Inc, to announce promising trial data in the development of a vaccine to defeat the pandemic. Published:11/16/2020 6:17:06 PM
[Markets] Stock Market Today: Dow 30,000 in Sight After Another Vaccine Rally Moderna (MRNA) followed up last week's Pfizer (PFE) act with outstanding vaccine data of its own, pushing the Dow to new highs just 50 points shy of 30,000. Published:11/16/2020 5:06:09 PM
[Markets] : Tesla to join S&P 500, stock jumps more than 9% Tesla Inc. stock rallied after hours Monday after S&P Dow Jones Indices said it will add the electric-car maker to the S&P 500 at the start of trading on Dec. 21.
Published:11/16/2020 5:06:08 PM
[Markets] NewsWatch: The Dow just clinched its fastest bear-market recovery in 30 years The Dow Jones Industrial Average on Monday notches its first all-time high since February, ending a relative fallow period for the blue-chip benchmark, which was hit hard by the COVID-19 pandemic relative to its peers.
Published:11/16/2020 4:07:52 PM
[Markets] Dow finishes up over 470 points to record high on vaccine progress Dow finishes up over 470 points to record high on vaccine progress Published:11/16/2020 3:35:40 PM
[Markets] GLOBAL MARKETS-Stocks ascend to record on economic recovery, vaccine outlook A gauge of global stocks hit a record and oil prices jumped on Monday as the newest positive data for a potential COVID-19 vaccine and signs of economic recovery in Asia boosted sentiment. U.S. stocks advanced, with the Dow Industrials setting a record as it neared the 30,000 mark for the first time, after pharma company Moderna said its prospective vaccine was 94.5% effective in preventing the illness, which has crushed economies across the globe. The announcement by Moderna followed similarly upbeat news a week ago from rival Pfizer. Published:11/16/2020 3:35:39 PM
[Markets] Dow Hits Record High As Vaccine Hope Trumps COVID 'Casedemic' Dow Hits Record High As Vaccine Hope Trumps COVID 'Casedemic' Tyler Durden Mon, 11/16/2020 - 16:02

COVID cases are exploding higher, hospitalizations are rising, and deaths have increased, but for the second Monday in a row, big pharma has dropped a press release proclaiming a "miracle" vaccine efficacy against the deadly pandemic.

Stocks soared initially... but just like last Monday, those early futures gains were quickly sold and Tech/momentum/growth was sold (weighing on Nasdaq)...From the vaccine headline, Nasdaq is unch, Small Caps significantly higher, Dow closed at cash high of the day...

The Dow (cash) hit a new record high today as futures tried (but failed) to peg 30,000 once again overnight...

As The Dow soars, Smart Money is not playing...

Source: Bloomberg

One thing we do note - if the exponential rise in cases is so worrisome, as the media, career bureaucrats, and liberal politicians proclaim endlessly - then why are bonds just shrugging it off?

Source: Bloomberg

Hint - either the election really made a difference or no one is buying the real terror being pitched from the casedemic and are heaping all their hope on the vaccine. In fact, 'hope' is soaring overall as the real economy is weakening...

Source: Bloomberg

Momentum crashed back to last week's lows...

Source: Bloomberg

Cyclicals soared...

Source: Bloomberg

Bank stocks ripped like last week (even if rates barely ended higher)...

Source: Bloomberg

VIX pumped and dumped intraday to end modestly lower with a 22 handle...

Treasuries spiked notably on the Moderna vaccine headlines but were quickly bid back lower to end barely higher on the day...

Source: Bloomberg

10Y Yields ended less than 1bp higher on the day, giving back the early vaccine spike...

Source: Bloomberg

The dollar ended the day lower, unable to hold the spike gains from the vaccine...

Source: Bloomberg

Bitcoin soared to over $16,800...

Source: Bloomberg

This is the highest close since Jan 2018...

Source: Bloomberg

Oil prices ended the day higher on vaccine hopes presumably, but once again staled at $42 and faded back...

Gold futures plunged on the vaccine headlines but buyers stepped right in to bring it back to unch...

 

Finally, we note that fear of the virus has collapsed to its lowest since early March...

Source: Bloomberg

And the work-from-home/re-opening trade signals a big shift...

Source: Bloomberg

And the VIX term structure has collapsed...

Source: Bloomberg

Published:11/16/2020 3:05:38 PM
[Markets] Market Extra: The Dow just clinched its fastest bear-market recovery in 30 years The Dow Jones Industrial Average on Monday notches its first all-time high since February, ending a relative fallow period for the blue-chip benchmark, which was hit hard by the COVID-19 pandemic relative to its peers.
Published:11/16/2020 3:05:38 PM
[Markets] US STOCKS-Wall St headed for record closing high as Moderna reignites vaccine hopes Wall Street stocks advanced on Monday, setting the S&P 500 and the Dow on course for all-time closing highs as news of another promising coronavirus vaccine bolstered hopes of eradicating the disease, while spiking infections and new shutdowns threaten to hobble a recovery from the pandemic recession. The blue-chip Dow Jones industrial average hit an intraday high and flirted with the 30,000 mark while the Russell 2000 was also on track for record close. Moderna Inc said its experimental COVID-19 vaccine was 94.5% effective in preventing infection based on interim late-state data. Published:11/16/2020 1:37:01 PM
[Markets] GLOBAL MARKETS-Stocks climb to record on economic recovery, vaccine hopes A gauge of global stocks climbed to a record and oil prices jumped on Monday as the latest positive data for a possible COVID-19 vaccine and signs of economic recovery in Asia boosted sentiment. U.S. stocks advanced, with the Dow Industrials setting a record as it neared the 30,000 mark for the first time, thanks to news from pharma company Moderna saying its prospective vaccine was 94.5% effective in preventing the illness which has crushed economies across the globe. The announcement by Moderna followed similarly upbeat news a week ago from rival Pfizer. Published:11/16/2020 1:13:53 PM
[Markets] Dow Jones Soars on Moderna Vaccine News; Home Depot, IBM, and Cisco Announce Acquisitions More positive vaccine news lit a fire under the stock market on Monday, with the Dow Jones Industrial Average (DJINDICES: ^DJI) up about 1.4% at noon EST. Moderna announced that an independent data-safety monitoring board found that its coronavirus vaccine candidate had an efficacy rate of 94.5% in a large phase 3 trial. The company expects to have 20 million doses ready to ship in the U.S. by the end of 2020, and it's on track to manufacture as many as 1 billion doses globally next year. Published:11/16/2020 12:10:55 PM
[Markets] US STOCKS-Dow hits record high as Moderna data bolsters vaccine bets The Dow hit a record high on Monday after Moderna became the second U.S. company in a week to report positive results from its COVID-19 vaccine trial, raising hopes of a quicker economic recovery from a pandemic-led recession. Moderna Inc soared 7.7% as it said its experimental vaccine was 94.5% effective in preventing COVID-19 based on interim data from a late-stage trial. Published:11/16/2020 11:40:27 AM
[Markets] Trump Cheers As Dow Hits New Record High Trump Cheers As Dow Hits New Record High Tyler Durden Mon, 11/16/2020 - 11:36

Dow futures pushed notably higher overnight, within a tick or two once again of the 30,000 level...

...but the cash Dow just broke to a new record high...

And President Trump is watching closely...

Published:11/16/2020 10:36:17 AM
[Markets] GLOBAL MARKETS-Stocks hit record on economic recovery, vaccine optimism A gauge of global stocks hit a record on Monday as the latest batch of positive data for a possible COVID-19 vaccine boosted sentiment, along with signs of economic recovery in Asia, while oil prices jumped. U.S. stocks climbed, with the Dow Industrials nearing the 30,000 mark for the first time, thanks to news from pharma company Moderna saying its prospective vaccine was 94.5% effective in preventing the illness which has crushed economies across the globe. The announcement by Moderna followed similarly upbeat news a week ago from rival Pfizer. Published:11/16/2020 10:04:57 AM
[Markets] Dow industrials knocking at door of 30,000 level at Monday's opening bell Dow industrials knocking at door of 30,000 level at Monday's opening bell Published:11/16/2020 9:06:36 AM
[Markets] Stocks Rebound and Close Higher; Dow Up 400, Led by Cisco Wall Street rebounds and Cisco powers the Dow Jones Industrial Average nearly 400 points, or 1.37%, higher. Published:11/13/2020 3:56:29 PM
[Markets] Dow Jones Up 400 Points as Cisco and Disney Stocks Surge on Earnings Beats The stock market was rallying on Friday despite a rapidly worsening pandemic in the United States. The Dow Jones Industrial Average (DJINDICES: ^DJI) was up about 1.2% at 3:25 p.m. EST, outperforming the other major indexes. Cisco reported a steep revenue decline but provided an optimistic outlook, and Disney leaned on its streaming business to beat analyst expectations. Published:11/13/2020 3:25:45 PM
[Markets] US STOCKS-Wall St climbs on Cisco, Disney's upbeat results Wall Street gained on Friday as Disney and Cisco's upbeat results brought the focus back to corporate earnings at the end of a volatile trading week that saw record surges in coronavirus cases and increased hopes of a working vaccine. Cisco Systems Inc led gainers among the S&P 500 and the Dow, helping the two indexes rise about 1% each. The network gear maker jumped 6.7% as it gained from a work-from-home driven surge in demand, while Walt Disney Co rose 2% as its rapidly growing streaming video business, and a partial recovery at its theme parks limited its quarterly loss. Published:11/13/2020 12:00:21 PM
[Markets] US STOCKS-Wall St climbs as Cisco, Disney jump after results Wall Street gained on Friday as Disney and Cisco's upbeat results brought the focus back to corporate earnings at the end of a volatile trading week that saw record surges in coronavirus cases and increased hopes of a working vaccine. Cisco Systems Inc and Walt Disney Co were the top gainers among 30 Dow components, helping the blue-chip index rise 0.8%. The network gear maker jumped 6.3% as it gained from a work-from-home driven surge in demand, while Disney rose 2.2% as its rapidly growing streaming video business, and a partial recovery at its theme parks limited its quarterly loss. Published:11/13/2020 9:27:08 AM
[Markets] Futures Rebound As Markets Look Beyond Surge In Covid Cases Futures Rebound As Markets Look Beyond Surge In Covid Cases Tyler Durden Fri, 11/13/2020 - 07:55

US equity futures rebounded and European stocks were mixed as shares of Disney and Cisco jumped after both reported solid earnings, but investors remained cautious as many U.S. states imposed restrictions to curb the relentless surge in coronavirus cases. Treasury yields reversed an earlier rise and the dollar slipped.

S&P futures rose 0.8%, or 27 points to 3,560 while Eupope's Stoxx 600 Index erased an earlier decline, with tech and banks among the winning sectors after Joe Biden was projected to win the battleground state of Arizona, cementing his win for the office. The projection by Edison Research dealt another blow to President Trump’s effort to overturn the results of the Nov. 3 presidential election.

Today's gains come a day after US markets fell 1% as the US braced for more lockdowns with New York preparing for the possibility of school closures and Chicago urged residents to shelter at home, fueling fears about the recovery, with investors also weighing how fast an effective vaccine would be rolled out.

Cisco Systems and Walt Disney were the top gainers among the Dow components trading before the bell. Futures tracking the blue-chip index were 0.9% higher. The network gear maker jumped 7.7% premarket as it gained from work-from-home driven surge in demand, while Disney rose 4.3% as its rapidly growing streaming video business and a partial recovery at its theme parks limited its quarterly loss.

Today's gains which followed a surge to an all timehigh on Monday following positive vaccine news from Pfizer which unleashed a record growth-to-value rotation, put S&P 500 and Dow on track for weekly gains. However, the tech-heavy Nasdaq is headed for a weekly loss as investors booked profits in market-leading tech stocks, which have benefited from a stay-at-home environment.

Investors took in stride warnings from three of the world’s top central bankers on Thursday that the prospect of a vaccine isn’t enough to put an end to the economic challenges created by the pandemic. Fed Chair Jerome Powell said on Thursday during a discussion with other central bankers that progress in developing a coronavirus vaccine was welcome news but that near-term economic risks remain as infections accelerate, underscoring the likely need for additional government stimulus.

To be sure, investor focus remained on covid as more than a dozen U.S. states reported a doubling of new COVID-19 cases in the last two weeks with Chicago’s mayor issuing a month-long stay-at-home advisory on Thursday.  The U.K. also reported record infections despite a tightened lockdown, and hospitalization rates set a new high in France.

In Europe, the Stoxx 600 Index erases earlier declines of as much as 0.4% and traded little changed as technology and banks lead gains among sectors while miners, energy and food & beverage slipped. Among the biggest individual advancers: Rolls-Royce +4.2%, Banco de Sabadell +3.9%, Nork Hydro +3.8%, Engie +3.7%, while the biggest drops included LPP -6.8% and  Salmar -3.2%.
Earlier in the session, Asian shares eked out gains on Friday and U.S. stock futures turned higher

Earlier in the session, MSCI’s broadest index of Asian shares outside Japan edged up 0.1%, reversing earlier losses. For the week it rose about 0.7%. But apart from a 0.71% gain in Seoul’s Kospi, most major regional indexes were lower on Friday: Japan's Topix and China's Shanghai Composite both fell. Japan’s Nikkei 225 fell 0.57% and the Topix lost 1.3%, with Toyota and Keyence contributing the most to the move. The Shanghai Composite Index retreated 0.9%, driven by Kweichow Moutai and China Life. Australian shares lost 0.2%, the Hang Seng was 0.48% lower and Chinese blue-chips slumped 1.57%, dragged lower by the Trump administration’s decision to ban U.S. investments in firms linked to the Chinese military, and by a series of high-profile bond defaults by state-owned enterprises.

Some investors saw a buying opportunity in the market weakness: "My view is this is the dark just before dawn,” said Michael Frazis, portfolio manager at Frazis Capital Partners in Sydney. "You’ve got the second wave of coronavirus, new sets of shutdowns, clear problems around the world, travel dropping off again... But at the same time, we have the strongest possible evidence that we do have a vaccine..."

“We think this is all actually very positive and it’s actually a good time to be investing in markets,” he said. adding that many risks nevertheless remained for short-term traders amid ongoing uncertainty over issues such as fresh U.S. stimulus. On Thursday, top Democrats in the U.S. Congress urged renewed negotiations over a multitrillion-dollar coronavirus aid proposal, but the top Republican immediately rejected their approach as too expensive, continuing a months-long impasse.

In rates, Treasury yields are back within a basis point of Thursday’s closing levels after erasing Asia-session declines as U.S. stock futures climbed.  10-year yields hovered around 0.88%, near middle of the 0.80%-0.97% weekly range and ~6bp higher on the week; curve spreads were little changed. Bunds, gilts outperformed with U.K. stocks lower. U.S. yields remain higher on the week after Monday’s surge sparked by positive vaccine trial results. Italian bonds led light euro-area gains ahead of an expected pricing of a 5-year dollar BTP

"Bond yields, which had been flirting with the 1.0% level in terms of the U.S. 10Y Treasury, have ... snapped back sharply in terms of yield,” Rob Carnell, Asia Pacific head of research at ING said in a note. “That move most likely got a further nudge from the softer-than-expected U.S. inflation data for October which were released yesterday, and which tally with a weaker economic reality."

In FX, the Bloomberg Dollar Spot Index extended losses in European hours as U.S. equity futures and most European stock markets reversed earlier losses. The dollar weakened against most Group- of-10 peers and the euro advanced after a brief dip to 1.1799 in the Asian session. On the other side, the pound led gains amid hopes for a Brexit trade deal while the yen came off highs as haven bids waned.

In commodities, an unexpected rise in U.S. crude stockpiles exacerbated virus-linked economic fears in commodity markets, pushing U.S. crude 1.85% lower to $40.36 per barrel. Brent crude dropped 1.47% to $42.89.

Looking at the day ahead, there’s the October PPI reading and the preliminary November reading of the University of Michigan’s consumer sentiment index. From central banks, we’ll hear from BoE Governor Bailey, as well as the BoE’s Cunliffe and Tenreyro. From the ECB, we’ll hear from Weidmann and Rehn, while Fed speakers include Williams and Bullard.

Market Snapshot

  • S&P 500 futures up 0.8% to 3,561.25
  • STOXX Europe 600 up 0.1% to 385.65
  • MXAP down 0.2% to 184.68
  • MXAPJ up 0.4% to 612.70
  • Nikkei down 0.5% to 25,385.87
  • Topix down 1.3% to 1,703.22
  • Hang Seng Index down 0.05% to 26,156.86
  • Shanghai Composite down 0.9% to 3,310.10
  • Sensex up 0.3% to 43,478.75
  • Australia S&P/ASX 200 down 0.2% to 6,405.22
  • Kospi up 0.7% to 2,493.87
  • Brent Futures down 0.8% to $43.17/bbl
  • Gold spot up 0.06% to $1,877.96
  • German 10Y yield fell 0.2 bps to -0.538%
  • Euro up 0.04% to $1.1811
  • Brent Futures down 0.9% to $43.16/bbl
  • Italian 10Y yield fell 5.4 bps to 0.573%
  • Spanish 10Y yield fell 0.6 bps to 0.126%
  • U.S. Dollar Index down 0.04% to 92.93

Top Overnight News from Bloomberg

  • State and federal election officials, along with experts in the private sector, said they had “utmost confidence in the security and integrity” of the Nov. 3 vote, as President Donald Trump continues to make unfounded claims of fraud and key security officials involved in protecting elections leave the administration or expect to be fired
  • China congratulated Joe Biden and Kamala Harris on winning the U.S. presidential election, ending days of speculation about when Beijing would formally acknowledge the victory
  • The ECB should put ultra-cheap loans at the core of its next stimulus package being prepared for December, Governing Council member Madis Muller said; Governing Council member Olli Rehn said the next ECB decision is about deciding which instruments, in which scale and duration, will best serve the purpose of supporting the European economy
  • Another week of Brexit negotiations -- one that was supposed to be decisive -- will end Friday with little progress made in the main areas of disagreement, according to three EU officials familiar with the situation. While both sides can see what a final agreement would look like, Brussels officials insist that reaching one will require the U.K. prime minister to move first, a stance their British counterparts reject
  • Joe Biden’s election is serving up a rude reality check for U.K. Prime Minister Boris Johnson’s desire to quickly close a trade deal with the U.S., a project that has until now depended heavily on the whims of President Donald Trump
  • Italy, which is Europe’s second most-indebted nation, is aiming to sell securities maturing in 2026, following a global investor call for its first dollar issue in over a year. While it’s a chance for Italy to diversify an investor base still dominated by domestic buyers, the nation will pay considerably more to raise cash

A quick look at global markets courtesy of NewsSquawk

Asian equity markets weakened on spill-over selling from Wall Street, where all major indices declined as participants continued to fade the reflation trade and with increases in virus cases denting the recent vaccine optimism, which saw the DJIA lead the downturn and briefly give up the 29k level. ASX 200 (-0.2%) was dragged lower by notable losses in the energy sector following similar underperformance stateside as rising infections and restrictions weighed on the demand outlook, while Nikkei 225 (-0.5%) was pressured as exporters felt the brunt of currency inflows and with earnings in focus as Rakuten shares slumped after its 9-month net loss widened five-fold. Conversely, Nissan shares were in top gear despite posting a H1 net loss of JPY 330bln as the Co. reduced its annual operating loss forecast by 28% and Sony was also among the notable gainers after it began PlayStation 5 sales in several major markets. KOSPI (+0.7%) rebounded from early losses with the index helped by resilience in tech stocks and with Asiana Airlines soaring on potential M&A reports after Korean Air Lines was said to be in discussions to acquire the airliner. Hang Seng (U/C) and Shanghai Comp. (-0.9%) conformed to the broad downbeat tone despite a firm liquidity effort by the PBoC, as sentiment remained subdued after China’s further clampdown on Hong Kong freedoms which triggered an uproar globally, with the UK said to be considering sanctions, while tensions remained a headwind after the White House confirmed an executive order prohibiting US investments in Chinese firms owned or controlled by the Chinese military. Finally, 10yr JGBs marginally extended above the 152.00 level following the bull flattening in USTs and with upside helped by the glum picture across risk assets, although the upside was capped amid the absence of the BoJ from the market today and ahead of key data beginning with Q3 GDP early next week.

Top Asian News

  • Hong Kong Sees GDP Contraction Near Low End of Forecast Band
  • World’s Biggest Cork Maker Eyes Next Step in the Spirits Market
  • Trump’s Taiwan, Hong Kong Support Poses Early Test for Biden
  • China’s Oil Giant Eyes New Supertankers to Shrink Fuel Glut

Major European bourses have largely nursed the mild losses seen at the cash open (Euro Stoxx 50 +0.4%) following on from a mostly downbeat APAC handover. The European day kicked off with a continuation of the growth to value rotational pause, reflected by sectors at the open alongside US equity futures performances at the time. However, despite a distinct lack of fresh fundamental news-flow, sentiment picked up pace whilst the rotational dynamics somewhat decoupling. European sectors at the open saw Oil & Gas, Autos and Banking names at the foot of the index whilst Tech and Healthcare fared better, whilst US equity futures at the time saw NQ outpacing the ES and RTY. However, as things stand, Tech retains top spot whilst Banks and Autos also reside towards to top of the pile. Oil & Gas has trimmed losses towards the unchanged mark whilst Healthcare tumbled, and Travel & Leisure ebbed lower towards the bottom of the pack. This decoupling is also reflected in US equity futures’ performance as NQ, ES and RTY are all posting gains in proximity to 0.8%. Back to Europe, UK’s FTSE 100 (-0.3%) underperforms regional peers as a firmer Sterling weighs on exporters, whilst gains in the SMI (Unch) are capped by a lacklustre performance in pharma-giants.

Top European News

  • U.K. Prime Minister’s Top Aide Quits, Will Leave By End of 2020
  • U.K. Fund Liquidity Rule Breaches Soared in Covid Early Days
  • East Europe’s Fleeting GDP Bump Bracketed by Virus Lockdowns
  • Rosneft’s Return to Net Loss Undermines Dividend Prospects

In FX, little sign of Sterling succumbing to any Friday 13 phobias, thus far, and some observers are suggesting that the latest rebound in Cable from the low 1.3100 area may be due to impending departure of UK PM Johnson’s SPAD Cummings. However, Eur/Gbp has also retreated from a double top just above 0.9000 and the Pound’s bounce could be more technical and consolidative given no positive developments on the Brexit front. Conversely, the Lira’s impressive revival can be put squarely if not solely down to Turkish President Erdogan’s economic epiphany in terms of pursuing more orthodox monetary and fiscal policies after sacking another CBRT President, with Usd/Try extending its sharp reversal from record peaks to test support below 7.6200 ahead of next week’s rate meeting.

  • NZD/AUD - The Kiwi has fallen further from post-RBNZ highs above 0.6900 towards 0.6800 vs its US counterpart and 1.0700+ against the Aussie to sub-1.0600 at one stage in wake of rather downbeat remarks from RBNZ Governor Orr overnight, caveating forecasts for the economic recovery to continue with a big ‘IF’, and backed up somewhat by a slowdown in October’s NZ manufacturing PMI. Meanwhile, Aud/Usd is hovering around 0.7260 as the Foreign Ministry’s Deputy Secretary states a readiness to engage with China on trade relations that have been strained of late.
  • DXY/EUR/CAD/JPY/CHF - Aside from all the deviations noted above, G10 currencies remain relatively rangebound and pretty much epitomised by the Dollar index holding within a narrow 93.007-92.767 band within wtd extremes (93.210-92.129), albeit easing amidst an upturn in broad risk sentiment. Indeed, the Euro and Loonie are gradually firming up as the Greenback slips to retest offers/resistance into 1.1850 and 1.3100 respectively. No obvious reaction to Eurozone data, but another decent option expiry interest may keep Eur/Usd contained between 1.1840-50 and 1.1795-1.1800 given 1.4 bn on either side and the BoC’s Senior Loan Officer Survey may offer the Cad some independent impetus in advance of Canadian CPI and retail sales next week. Elsewhere, the Yen and Franc are both meandering from 105.15 to 104.87 and 0.9158 to 0.9137, with the latter largely ignoring slightly less deflationary Swiss import and producer prices.
  • SCANDI/EM - Not quite all change, but the Swedish Krona has slipped after holding up better than its Norwegian peer on Thursday and it looks like 10.2000 is proving sticky for the Eur/Sek cross, but the Mexican Peso is deriving some protection from softer crude prices on the back of Banxico’s unexpected decision to stand pat on rates with only one dissenter chiming with consensus for a 25 bp ease, as Usd/Mxn probes 20.5000.

In commodities, WTI and Brent front-month futures trade remain pressured but have been drifting off worst levels during early European hours in lockstep with price action across equity markets. News flow for the complex has been light on Friday morning and thus the cue is taken from overall market sentiment. In terms of the fundamental environment, rising COVID-19 cases across the globe continues to weigh on the demand side of the equation, with an effective vaccine unlikely to see a mass rollout in the near-term, whilst supply side is still uncertain as OPEC+ producers gear up to for its non-policy confab next week. On that note, profit-taking in the crude complex cannot be ruled out ahead of the weekend given the respectable gains in the benchmarks this week. WTI Dec trades just under USD 41/bbl (vs. low 40.16/bbl) whilst Brent Jan edges higher above USD 43/bbl (vs. low 42.67/bbl). Elsewhere, spot gold and silver eke mild gains as the precious metals coat-tail on the recent USD softness, albeit remain contained within recent ranges. Finally, LME copper gleans support for the softer Buck and recovery in stocks.

US Event Calendar

  • 8:30am: PPI Final Demand MoM, est. 0.2%, prior 0.4%; PPI Final Demand YoY, est. 0.4%, prior 0.4%
  • 8:30am: PPI Ex Food and Energy MoM, est. 0.2%, prior 0.4%; PPI Ex Food, Energy, Trade MoM, est. 0.2%, prior 0.4%
  • 9am: Bloomberg Nov. United States Economic Survey
  • 10am: U. of Mich. Sentiment, est. 82, prior 81.8; Current Conditions, est. 88.3, prior 85.9; Expectations, est. 79.1, prior 79.2

DB's Jim Reid concludes the overnight wrap

It’s strange to wake up to see that my school golf partner of two years and in countless pairs competitions is currently leading the US Masters. So good luck to Paul Casey this weekend although I suspect he’s not reading this unless he was keen to hear what the super committee of central bankers thought about the world economy last night.

On this in the latter half of yesterday’s US session we heard from Fed Chair Powell, ECB President Lagarde and BoE Governor Bailey at a panel hosted by the European Central Bank. They all shared similar concerns that a potential Covid-19 vaccine would not end the economic challenges of the pandemic. Powell highlighted near-term risks saying that “the main risk we see to (the economy continuing on a solid path of recovery) is clearly the further spread of the disease here in the United States.” Lagarde cautioned that she didn’t want to be “exuberant” in light of the vaccine possibilities, while Bailey called the news “encouraging.” On the need for further accommodation in light of the near term risks, Powell expects that the Fed “will need to do more, and Congress may need to do more as well on fiscal policy.”

So no major surprises from this important trio, and even before they’d started speaking, yesterday saw a notable decline in sovereign bond yields on both sides of the Atlantic, with US Treasuries ending the session -9.4bps at 0.882% as they reopened following the previous day’s holiday. There was also a notable flattening in yield curves across numerous countries, with the 2s10s Treasury curve flattening -8.8bps as it came off a near 3-year high. Over in Europe, 10yr gilt yields (-6.5bps) saw the largest declines, though yields on 10yr bunds (-2.9bps), OATs (-2.6bps) and BTPs (-5.4bps) also lost ground. 2yr Greek yields went negative for the first time on Wednesday and fell slightly further yesterday.

With investors moving out of risk assets, global equity markets fell back from their recent highs amidst further negative news on the coronavirus. There were also reports that the Trump administration would be stepping away from stimulus negotiations and leaving that to Congress, something the market took negatively given that Senate Majority Leader McConnell was looking to pass a far smaller package than the White House. By the close, the S&P 500 was down -1.00%, with nearly 90% of the index moving lower. Energy (-3.39%) and Autos (-2.59%) stocks led the declines, but Bank stocks (-2.08%) were not far behind thanks to the notable fall in sovereign bond yields. Tech stocks outperformed their cyclical counterparts slightly with the NASDAQ falling a smaller -0.65%. Europe also suffered, with the STOXX 600 down -0.88% in its worst day for over two weeks, as other indices across the continent similarly moved lower. The selling was also widespread in Europe as 19 of 20 STOXX 600 sectors fell, led by Euro Bank stocks (-1.93%) and Consumer Products (-1.85%) as Technology (+0.79%) was the only sector to rise.

Asian markets have followed the US lower overnight, with the Nikkei (-0.99%), the Hang Seng (-0.55%), and the Shanghai Comp (-0.75%) all moving lower. The moves came as President Trump signed an executive order that would prohibit US investments in Chinese firms linked to the country’s military. The one exception to this downward move was the KOSPI however, which has moved +0.60% higher. Meanwhile in the US, S&P 500 futures are down a marginal -0.04%, and yields on 10yr Treasuries this morning have moved a further -1.3bps lower .

On the negative coronavirus developments, yesterday saw the number of new cases here in the UK reach a record 33,470 after a good two to three weeks of stability in the 20-30k range, while Italy reported a further 37,978. Covid-19 hospitalisations in France are now above the highs reached in mid-April as French Prime Minister Castex acknowledged that the country may tighten lockdown restrictions further. And in the US, infections recorded another record high with fatalities rising to their highest daily level since May. Nevertheless, Dr Fauci struck an optimistic tone on a potential vaccine, saying that “it’s not going to be a pandemic for a lot longer, because I believe the vaccines are going to turn that around”.

Sterling weakened further yesterday, falling -0.79% against the US dollar, as there were more negative noises on the state of the trade negotiations between the EU and the UK. We’re now in the crunchpoint of the talks, which have already been pushed beyond a number of previous informal deadlines, and comes with just weeks left before the transition period concludes at the end of this year. There wasn’t much of substance out yesterday, but the BBC’s Europe editor Katya Adler tweeted that “EU diplomats sounding pessimistic about EU-UK negotiations.” We then got another tweet from the EU’s Michel Barnier which said he “Went looking for level playing fields…” with a picture of a football field in the backdrop, so not the most positive tweet regarding what has proven one of the most contentious points in the negotiations. A key moment next week will be the EU leaders’ meeting on Thursday, which is taking place via videoconference, though given the lack of concrete progress so far, it’s not obvious there’ll necessarily be a deal on the table ready for them to actually discuss.

On the data front, there were some positive figures from the US, where the weekly initial jobless claims for the week through November 7 fell to a post-pandemic low of 709k (vs. 731k expected). Incidentally, that brings them to just 14k above the pre-Covid record of 695k back in 1982. Meanwhile, the continuing claims for the week through October 31 also reached a post-pandemic low of 6.786m (vs. 6.825m expected). Nevertheless, there were some soft CPI readings from the US for October, with the month-on-month figures for both CPI and core CPI unchanged, and the year-on-year CPI figure fell back to 1.2%, which is the first time the reading has declined since May. Finally in Europe, the UK GDP reading for Q3 showed a record +15.5% expansion (vs. +15.8% expected), which follows a record -19.8% contraction in Q2. Nevertheless, with many restrictions having been reimposed again, our UK economist expects there to be another contraction in Q4.

To the day ahead now, and data highlights include the second release of the Euro Area’s Q3 GDP, while from the US there’s the October PPI reading and the preliminary November reading of the University of Michigan’s consumer sentiment index. From central banks, we’ll hear from BoE Governor Bailey, as well as the BoE’s Cunliffe and Tenreyro. From the ECB, we’ll hear from Weidmann and Rehn, while Fed speakers include Williams and Bullard.

Published:11/13/2020 6:53:46 AM
[Markets] Stock market news live updates: Stocks extend declines as vaccine rally cools further, stimulus concerns linger Stock futures were mostly lower Thursday morning, with contracts on the Dow and S&P 500 sliding as optimism over a COVID-19 vaccine moderated further. Published:11/12/2020 12:00:56 PM
[Markets] Dow Futures Extend Gains, Tech Stocks Rebound as Vaccine Hopes Drive Global Markets The Dow is within touching distance of its all-time closing high Wednesday as markets continue to power higher following Pfizer's coronavirus vaccine breakthrough earlier this week. Published:11/11/2020 5:25:31 AM
[Markets] Dow ends up over 250 points while Nasdaq extends previous day's decline Dow ends up over 250 points while Nasdaq extends previous day's decline Published:11/10/2020 3:42:08 PM
[Markets] Why the Stock Market Can't Make Up Its Mind The stock market was mixed on Tuesday, with very strong moves in both directions from different market benchmarks. The Dow Jones Industrial Average (DJINDICES: ^DJI) again posted sizable gains as it once again challenged its all-time closing high. When you look beyond the large-cap stock indexes, you can see even more variation in returns, as the Russell 2000 Index of small-cap stocks was up more than 2%. Published:11/10/2020 3:42:08 PM
[Markets] Peter Schiff: There Is No Vaccine For What Ails The Economy Peter Schiff: There Is No Vaccine For What Ails The Economy Tyler Durden Tue, 11/10/2020 - 15:45

Via SchiffGold.com,

Stocks soared, and gold and silver sold off Monday after Pfizer announced success in stage III coronavirus vaccine trials.

During his podcast, Peter Schiff talked about the crazy day in the markets and suggested we might want to tap the brakes when it comes to the excitement about a COVID vaccine because there is no vaccine for what actually ails the economy.

Gold suffered its biggest decline since June 2013, falling nearly $100 at one point. Despite the selloff, gold did manage to hold support at $1,850 and pushed back to about $1,865 by the end of the day. Silver also dropped, losing 5.5%.

Meanwhile, the Dow gained 834 points while the NASDAQ sold off into the close, primarily due to investors dumping the “stay-at-home” stocks such as Netflix and Zoom. The Dow also sold off from its highs. At one point, it was up some 1,700 points.

Pfizer and BioNTech wrapped up stage III trials. Forty-three thousand individuals received the vaccine during the trial and the data suggested it was 90% effective in preventing the coronavirus.

But Peter said it would be wise to tap the brakes. In the first place, we have no idea whether or not the vaccine will receive approval. The FDA has already said it needs more time to analyze the possibility of side-effects.

One thing I know for sure. If we do get a COVID vaccine from this particular product, it’s not going to happen this year. In fact, it’s not going to happen during the coming flu season.”

Peter said, at best, we might see the vaccine rolled out in the spring.

That means it’s not going to do anything to prevent a second wave of COVID or any kind of economic damage that may occur as a result of any kind of lockdowns or other policies that governments pursue in order to mitigate the spread of the disease.”

So, if this is a positive, it’s not in the immediate near-term. It’s at least six months away.

We also have no idea if a vaccine will be a one-time thing or if it will need to be repeated every year. We don’t even know if there can be permanent immunity against the coronavirus.

Peter said he thinks the main reason there were such big moves in stocks based on this announcement was the amount of leverage and speculative money in the markets thanks to the Fed and other central banks and the artificially low interest rates “that have turned the stock markets into casinos.”

While stocks gained Monday, bonds got clobbered. The yield on the 10-year US Treasury approached 1% and the yield on the 30-year was at about 1.75%. Peter said he could see the 30-year yield making a bee-line to 3% and that would be a big problem for the Federal Reserve.

I don’t think the Federal Reserve is going to sit back and allow yields to rise to that degree. Because we had a problem when the repo market was blowing up. That’s the reason back in 2019, before COVID, that’s why the Fed quietly restarted QE because of the problems in the short end of the curve. Well, if we get a bigger problem in the long end, if we start to see 30-year bonds tanking, 10-year bonds tanking, that is big trouble for the whole financial system.”

In effect, you’re talking about increasing interest rates and that’s not a good scenario given all of the debt in the economy.

If people are starting to look beyond the COVID mountain into the valley of economic growth that supposedly lies on the other side, what’s going to happen? Well, the Fed has to start hiking interest rates. The economy is coming back. So, the Fed needs to respond by raising interest rates and withdrawing all of that emergency liquidity that it supplied when the COVID emergency was still going. Except it’s impossible to do that. Because we now have a bigger addiction to stimulus than ever before.”

Investors still haven’t wrapped their heads around the fact that the Fed, along with various levels of government, have done far more damage to the economy than COVID-19.

The problem is not really the fact that we have a disease, but that we’re addicted to the cure, which was cheap money and all this debt. And so now, it’s the addiction to the cure that’s the real problem. The disease doesn’t even matter anymore. Because even if we get rid of the disease, we’re still addicted to the cure. And the Fed can’t take away the cure without causing an even bigger problem than the initial disease that the cure was meant to cure because now the problem isn’t the disease. Who cares about that? The problem is the cure that was so addicting. And now we’ve got an even bigger problem than the one we started with. And that problem’s not going away. There is no antidote or vaccine that’s going to work for that. We are stuck with that.”

The bottom line is there is going to be more money printing. It doesn’t matter whether the COVID-19 vaccine works or not. The bigger problem was created by governments and central banks.

All that debt and all the money printing doesn’t go away even if COVID goes away.”

Peter said despite the plunge Monday, gold is the safe haven – not from COVID-19, but from the government cure.

It’s a safe haven from the monetary and fiscal policy mistakes that were made in reaction to COVID. That’s why gold was going up [during the pandemic]. And it’s because the government is going to continue to make the same monetary policy and fiscal policy mistakes after COVID, that’s why gold is going to keep going up. And in fact, because of all the money they printed before COVID, because of all the extra debt that we accumulated during COVID, that’s why the Fed can’t dial it back. That’s why if the economy recovers from COVID, it can never recover from the addiction to stimulus. That’s why the stimulus has to continue long after the disease it was meant to cure goes away. That means inflation is going to run out of control.”

Published:11/10/2020 2:41:38 PM
[Markets] Market Snapshot: Stocks put in mixed performance as vaccine progress sparks rotation U.S. stocks open mixed Tuesday, with the Dow Jones Industrial Average adding to gains, while the Nasdaq suffers as investors rotate out of pandemic winners as investors cheer vaccine progress.
Published:11/10/2020 8:40:22 AM
[Markets] US STOCKS-Wall Street rallies on coronavirus vaccine trial results The S&P 500 and the Dow rallied sharply but closed shy of their records on Monday as investors bet that a full economic reopening was finally in sight following the first positive data from a late-stage COVID-19 vaccine trial. Investors said they were also reassured by Saturday's news that Joe Biden had garnered enough votes to win the U.S. presidential election as they had priced in this news last week. Published:11/9/2020 4:30:47 PM
[Markets] GLOBAL MARKETS-S&P and Dow advance, Treasury yields soar on potential vaccine A pivot away from tech and into value stocks pushed the bellwether S&P and Dow sharply higher, but they ended the session shy of record highs. Crude oil prices, meanwhile, had their best day in more than five months, jumping more than 8%. Published:11/9/2020 4:00:37 PM
[Markets] Dow industrials end up over 800 points on positive vaccine news Dow industrials end up over 800 points on positive vaccine news Published:11/9/2020 3:30:56 PM
[Markets] COVID 'Cure' Creates Chaos: Tech Wrecks, Bonds Bloodbath, Momo Massacred COVID 'Cure' Creates Chaos: Tech Wrecks, Bonds Bloodbath, Momo Massacred Tyler Durden Mon, 11/09/2020 - 16:00

Monetary stimulus, election certainty, and now a vaccine - Buy, Mortimer, Buy!!!! Small Caps were limit up in the pre-market as everything exploded on Pfizer's headlines... Nasdaq ended red, with markets tumbling late on as Trump challenge concerns picked up...

That is an all-time record high for the Russell 2000, Dow, and S&P 500.

Dow Futures perfectly tagged 30,000 at their highs today...

Reuters reported that a spokesman for one exchange said "unprecedented" trading volumes in the 30 minutes after the Pfizer announcement were up to 10 times the level seen earlier in the day and broke a previous record set in March when markets recorded sharp falls at the peak of virus-related restrictions.

But it wasn't all shits and giggles.

Momentum collapsed...

Source: Bloomberg

...suffering its biggest one-day drop in history...

Source: Bloomberg

All those momentum traders might be sounding a little ungrateful at Pfizer's "cure" for the COVID plague...

A massive reversal in the Small Caps/Nasdaq RV trade...

Pfizer had a big day, but could not hold its best gains...

The COVID Fear trade crashed to its lowest since early March..

Source: Bloomberg

FANG Stocks were also whacked as the 'stay-at-home' trade unwound...

Source: Bloomberg

Relative to the average stock (represented by the S&P 500 equal-weighted index), FANG Stocks had their worst day since inception in 2015 (in other words, since people have used the acronym)...

Source: Bloomberg

Banks soared (on higher rates)...

Source: Bloomberg

Airlines (and cruise lines) all exploded higher...

Source: Bloomberg

VIX crashed to a 22 handle (its lowest since August) before rallying back to close green as Trump challenges hit...

Bonds were a bloodbath today with the long-end spiking over 13bps and the curve steepening dramatically...

Source: Bloomberg

However, note where yields stalled for the day and rolled over... right at the peak of election night, running those stops and unable to push through...

Source: Bloomberg

The yield curve (2s30s) pushed to its steepest since May 2017

Source: Bloomberg

Fed rate expectations rose (hawkishly) on the day...

Source: Bloomberg

As rate-hike expectations lifted, the dollar strengthened...

Source: Bloomberg

Cryptos were mixed with Bitcoin dumped and pumped (finding support around $15,000)...

Source: Bloomberg

Oil soared over 8% on the day, pushing WTI back above $41 intraday...

Interestingly, copper ended unch...

Gold was clubbed like a baby seal, back below $1900 to its lowest since September...

Silver futures tumbled back below $24 intraday before finding support...

 

Finally, we wonder what happens next as the S&P 500 has tagged its megaphone high trendline...

Source: Bloomberg

Published:11/9/2020 3:02:49 PM
[Markets] GLOBAL MARKETS-Wall Street reaches all-time high, Treasury yields soar on vaccine promise The S&P 500 and the Dow followed world equity indexes to record levels and U.S. Treasury yields surged on Monday, as promising developments toward a coronavirus vaccine and the prospect of improved trade relations under President-elect Joe Biden gave a jolt to investor risk appetite. Value stocks boosted all three major U.S. stock indexes to all-time highs and crude prices jumped more than 10%. Published:11/9/2020 2:30:28 PM
[Markets] Beyond Meat Whipsaws Higher After Revelation They Helped Create McDonald's New "McPlant" Beyond Meat Whipsaws Higher After Revelation They Helped Create McDonald's New "McPlant" Tyler Durden Mon, 11/09/2020 - 14:22

Beyond Meat shares reversed course violently after being pummeled early in the session, touching as low as $141 per share, despite the Dow being up well over 1,000 points for the entire session.

The plunge in shares was a breakneck-speed response to a headline that McDonald's was developing its own "McPlant" in-house meat-free burger for trials next year. Competitor Burger King is already offering a similar product, its "Impossible" Whopper, in partnership with Impossible Foods. 

But BYND shares swung higher in early afternoon trading after Reuters clarified that Beyond Meat helped co-create the McPlant with McDonald's. 

The market at first believed the original incomplete headline to mean that McDonald's was foregoing a partnership and was doing their meat-free R&D in-house. For instance, outlets like CNBC reported this morning that the McPlant was "created by McDonald's and for McDonald's". At the same time, no supplier had been named:

The company has not yet disclosed the supplier for the line. A company spokesperson declined to identify their supplier but said that McDonald’s will not be manufacturing the products.

But a few hours later, around 1345 EST, headlines crossed the wire to the contrary:

BEYOND MEAT, MCDONALD'S CO-CREATED MCPLANT, REUTERS SAYS

BEYOND MEAT QUICKLY TURNS POSITIVE

BEYOND MEAT CONFIRMS CREATED MCPLANT WITH MCD: RTRS

Beyond Meat shares are roughly unchanged on the day now.

We will update this story as more details become available.

Published:11/9/2020 1:31:45 PM
[Markets] US STOCKS-S&P 500, Dow hit all-time highs as vaccine moves step closer The S&P 500 and the Dow hit record highs on Monday as the first successful data from a late-stage COVID-19 vaccine trial spurred hopes of the economy recovering quickly from a year of pandemic-driven crisis. Oil prices surged more than 8% and U.S. Treasuries sold off after U.S. drugmaker Pfizer and its German partner BioNTech said data from the large-scale trial of their vaccine showed it was more than 90% effective in preventing COVID-19. Published:11/9/2020 11:32:50 AM
[Markets] US STOCKS-S&P 500, Dow hit all-time highs on vaccine optimism The S&P 500 and the Dow hit record highs on Monday as the first successful late-stage clinical trial of a COVID-19 vaccine sparked hopes of the economy emerging from a pandemic-driven crisis. The blue-chip Dow surged as much as 5.7%, also getting a boost from Joe Biden clinching a tightly-fought presidential election. Published:11/9/2020 10:03:05 AM
[Markets] Biden Camp Celebrates Pfizer News, Warns Masks Better Option For Fighting COVID; Novovax Gets 'Fast Tracked' Biden Camp Celebrates Pfizer News, Warns Masks Better Option For Fighting COVID; Novovax Gets 'Fast Tracked' Tyler Durden Mon, 11/09/2020 - 10:02

Update (1000ET): Nobody was more relieved to see the Biden-Harris ticket prevail last week than Dr. Anthony Fauci (arguably, the first job that Biden saved was Fauci's). Now the good doctor is joining the vaccine market pump-fest, by telling reporters that his favorite biotech company, Moderna (which he has been pumping virtually since its first vaccine-related press release) might exhibit similarly effective results to Pfizer's vaccine.

  • TOP NIH OFFICIAL DR. FAUCI: MODERNA MAY SIMILAR RESULTS AS THE PFIZER VACCINE.

This, despite recently released data calling the vaccine's effectiveness into question.

* * *

Update (0910ET): Pfizer shares are now up 16% with less than a half hour to go before the open.

Meanwhile, for traders still turning over that "90% efficacy" figure (the fact that so many infections were in the placebo group is surely a good sign, the scientists said) in their heads, CNBC has offered some helpful points of comparison.

Who else is ready for the 'roaring twenties' pt II?

* * *

Update (0820ET): Adding to the positive COVID-19 vaccine news that has goosed stocks Monday morning, the FDA has officially awarded Novovax, considered a second-tier COVID-19 vaccine competitor, a "fast track" designation, while WSJ and other media are reporting that Pfizer's vaccine could get emergency approval and head into distribution by the end of the month.

  • NOVAVAX COVID VACCINE CANDIDATE GETS FDA FAST TRACK DESIGNATION

Meanwhile, Dr. Scott Gottlieb, appearing on CNBC, said that the data appear to be "the light at the end of the tunnel", and a "critical step" toward validating our technology. However, he added that we still have "a hard stretch ahead of us" and that we must continue to keep the most vulnerable safe.

Dr. Gottlieb added that the "timeline" for mass vaccination is late February/early March to start the process, since people need to receive multiple doses, weeks apart, before protective immunity develops. A vaccine could be "broadly available" by the end of the second quarter/beginning of third quarter.

Though that timeline might shift by a few weeks in either direction, the timeline probably won't change much assuming the FDA supplies the necessary approvals.

Also, Americans should never forget that this vaccine news is "particularly great news for black Americans".

All kidding aside, this morning's news isn't exactly unexpected. The trial data effectively confirm that the vaccine process is on track, and that Pfizer still plans to apply for emergency approval by the end of the month.

As Wall Street analysts try to figure out what's going on and what this means exactly, if anything, for the long-term outlook, one team at Merrill warned that more curmudgeonly traders might soon move to send the market back to reality.

"The simply truth of the matter is that Pfizer will only be able to treat 25 million people this year, and maybe 650 million next year. Is that enough, assuming some areas reach a level of immunity to keep the virus in check? The answer is not clear at the moment. What is certainly known is that normalcy still remains out over the horizon and it will take quite a bit of time to realize the value embedded in this morning’s surge in travel stocks."

Bloomberg reported that 650 million dose number, and also noted that no region will have a monopoly on vaccines; the notion that universal vaccination can be achieved by the end of next year - or even the end of 2022 - still seems pretty unlikely.

he Bloomberg story offers at least some reason for caution in pricing a swift return to normalcy. It suggests that the companies will be able to produce enough doses to inoculate 650 million people -- less than 10% of the world’s population -- by the end of next year. There’s no one country or region that will jump to the front of the queue for doses, meanwhile: the companies have pre-sold 100 million doses to the U.S., 120 million to Japan, and 300 million to the European Union. It takes two doses to immunize one person, so that could leave a lot of people waiting for 2022 and beyond to get access to the vaccine

Just something to keep in mind...but just in case you forget, Andrew Ross Sorkin is bringing up the fact that this is indeed "great news" about every 30 seconds this morning on "Squawk Box".

But one thing you won't hear on CNBC is Trump's role.

* * *

Update (0815ET): In a statement that effectively confirmed that this morning's WSJ leak about the Pfizer vaccine was part of a choreographed rollout by Pfizer to withhold news about the mRNA vaccine candidate's trial results until a week after the election, Joe Biden and his campaign warned Americans that the battle with COVID-19 isn't over...yet.

Though this morning's news is being heralded by news anchors as a "breakthrough" and a "game changer", Biden and his "public health advisors" - who bizarrely had apparently been given the trial results last night ahead of the public and, potentially, the sitting president (though we'll wait for any potential comment from the White House).

While the statement acknowledged that the results are indeed "excellent news", they noted that "the end of the battle against COVID-19 is still months away."

Which is why, for now, wearing a mask "remins a more potent weapon against the virus than the vaccine. Today's news does not change this urgent reality." Biden has said he is open to a national mask mandate, and with his team expected to announce its own virus task force on Monday, this news is certainly an ideal rollout for the president-elect's more heavy-handed strategy for enforcing mask-wearing and social distancing.

And although they somewhat conspicuously claimed that this news follows a "previously announced timeline", CEO Bourlas himself said just days ago that the results shouldn't be expected until later this month, only to turn around and drop the data - via a leak to WSJ, giving the company infinite room to tweak the message - days after the election.

Pfizer's own executives only learned about the development Sunday morning - mere hours before the president-elect - according to WSJ's reporting.

Statement by President-elect Joe Biden on Pfizer's Vaccine Progress

Last night, my public health advisors were informed of this excellent news. I congratulate the brilliant women and men who helped produce this breakthrough and to give us such cause for hope.

At the same time, it is also important to understand that the end of the battle against COVID-19 is still months away. This news follows a previously announced timeline by industry officials that forecast vaccine approval by late November. Even if that is achieved, and some Americans are vaccinated later this year, it will be many more months before there is widespread vaccination in this country.

This is why the head of the CDC warned this fall that for the foreseeable future, a mask remains a more potent weapon against the virus than the vaccine. Today's news does not change this urgent reality. Americans will have to rely on masking, distancing, contact tracing, hand washing, and other measures to keep themselves safe well into next year. Today's news is great news, but it doesn't change that fact. America is still losing over 1,000 people a day from COVID-19, and that number is rising - and will continue to get worse unless we make progress on masking and other immediate actions. That is the reality for now, and for the next few months. Today's announcement promises the chance to change that next year, but the tasks before us now remain the same.

Meanwhile, now that WSJ has published a few updates to its original story, we're starting to see more details from the data showing that it's not as conclusive as it might seem - as one twitter user pointed out.

And what's more, other media outlets chasing the story are quoting Pfizer executives explicitly denying credit to the sitting president, who personally championed hundreds of billions of dollars in funding for vaccine trials, including the Pfizer-BioNTech trial, even though media reports routinely credited Trump and OWS as one of the president's most successful virus-fighting endeavors.

Meanwhile, Dow futures continue to climb, while the Nasdaq crumbles and the move back into "real economy" assets continues.

* * *

Update (0730ET): Speaking to reporters after WSJ published preliminary data from its COVID-19 vaccine trial, Pfizer CEO Albert Bourla told CNBC that the trial should be finished by the end of the month - that is, the end of November - leaving the project on track to win an emergency-use approval by the end of the year, followed by approval for widespread use early next year. Another Pfizer exec described the news in the most optimistic of terms.

"This is about the best the news could possibly be for the world and for the United States and for public health," said William Gruber, Pfizer senior vice president for vaccine clinical research and development. It was better than even the best result he had hoped for, he said.

During his interview, Bourla also attempted to shame American consumers who are skeptical about taking the vaccine (remember, polls show 42% Americans aren't comfortable with the accelerated approval process and the ability of scientists to protect against any longer-term side effects).

We understand that the trial must move "at the pace of science", but is it really possible that they have arrived at all of these conclusions over the past few days?

* * *

Christmas has come early for Pfizer and BioNTech, apparently. The US pharma giant has partnered with the German biotech firm on what is currently one of the leading - if not the leading - vaccine project in the West. And after announcing just days before the election that the next batch of critical data likely wouldn't land  before Americans head to the polls, now that the Biden-Harris ticket has prevailed, Pfizer and its partner have released data showing its vaccine is more than 90% effective.

According to data leaked to WSJ, the vaccine proved to be more than 90% effective in subjects who developed the virus and saw at least one symptom.

With markets already in a jubilent mood following the outcome of last week's election in the US, the news sent the STOXX 600, Europe's main equity benchmark, rocketing 2.5% higher. Shares of Pfizer also gained 6% on the news, while shares of BioNTech shot up 14%.

US benchmarks rallied, led by the Russell, as the value-rotation trade was back on...

...shares of the Nasdaq tech giants that led the market during the worst of the lockdown were seeing their shares ebb once again.

Yields moved higher on the news.

Brent Crude even saw its biggest intraday move since June on the report, which has elicited an extremely positive reaction in the market, a sign that investors see this as nothing short of a breakthrough in the battle against COVID-19.

Meal-kit provider HelloFresh dropped 13%, making it the worst performer in the Stoxx 600 as the rest of the market surged.

Unlike the AstraZeneca-Oxford vaccine, which ran into some still only vaguely explained delays, the Pfizer-BioNTech vaccine relies on messenger RNA technology, which effectively encodes immunity to the virus directly into human genes.

Source: WSJ

In summary: Biden in, COVID out.

Published:11/9/2020 8:59:28 AM
[Markets] Investors Ignore Evidence At Their Financial Peril Investors Ignore Evidence At Their Financial Peril Tyler Durden Mon, 11/09/2020 - 09:15

Authored by Lance Roberts via RealInvestmentAdvice.com,

Some of my favorite movies are when a group of investigators tracks down “wrong-doers.” At first, they have only a few clues that are disparate and have little context. However, as the movie progresses, the clues coalesce into a meaningful outcome of catching the villain. In the financial markets, our job as investors is much the same. However, at the peak of bull market cycles, investors begin to ignore evidence at their financial peril. 

Let’s take a look at the clues which may be more meaningful than individuals are currently assuming.

Clue 1: Valuations Expensive On Every Level

“Market bubbles have NOTHING to do with valuations or fundamentals.”

I have touched on the impact of valuations and forward returns. Currently, these fundamental concerns remain devoid of attention by investors chasing short-term performance. Despite the March selloff, record numbers of unemployed, and a deep recession, the markets remain near all-time highs.

“We are in a crisis, the worst crisis in my lifetime since the Second World War. I would describe it as a revolutionary moment when the range of possibilities is much greater than in normal times. What is inconceivable in normal times becomes not only possible but actually happens. People are disoriented and scared. They do things that are bad for them and for the world.”- George Soros

As shown in the chart below, the S&P 500 is trading in the upper 90% of its historical valuation levels.

However, it is not just the basic fundamental measures of the market. As noted by the WSJ, valuations are expensive by almost every measure. To wit:

“To illustrate the bearish story told, consider the projected 10-year returns to which these indicators’ current levels translate. The most bearish projection was the S&P 500 would produce a 10-year total return of 3.9 percentage points annualized below inflation. The most bullish was 3.6 points above inflation.

Even the bullish end of that range is more than 3 annualized percentage points below the stock market’s inflation-adjusted return over the past 200 years.”

Low Returns Or Worse

There are two important points to take away from the data.

  1. There are several periods throughout history where market returns were not only low but negative. (Given that most people only have 20-30 functional years to save for retirement, a 20-year period of low returns can devastate plans.)

  2. Periods of low returns follow periods of excessive market valuations and encompass the majority of negative return years. (Read more about this chart here)

While valuations are often dismissed in the short-term because there is not an immediate impact on price returns. By their very nature, valuations are HORRIBLE predictors of 12-month returns. As such, one should never focus solely on valuations in an investment strategy. However, over the long term, valuations are strong predictors of expected returns.

The conclusion from the WSJ is the critical “clue” we “investigative investors” should consider:

Ben Inker, head of the asset-allocation team at GMO, draws an analogy to a leaf in a hurricane: ‘You have no idea where the leaf will be a minute or an hour from now. But eventually gravity will win out, and it will land on the ground.’”

What we know is that stock returns in a decade will most likely be lower than the last. We don’t know if stocks will be lower, none of these indicators tell us the path the market will take along the way.  As the WSJ concludes:

“It might immediately head south from here, or it could enter a blowoff phase of sharply higher prices before succumbing to a severe bear market.”

Clue 2: Detachment Of Market From The Economy

As noted above, the detachment of the current economy from stock market is not sustainable. Such has led to a steady chant by the “bullish” crowd that “the stock market is not the economy.” While such is indeed a true statement, what it obfuscates is that the revenue, and earnings, of the corporations which comprise the market, come from economic activity.

The economy, earnings, and asset prices over time are highly correlated, as shown by the chart below.

Since 1947, earnings per share have grown at 6.21% annually, while the economy expanded by 6.47% annually. That close relationship in growth rates should be logical, particularly given the significant role consumer spending has in the GDP equation. 

The correlation between the two is shown in the chart below.

The current “negative correlation” is quite an anomaly given that corporate earnings are derived from economic activity. However, that relationship broke due to the massive amount of Federal Reserve interventions in the financial markets. Currently, the Fed owns the largest amount of the Treasury Bond market in history.

Clue 3: Earnings Decline

Speaking of earnings. One of the primary themes used by the “Permabulls” is that “valuations are cheap due to low interest rates.” That argument has been the clarion call of a generation of investors who have ignored fundamentals and valuations to chase market returns.

Since 2019, when earnings growth began to deteriorate in earnest, investors bid up shares. As such, the primary driver of returns, as shown below, has come from “multiple expansion.”

Earnings Getting Weaker

The “hope” remains that earnings growth will eventually catch up with valuations. However,  despite being 3/4ths of the way through 2020, the outlook for earnings continues to deteriorate. n just the last 15-days, the estimates for 2021 have declined by almost $7 per share despite a recovering economy’s repeated statements.

There are two problems with the thesis that “low rates justify high valuations.”

  1. Historically, such has not ever been the case; and,

  2. When rates rise, valuations quickly become an issue.

However, since stock prices reflect economic growth, the impact of rising rates on the economy is a far more significant issue.

Clue 4: The “Fed Put”

“Actually, one of the dangers is that people could be throwing risk to the wind and this [market] could be a runaway. We sometimes call that a melt-up and produces prices too high and then if there’s a shock, you come down to Earth and that could impact sentiment. I think this market is fully valued and not undervalued, but I don’t think it’s overvalued,” – Jeremy Siegel

Here is an interesting thing.

“Market bubbles have NOTHING to do with valuations or fundamentals.”

In other words, bubbles can exist even at times when valuations and fundamentals might argue otherwise. Let me show you an elementary example of what I mean. The chart below is the long-term valuation of the S&P 500 going back to 1871.

Notice that with the exception of only 1929, 2000, and 2007, every other major market crash occurred with valuations at levels LOWER than they are currently. 

Currently, it is believed that asset prices will not be allowed to meaningfully correct due to the “Fed put,” which has provided investors with “insurance” against taking “risk.” 

This assumption of “insurance,” which is effectively “moral hazard” created by the Federal Reserve, less to a litany of behavioral consequences for investors.

Psychological Problem

The biggest of these problems for individuals is the “herding effect” and “loss aversion.”

These two behaviors tend to function together, compounding the issues of investor mistakes over time. As markets are rising, individuals believe that the current price trend will continue to last for an indefinite period. The longer the rising trend lasts the more ingrained the belief becomes until the last of “holdouts” finally “buys in” as the financial markets evolve into a “euphoric state.”

As the markets decline, there is a slow realization that “this decline” is something more than a “buy the dip” opportunity.  As losses mount, the anxiety of loss begins to mount until individuals seek to “avert further loss” by selling.

This is the basis of the “Buy High / Sell Low” syndrome that plagues investors over the long-term.

However, by understanding what drives market returns over the long term, you can understand the impact the market has on psychology and investor behavior.

It is likely that in a world where there is virtually “no fear” of a market correction, an overwhelming sense of “urgency” to be invested, and a continual drone of “bullish chatter;” the markets are poised for the unexpected, unanticipated, and inevitable event.

Caught In “No Man’s Land” 

The disconnect between the stock market and real economic growth can certainly continue for now. Exuberance and confidence are at the highest levels on record, but the underlying stories are beginning to weave a tale of an economy that is very late in the current cycle.

Importantly, these are not short-term stories either. The long-term picture for the economy and the markets from the three biggest factors (Debt, Deflation, and Demographics) continues to build. These factors will continue to weigh on economic growth, and market returns, during the next generation as the massive wave of the baby-boomers shift from supporters to dependents of the financial and welfare system. 

Winning The War

Let me conclude with this quote from Vitaliy Katsenelson which sums up our investing view:

Our goal is to win a war, and to do that we may need to lose a few battles in the interim.

Yes, we want to make money, but it is even more important not to lose it. If the market continues to mount even higher, we will likely lag behind. The stocks we own will become fully valued, and we’ll sell them. If our cash balances continue to rise, then they will. We will not sacrifice our standards and thus let our portfolio be a byproduct of forced or irrational decisions.

We are willing to lose a few battles, but those losses will be necessary to win the war. Timing the market is an impossible endeavor. We don’t know anyone who has done it successfully on a consistent and repeated basis. In the short run, stock market movements are completely random – as random as you’re trying to guess the next card at the blackjack table.”

As an investor, it is essential to pay attention to the clues and the evidence’s weight. The success, or failure, of catching the end of the current bull market and the economic cycle will have important implications for your long-term financial goals.

Published:11/9/2020 8:28:37 AM
[Markets] Dow futures up 1,750 points on vaccine news and presidential election outcome Dow futures up 1,750 points on vaccine news and presidential election outcome Published:11/9/2020 7:58:30 AM
[Markets] S&P Futures, Global Stocks Soar To All Time High, Russell Limit Up On Covid Vaccine News S&P Futures, Global Stocks Soar To All Time High, Russell Limit Up On Covid Vaccine News Tyler Durden Mon, 11/09/2020 - 07:35

Biden in, COVID out.

Global stocks and S&P futures exploded higher, hitting all time highs, following this morning's news that a Pfizer covid vaccine is more than 90% effective, which came at a time when stocks were already euphoric in the overnight session following the weekend's political news that Biden was in.

The result, in a nutshell, was an explosion in small caps, a surge in the Dow, a spike in the S&P and a slump in the Nasdaq (more below).

"This is about the best the news could possibly be for the world and for the United States and for public health," said William Gruber, Pfizer senior vice president for vaccine clinical research and development. It was better than even the best result he had hoped for, he said.

The news, which conveniently came just days after Biden was declared president elect by the media, sent Emini S&P futures up as much as 4%, last seen up 124 points to 3,634 or up 3.8%...

... and hitting new all time highs, surpassing the early September closing record of 3,568.

... pushing European stocks up 3.9%, led by travel, banks, energy and auto sectors...

... and Dow futures up 5%, or more than 1,400 points, to 29,650...

... the ETF of Russell 2000 ETF small-caps, the RTY, just hit the 7% limit up.

With the Pfizer news unleashing an epic reflation trade, the Nasdaq initially rose but then tumbled on the back of the sharply higher yields which are hitting deflation names such as the FAAMGs...

... triggering an impressive reversal in the S&P/Nasdaq relationship:

"For stocks, this is likely the best of both worlds," said Joyce Chang, head of global research at JPMorgan Securities. "A GOP senate majority should ensure that Trump’s pro-business policies stay intact. Under Biden, additional tariffs that fueled the trade war are unlikely to materialize."

Stocks that had struggled due to lock-down/restrictive measures related to the virus soared; cruise operators, airlines, hotels, amusement park/movie theater operators and casinos were among the early session’s top “lock- down” performers.

Airline stocks surged, with the Stoxx 600 Travel & Leisure Index up as much as 7%, the most intraday since May 26, with the index reaching the highest since Match 9; British Airways parent IAG jumped 25%, cruise operator Carnival surged 18%, Ryanair gained 18% and hotel company Accor jumps 12%. U.S. airlines also jumped premarket, with American Airlines up 15% and Delta up 12%.

Catering companies like Sodexo and Compass, travel booking software firm Amadeus also surging, as are airports concession operators like WH Smith, SSP Group and Autogrill. Aerospace stocks are also surging, with Airbus, Safran and Rolls-Royce among the biggest gainers in the industrial goods index, along with airports operators like ADP and Aena.

Bank stocks also jumped in premarket trading: BofA, Citigroup and JPMorgan climbed about 7% while Wells Fargo jumped more than 8%; Morgan Stanley and Goldman Sachs rose more than 5% as the yield curve sharply steepened.  Regional banks rallied, too with KeyCorp, Huntington, Regions and Truist rising more than 5%.

Banks had been hard hit this year by pandemic-induced economic woes and low interest rates; the KBW Bank Index (BKX) has tumbled 31% versus an 8.6% gain for the S&P 500. Card stocks gained as well, with Visa and Mastercard adding more than 5%, and American Express and Capital One up more than 8%.

At the same time, stay at home stocks such as Peloton, Netflix and Zoom sank: PTON is down 5.2%, NFLX -3.3% and ZM -5%; Nautilus, Etsy and Wayfair also fell. The news also hammered companies that had boomed amid an insatiable need for Covid-19 tests: QDEL sank 14% as QGEN tumbled 12%; among smaller companies trading on lighter volumer were GNMK -6.1%, FLDM -2.8%.

Looking ahead, Bloomberg notes that there’s precedence for the market’s gains to continue. Since 2000, every time the S&P 500 was higher heading into Election Day, November and December came in green, too. The first years of presidential terms have also been good ones of late. Since 1986, according to Leuthold Group data, they’ve seen average gains of 18.6%.

The news also helped crude oil explode 8% higher...

... while such flight to safety trades as Treasury yields, reversed amid expectations the reflation trade may finally be unleashed should covid be vanquished, and the 10Y yield soared as much as 14bps higher, rising to a session high of 0.9338% before easing back to 0.91%. Supply is also a factor as this week’s Treasury refunding begins with 3-year note sale at 1pm ET and a heavy IG corporate issuance slate is expected.

Others safety trades such as gold and silver, were also hammered, tumbling over 2%.

In FX, the USD was little changed overall, though the underlying bias was negative according to BMO's Stephen Gallo; in BBDXY terms the currency is down 2.4% in Q4 to-date. Within the FX space, the bulk of the weakness in the USD was shouldered by the currencies of commodity exporters (NZD, AUD, NOK, CAD, IDR and MXN). Risk assets fed off the strength in commodity prices and weaker USD (Hang Seng +1.2%, Stoxx-50 +6.0%), and the rally gained momentum after reports of an effective vaccine circulated.

Elsewhere in FX, the TRY rallied 6.1% vs the USD after leadership changes were announced for Turkey's MoF and central bank over the weekend. The majority of FX investors probably expect CBRT to tighten its monetary policy stance further to rein in credit growth, although that is clearly at odds with Erdogan's ideological preference for rate cuts. Despite that sentiment, the yield on the local currency 2-year government debt dropped (probably because financial markets had already been applying the tightening for the central bank). The next scheduled rate decision is on November 19.

Looking ahead, here are some of the week's key events:

  • Brexit trade-deal talks between the U.K. and EU continue in London Monday
  • Tuesday is the EU’s target date for triggering tariffs on as much as $4 billion of U.S. goods in retaliation over illegal aid to Boeing Co.
  • Alibaba holds its annual Singles’ Day on Wednesday, an online global shopping phenomenon that had $38 billion of sales last year
  • ECB President Christine Lagarde, BOE Governor Andrew Bailey and Fed Chair Jerome Powell are among the speakers Thursday at an online ECB Forum entitled “Central Banks in a Shifting World”
  • Finance ministers and central bankers from the Group of 20 hold an extraordinary meeting Friday to discuss bolder action to help poor nations struggling to repay their debts.

Aside for the Pfizer covid vaccine, here are some of the other top overnight news from Bloomberg:

  • Biden is largely ignoring Trump’s efforts to undermine his victory. The president-elect plans to unveil on Monday his transition team’s coronavirus task force, a step toward fulfilling his central campaign promise: He will make containing the pandemic his first priority
  • Republican congressional leaders still wary of crossing President Donald Trump are holding back from acknowledging Democrat Joe Biden’s victory in the 2020 presidential race
  • Joe Biden won the presidency promising to bring Americans together. But now his administration is sure to come under pressure from some Democrats to risk exacerbating divisions by investigating and prosecuting Donald Trump
  • Germany is seeking to mend transatlantic trade relations and is mulling a more conciliatory approach that would see the European Union delay tariffs set to hit $4 billion of American products as soon as Tuesday, according to a senior official familiar with the government’s thinking
  • Unlike Donald Trump, whom Chinese officials had little knowledge of before he took office, Joe Biden is well known in Beijing. But that history is unlikely to quickly repair a relationship between the global powers that has fundamentally changed over the past four years
  • France’s economy will take a smaller hit from the new lockdown to contain the spread of Covid-19 than it did during the tighter restrictions on activity earlier this year, according to the country’s central bank
  • Over the course of the next seven days, the U.K. premier needs to deliver a trade deal with the EU or risk a chaotic and economically damaging rupture, and avoid a rift with U.S. President-elect Joe Biden over the U.K.’s controversial Brexit laws

While it's already somewhat dated, here is DB's Jim Reid with a recap of the weekend's firehose of news:

So barring an extraordinary series of events Joe Biden will be the next President of the US. Not that it matters in the great scheme of things but we’ve been debating whether this was a close election or not. It really depends on how you look at it. In terms of the popular vote, Joe Biden won more votes than any candidate in history and will likely win by the second most decisive result since 2000. He leads by 3pp currently with this likely to grow in the coming days, with Nate Silver predicting 4.3pp over the weekend. However in the end the election could have been tied at 269 (and a Congress likely to be weighted towards anointing Trump) without a combined c.55,000 votes in Arizona, Wisconsin and Georgia. It’s largely irrelevant but interesting nevertheless.

Attention will still remain on the remaining Senate races. The Democrats have gained a net of one seat so far, and it looks likely that a pair of run-off elections in Georgia on January 5th will determine which party controls the Senate over the next two years. The most likely outcome though is a divided government as the Dems would need to win both against current expectations.

The market last week stuck to the normal script post a close election where the market rallies regardless of who wins rather than one where micro analysis of post election policies are used to predict what happens next. Who needs us analysts?

The S&P 500 rallied +7.32% last week (-0.03% Friday), while the VIX fell -13.2pts to 24.9, its lowest level since August. It was the S&P’s best week since early April when the index was coming back from the pandemic lows. Indeed it was the best post election 2-day performance since 1900 according to DB’s Binky Chadha.

Binky also noted that going into the election, near term implied vol across asset classes had risen sharply and vol curves were steeply inverted. As the election unfolded in a largely orderly fashion, vol collapsed, with vol curves now significantly flatter across the board. The drop in implied vol has been entirely driven by a fall in risk premiums, with realised vol in fact rising. The equity vol premium is now in the middle of its historical range, according to Binky suggesting the unwinding of protection positions is done.

However, the bounce in the S&P 500 took it only to the top of the range it has been in since August so you could argue we’ve just returned back to where we were before election risk premiums started rising. Technology and Biotech stocks outperformed last week with the NASDAQ up a greater +9.01% (+0.04% Friday). The positive risk sentiment was seen in Europe as well, as the Stoxx 600 ended the week +7.02% higher (-0.20% Friday) while the FTSE MIB (+9.69%), CAC 40 (+7.98%), and DAX (+7.99%) all gained sharply.

In terms of the economic outlook post election our US economists updated their view on Friday. Since Election Day, Senate Majority Leader McConnell has sounded more open to a stimulus deal. This shift in tone increases the chances for a lame duck package and could hint at the potential for a somewhat larger stimulus deal than they originally thought without a “Blue Wave”. So they keep their current baseline assumption of a roughly $750bn fiscal package legislated by Q1 even though they previously worried about this in a split government scenario.

Although the pace of the economic recovery entering Q4 has exceeded their prior expectations, worsening covid trends continue to be a source of downside risk in the coming months. Balancing out these risks, they have upgraded their Q4 real GDP growth projection by 120bps to 2.3% (annualised). This is mainly due to a 170bps upward revision to consumer spending, which we now see expanding by 1.6% in the current quarter. The upshot is that 2020 growth has been revised up by 30bps to -2.9% on a Q4/Q4 basis. They have not made any material changes to their 2021 and 2022 growth projections. However, given the importance of the Senate outcome, they plan to reassess their view pending the results of those elections in early January. See their note here for more.

Asian markets have started the week on a front foot with the Nikkei (+2.41%), Hang Seng ( +1.77%), Shanghai Comp (+1.95% ) and Kospi ( +1.41%) all advancing. Futures on the S&P 500 and Nasdaq are also up as much as +1.70% and +2.60% respectively on the news of a Biden Presidency. In FX, the onshore Chinese yuan is up +0.54% to 6.5771. The Turkish lira is also up +1.56% this morning after a new central bank chief was appointed over the weekend and the subsequent resignation of the country’s finance and treasury minister, Berat Albayrak. Elsewhere, crude oil prices are up c. +2.50% while spot gold prices are up +0.70%. In terms of weekend data releases, we saw China’s October exports at 11.4% yoy (vs. 9.2% yoy expected), the highest growth since March 2019 while, imports stood at +4.7% yoy (vs. +8.6% yoy expected).

Onto the latest on the virus and the US reported another 102,342 cases over the past 24 hours, marking the 5th continuous day over 100k. The state of Utah is now facing an overcrowding of hospitals and has declared a state of emergency and ordered a mask mandate. The state has also ordered 2-week restrictions on casual social gatherings and extracurricular activities. Meanwhile in Oklahoma, more than 90% of ICU beds are now occupied and the state’s health commissioner has asked residents to wear masks and observe other precautions. President Elect Joe Biden will speak later today on his plan to “beat Covid 19,” under which he is expected to appoint a 12-member coronavirus task force. In Europe, Italy reported over 30k for the 5th consecutive day yesterday. For more on how the virus is spreading see the table below.

Maybe as US election noise begins to fade we’ll return back to the virus and to what promises to be a crucial week for Brexit trade negotiations although one can be accused of crying wolf so many times before on this sort of statement that markets won’t really pay it too much attention. However to ratify any deal across Europe before December 31st, mid-November has often been cited as the last point where a deal can be struck. Deadlines have been extended before but the next week takes us to that point. A call between PM Johnson and the EU’s Ursula von der Leyen on Saturday suggested progress had been made but that there were still issues around the level playing field and fishing. The PM noting “significant differences” remain and von der Leyen suggesting “large differences”. Talks will continue this week.

On the data front, this week is a quieter one, with the highlights including the US CPI reading for October on Thursday, along with the preliminary consumer sentiment index from the University of Michigan for November. The UK will also be releasing its Q3 GDP reading, although for Q4 the Bank of England is now predicting another contraction with England now experiencing a second lockdown.

Finally, earnings season is winding down now, with 438 of the S&P 500 companies having now reported. We will only see a further 16 S&P 500 companies report this week, along with a further 65 from the STOXX 600. In terms of the highlights, today we’ll hear from McDonald’s, before tomorrow sees reports from Adidas and Deutsche Post. Then on Wednesday we’ll hear from Air Products and Continental, before Thursday sees reports from Walt Disney, Cisco Systems, Siemens, Deutsche Telekom, Merck, Applied Materials, Tencent and Nissan Motor.

Though the main central bank decisions are now out of the way, there’ll be a number of speakers over the week ahead, particularly given an ECB forum on central banking this week. The expected highlight will be a policy panel on Thursday featuring ECB President Lagarde, Federal Reserve Chair Powell and Bank of England Governor Bailey, so that’ll definitely be one to keep an eye on, not least given the potential for further stimulus as coronavirus cases continue to rise on both sides of the Atlantic.

Looking back at more of last week now, with the Senate looking likely to remain with the Republicans at this point, markets viewed a divided government as bullish for Treasuries. US 10yr Treasury yields fell -5.5bps (+5.6bps Friday) to finish the week at 0.819%. In Europe core sovereign debt went the other way and the risk on dominated rather than the micro of US fiscal policy as 10yr Gilt yields rose +1.2bps (+4.0bps Friday) to 0.27%, while 10yr Bund yields were up +0.6bps (+1.6bps Friday) to -0.62%. Peripheral sovereign debt spreads to bunds tightened as risk sentiment rose. Italian (-12.5bps), Spanish (-4.4bps), Portuguese (-3.1bps) and Greek (-14.0bps) 10yr bond yields all tightened to bunds. Credit spreads in the US and Europe also tightened on the week, particularly high yield debt. US HY cash spreads were -56bps tighter, while Europe HY cash spreads tightened -40bps. IG US cash spreads were -9bps tighter and -3bps in Europe.

The US dollar also reacted to the election news as the greenback fell -1.92% (-0.32% Friday) on the week, the largest one week fall since late March and is now at its lowest level since late August. This drop in the dollar supported commodity prices as WTI (+3.77%) and Brent crude (+5.31%) rose sharply. Metals also gained with a +3.49% rise in copper prices and gold gaining +3.86%, its best week in just over three months. Bitcoin was interestingly up +14.03% (+2.03% Friday)

In terms of data released on Friday, US payrolls were the big highlight. The US labour market unexpectedly strengthened last month, having added +638k jobs (vs 580k expected) which dropped the unemployment rate to 6.9% (vs 7.6% expected). Underneath the headline numbers there were some worrying trends, as the number of long-term unemployed (jobless for 27 weeks or more) increased by 1.15 million to 3.56 million, the highest level since early 2014. In Europe, German industrial production came in under expectations at +1.6% (vs. +2.5 expected), though this was an improvement from last month’s revised +0.5% gain. Italian retail sales for September fell less than expected at -0.8% (vs -1.5% expected), but this was a sharp reduction from last month’s +8.2%.

Published:11/9/2020 6:58:51 AM
[Markets] Dow futures up 1,500 points after Pfizer vaccine news and election outcome Dow futures up 1,500 points after Pfizer vaccine news and election outcome Published:11/9/2020 6:58:51 AM
[Markets] Dow futures rise 225 points as investors ready for Biden presidency Dow futures rise 225 points as investors ready for Biden presidency Published:11/8/2020 5:45:07 PM
[Markets] European stocks, Dow futures gain as U.S. election counting continues European stocks, Dow futures gain as U.S. election counting continues Published:11/5/2020 4:48:09 AM
[Markets] Dow futures pick up steam as election results tighten Dow futures pick up steam as election results tighten Published:11/3/2020 10:59:27 PM
[Markets] European stocks, Dow futures climb on Election Day optimism European stocks, Dow futures climb on Election Day optimism Published:11/3/2020 5:26:22 AM
[Markets] US STOCKS-Wall Street rises but market braced for choppy week on eve of U.S. election The Dow and S&P closed higher on Monday with the Nasdaq posting slimmer gains on the eve of the U.S. presidential election, as investors girded for what could be big market swings this week. The longer-term moves will depend on whether Republican President Donald Trump or his Democratic challenger Joe Biden wins the White House race. Biden leads in national opinion polls, but races are tight in battleground states that could tip the election to Trump. Published:11/2/2020 3:46:34 PM
[Markets] US STOCKS-Wall Street rises but market braced for choppy trade in U.S. election week The Dow and S&P closed higher on Monday with the Nasdaq posted slimmer gains on the eve of the U.S. presidential election, as investors girded for what could be big market swings after all three indexes notched their biggest weekly decline since March. Market participants largely expected short-term volatility and the likelihood of major long-term policy shifts related to taxes, government spending, trade and regulation depending on whether Republican President Donald Trump or his Democratic challenger Joe Biden wins the White House race. Published:11/2/2020 3:10:20 PM
[Markets] Despite Tech Tumble; Stocks, Bonds, Gold, & The Dollar Rally On Election Eve Despite Tech Tumble; Stocks, Bonds, Gold, & The Dollar Rally On Election Eve Tyler Durden Mon, 11/02/2020 - 16:01

As Asia closed and Europe opened, US equity futures were panic bid up 400-plus Dow points overnight, clung to gains into the US cash open when Nasdaq was dumped and Small Caps pumped along with The Dow. Last minute buying panics ramped Nasdaq barely into the green...

Weakness in Nasdaq was driven by the mega-tech names with AMZN taking a good hit...

Source: Bloomberg

Brace yourself for some vol in the next 24 hours...

All the major US indices are at critical technical levels ahead of the election night malarkey...

And equity risk remains very rich relative to credit risk...

Source: Bloomberg

Value stocks were bid today...

Source: Bloomberg

Despite broad stock market gains, bonds were also bid with the long-end outperforming...

Source: Bloomberg

The dollar rallied for the 4th straight day back to its strongest since early October...

Source: Bloomberg

Bitcoin was dumped overnight when stocks ramped but has been bid back in the last few hours...

Source: Bloomberg

Gold was bid, despite USD gains, pushing back up towards $1900...

As did Silver...

Oil prices exploded higher after crashing to a $33 handle overnight. The rebound was catalyzed by Russia comments on OPEC+ output cuts...

 

Finally, all eyes on Pennsylvania...

Source: Bloomberg

What's the worst that could happen?

Source: Bloomberg

Published:11/2/2020 3:10:20 PM
[Markets] Dow finishes up over 400 points on eve of presidential election Dow finishes up over 400 points on eve of presidential election Published:11/2/2020 3:10:20 PM
[Markets] Dow Trades Higher Ahead of Election Day, Tech Edges Lower Stocks were mostly higher Monday as investors prepared for a week filled not only with the presidential election but also with a Federal Reserve policy meeting and the U.S. jobs report. The Dow Jones Industrial Average rose 405 points, or 1.53%, to 26,907, the S&P 500 rose 1.02% and the Nasdaq fell 0.03% as the tech sector struggled. An expansion in U.S. manufacturing in October fueled the stock market's sharp gains earlier in the session. Published:11/2/2020 2:09:11 PM
[Markets] Dow Charges 500 Points Higher on Eve of Election Day Stocks rose Monday as Wall Street rebounded from its worst month since March as investors prepared for a week filled not only with the presidential election but also with a Federal Reserve policy meeting and the U.S. jobs report. The Dow Jones Industrial Average jumped 496 points, or 1.87%, to 26,998, the S&P 500 rose 1.71% and the Nasdaq gained 1.41%. An expansion in U.S. manufacturing in October also was fueling stock market gains. Published:11/2/2020 9:41:55 AM
[Markets] Dow futures up more than 400 points on eve of Election Day in U.S. Dow futures up more than 400 points on eve of Election Day in U.S. Published:11/2/2020 7:07:47 AM
[Markets] 3 Things to Watch in the Stock Market This Week Stocks fell significantly last week, as both the Dow Jones Industrial Average (DJINDICES: ^DJI) and the S&P 500 (SNPINDEX: ^GSPC) shed over 5% as COVID-19 outbreaks continued and several large tech companies fell following earnings reports. The Dow is down 7% so far in 2020 while the S&P is up slightly. A few stocks will announce operating results over the next few trading days, including Wayfair (NYSE: W), Hershey (NYSE: HSY), and Electronic Arts (NASDAQ: EA). Published:11/2/2020 6:37:36 AM
[Markets] Dow futures up over 300 points on election eve, helped by China, Europe data Dow futures up over 300 points on election eve, helped by China, Europe data Published:11/2/2020 4:36:25 AM
[Markets] 'CommonPass': New COVID-19 Security Measures Will Make Health A Prerequisite For Travel 'CommonPass': New COVID-19 Security Measures Will Make Health A Prerequisite For Travel Tyler Durden Mon, 11/02/2020 - 05:00

Authored by Raul Diego via MintPressNews.com,

As the multi-sector, global response to the coronavirus tightens the noose around civil liberties, CommonPass stands out as one of the most appalling and dangerous attacks on basic human rights in the name of public health.

Imagine standing at a TSA security checkpoint on your way home for the holidays. You’re getting ready to go through the awkward travel procedures instituted almost immediately after 9/11 when the Transportation and Security Administration (TSA) was created and air travel in the United States morphed into a search and seizure operation with the implied possibility of your detention and interrogation.

The initial outrage such expressions of implicit state violence caused early on eventually gave way to begrudging acceptance. But now, a new layer of “security,” that could restrict freedom of movement even further, is being rolled out at several ports of entry in partnership with health technology industry leaders, academic institutions, and government health entities in more than three dozen countries.

A new digital certificate called CommonPass, designed to serve as a clearance mechanism for passengers based on a health diagnosis underwent its first transatlantic test on October 21 under the watchful eye of the Centers for Disease Control (CDC) and U.S. Customs and Border Protection (CBP) at Heathrow Airport in London. There, a group of select participants embarked on United flight 15 to Newark, New Jersey after being screened and tested for COVID-19 at the point of departure in a largely ceremonial exercise that included initiative co-founders, Paul Meyer and Bradley Perkins.

The app’s first trial run took place with much less media fanfare last month on a Cathay Pacific Airways flight from Hong Kong to Singapore and marked the beginning of the CommonPass pilot project launched by The Commons Project non-profit organization in-tandem with the World Economic Forum.

Travel industry insiders claim that CommonPass will allow international travel to resume before a COVID-19 vaccine is made widely available by applying standard methods for certification of lab results and vaccination records of travelers through the CommonPass Framework, based on criteria set by the governments of each port of entry.

A graphic from a Commons Project presser lays out the basics of the CommonPass

J.D. O’Hara, CEO of one of the world’s largest travel services companies and one of the participants at Wednesday’s CommonPass trial run, hailed the app’s ability to “verify health

information in a secure, verified manner,” while Roger Dow of the U.S. Travel Association released a statement praising it for paving a “way forward” for the global economy in the wake of the pandemic.

As the multi-sector, global response to the coronavirus tightens the noose around civil liberties, CommonPass stands out as one of the most appalling and dangerous attacks on basic human rights in the name of public health and is rife with a potential for abuse so great, that it behooves us to find out more about the people and interests behind it.

Feudal revivalists

In medieval times, the ‘commons’ denoted the de facto and collective ownership of land, which peasants used to plow, sow and harvest or raise sheep and cattle. The rise of the land-owning classes in post-Magna Carta Europe, and England in particular, slowly eviscerated this form of communal privilege through the enclosure system, which redistributed the commons to the proto-capitalist class in partnership with the monarchies and create the system of oppressive labor exploitation known as feudalism.

Starting in 1604, the Enclosure Acts of England created legal property rights for land that had belonged to the farmers and shepherds, forming the basis of modern-day capitalism. Today, that scene is being repeated as the Internet, an information ‘commons’ is being carved out by Big Tech and led by organizations like The Commons Project, which avails itself of a name that connotes the total opposite of its purpose.

Co-founders Paul Meyer and Bradley Perkins are the non-profit’s CEO and Chief Medical Officer, respectively. Perkins began his career over thirty years ago at the Center for Disease Control and, for nearly a decade, worked at the RAND corporation’s health care policy division, RAND Health Advisory Board. Meyer, for his part, is a Yale law school graduate, who was writing President Clinton’s speeches years before receiving his graduation diploma from the storied institution. Both have extensive career histories in the fields of health and technology, though in very different areas and with strange bedfellows along the way.

In 2009, Perkins became the Chief Technology Officer for a publicly-traded cross-national operator of hospitals and clinics called Vanguard Health Systems. Vanguard had been established with funding from Morgan Stanley and controlled by the Blackstone Group since 2004, maintaining control all though the company’s IPO in 2011. Two years later, Vanguard was acquired by Tenet Healthcare, creating the third-largest investor-owned hospital company in the United States with a total of 65 hospitals nationwide and over 500 healthcare facilities.

Paul Meyer, center, is pictured in a screenshot of a media briefing touting CommonPass

Besides being one of the biggest healthcare companies in the United States, Tenet is also one of the most notoriously corrupt. The same year it bought Vanguard, it was slapped with a major whistleblower complaint that disclosed the company’s fraudulent practices. That lawsuit resulted in a $514 million settlement. A more recent case involving a conspiracy between Oklahoma orthopedic surgeons at one of its facilities was settled for $66 million in 2019. But, Tenet’s problems go back even further to the early 2000s when fraud and performing unneeded surgeries led to a multitude of lawsuits and even a Senate investigation.

The Vanguard deal marked the end of Perkins’ tenure there, who chose to take a $1.9 million package instead of joining the newly merged conglomerate like its CEO and much of its staff did. He would move on to create a company of his own called Sapiens Data Science; a health tech platform that provides access to “credible scientifically validated data algorithms” and looks to create a “new revolutionary health ecosystem.”

Meyer’s background is more complicated, and his arrival on the healthcare scene runs through different channels linked to American intelligence cover operations dating back to NATO’s war in Kosovo and the former Yugoslavia during the early Clinton years. It is his involvement with an infamous human-trafficking outfit known as the International Rescue Committee or IRC, that should be cause for concern given his role in The Commons Project and flagship CommonPass app.

The Meyer of Kosovo

Before he was named Young Global Leader by the World Economic Forum or Henry Crown Fellow at the Aspen Institute, and even before becoming a Term Member of the Council on Foreign Relations and receiving MIT’s 2003 Humanitarian of the Year award, Paul Meyer found himself in war-torn Kosovo installing a new Internet infrastructure system to replace the one destroyed in the war, only days after NATO bombs had stopped shelling the Serbian people.

Barely out of law school and having spent two years writing President Clinton’s speeches as the conflict in the former Yugoslavia was transpiring, Meyer was tapped by the IRC to lead a UN and private relief effort called the Internet Projekti Kosova (IPKO) or Kosovo Internet Project, with tech-savvy local Akan Ismaili to handle the complex technical issues and Teresa Crawford from the Advocacy Project to “uplink” satellites in the region with the stated purpose of reuniting displaced Albanian families. The system was set up atop a building used by the British KFOR Civil-Military Cooperation CIMIC and British Royal Engineers were also brought onto the project, among others.

Eventually, the IRC gave the project to a non-profit organization “dedicated to providing wide access to the Internet in Kosovo.” IPKO is today the largest telecom, internet, and cable TV company in Kosovo. Meyer remains involved through the IPKO Foundation, which he co-founded to provide “free technology education” to Kosovar students.

By the 1950s, the IRC was known to be an “integral link” in the CIA’s covert network led by Tony Blair protégé and former British Foreign Minister, David Miliband since 2013. In 2018, the IRC was embroiled in a child-sex trafficking scandal dubbed the “sex-for-food scandal” covered extensively by Whitney Webb in a recent article. The organization’s cover-up of dozens of sex abuse, bribery and fraud allegations resulted in the U.K. government withdrawing its funding from the organizations. However, no IRC employees were prosecuted over the 37 incidents detailed in the report.

Currently, the IRC is very involved in the implementation of a biometric ID system for refugees of the ongoing conflict in Myanmar, a project funded by the Rockefeller Foundation-backed ID2020 Alliance, which also funds The Commons Project. IRC’s Mae La initiative, however, receives most of its funding through the notorious CIA-cutout USAID and intends to create a “blockchain-based digital identification” system using iris recognition technology to give refugees access to IRC’s services in Thailand. Long term goals include rolling health, work and financial data together into a single ID system, that will determine access to food, healthcare and mobility.

We want your DNA

The difference between IRC’s Mae La project and The Commons Project is a question of class. Class status, to be specific. But, it is essentially the same idea and covers the same interests of the groups and individuals who form part of the Commons Project’s board of trustees; many of whom have been part of the digital tracking and healthcare technology space for years.

People like Linda Dillman, who ran Wal-Mart’s implementation of RFID employee tracking technology as the retail giant’s CIO or the former Chief Technology Officer for the U.S. Department of Health and Human Services, Bryan Sivak, who is now a Managing Director at Managing Director at Kaiser Permanente, one of the largest healthcare insurance plan providers in the nation. Other trustee affiliations stand out, as well, such as Will Fitzpatrick, General Counsel to the Omidyar Network and George W. Bush’s Assistant Secretary of Defense, Health Affairs, Dr. William Winkenwerder, Jr.

At the core of these efforts is the desire to create a DNA-based population screening agenda, which people like Perkins and Meyer are forcefully pushing forward. Perkins worked as the CMO at a company called Human Longevity, Inc., which “combines state-of-the-art DNA sequencing and expert analysis with machine learning, to help change medicine to a more data-driven science.”

A microbiologist demonstrates a whole-genome DNA sequencing machine called a MiSeq at CDC HQ in Atlanta. David Goldman | AP

Meyer developed a precursor to CommonPass in 2016, when he merged his mobile health services company, Voxiva, which implemented the “first nationwide digital disease surveillance systems in Peru and Rwanda” in partnership with the CDC, the National Institutes of Health (NIH), with Sense Health to form a health messaging service called Wellpass Meyer described as “an integrated platform… [that] helps overcome the challenges of deploying fragmented engagement and population health solutions.”

Dubious technology

The reliability of the DNA-based, algorithmically-deduced health diagnoses used for the CommonPass trial run must also be called into question given the history of the company furnishing the technology. Prenetics, Ltd is the Hong Kong-based, Alibaba-funded company that also performed the COVID-19 testing for the UK’s Premier League’s Project Restart, which used a similar health status app called Covi-Pass, covered by this author in June.

Prenetics’ COVID tests rely on DNA-based technology it acquired in 2018, when it purchased DNAFit; a company founded by South African businessman Avrom “Avi” Lasarow, who came on board after the merger as Prenetics’ Chief Executive Officer for Europe, Middle East and Africa. Lasarow, who also heads the Premier League’s coronavirus testing program, just settled a civil case against him in the U.S. last May for nearly $60,000 surrounding allegations of “deceptive health claims”.

Lifestyle genetics pioneer” Lasarow has a long track record of settling out of court over such issues, including a lawsuit brought by the U.S. Federal Trade Commission in 2015, which accused Lasarow Healthcare Technologies Ltd., aka L Health Ltd., and two other defendants of making false or unsubstantiated claims regarding a “melanoma detection” app. As part of that settlement, Lasarow was “prohibited from making any misleading or unsubstantiated claims about the health benefits or efficacy of any product or service.”

Prenetics has been reportedly working on establishing a partnership with VSTE Enterprises, the same company that developed the V-Code technology that underpins Covi-Pass, since May. Nevertheless, such red flags pale in comparison to the individuals and organizations that are behind CommonPass, itself, who have plans for a much vaster digital enclosure based on DNA population screening technologies through initiatives like the The Commons Project, which aims to fundamentally transform medicine and impose new limits on our freedom of movement as the CommonPass rollout is slated to quickly expand to other routes across Asia, Africa, the Americas, Europe and the Middle East.

A common thread

Just as Bush’s Aviation and Transportation Security Act opened the doors for certain technology and security sectors to flourish in the wake of 9/11, this novel health-focused expansion of the national security state has bypassed all levers of democratic power to allow for the entrenchment of a far larger and more dangerous group of entities, within the health, technology and life sciences industries together with an increasingly more powerful clique of federal health agencies and officials, like Robert Kadlec, who are pushing for a full spectrum surveillance society.

Taking your shoes off at the airport and exposing your body to radiation has become routine now at every airport in the nation and most ‘temporary’ laws passed through emergency legislation remain on the books nearly two decades later. Precedent demands that we assume the same will occur with the majority of the new restrictions on our freedom of movement and quality of life currently being implemented throughout the country and the world.

Rolling back these draconian measures is not in any of their plans, as promised by the president of the U.S. Travel Association, Roger Dow, who confidently asserted after Wednesday’s successful CommonPass trail run, that the app will let us “navigate out of the crippling economic fallout of COVID-related travel restrictions and quarantine requirements,” adding that it will “pay further dividends for more seamless and convenient travel even once the pandemic has subsided.”

Published:11/2/2020 4:07:12 AM
[Markets] Nasdaq Hits Correction Mode, Dow Touches 200-Day Moving Average In Volatile Friday Trade If there were any doubts left about whether the market would be "risk-on" or "risk-off" going into the election, Friday's selloff pretty much iced it. The toggle has switched to the off position.The late-week meltdown ignited after earnings from four of the five FAANGs that were mostly positive, but perhaps lacking in the guidance department (see more below). Combine that with the resurgence of COVID-19, the Senate adjourning with no more progress on a stimulus package, and the culmination of a long and contentious election season, and it's no wonder investors seem ready for a break. Even before FAANG earnings officially put things on ice, many investors showed signs of risk aversion ahead of the election. That made itself pretty clear with selloffs on Monday and Wednesday. Major indices suffered their worst week since March, and now people are openly making comparisons between this pre-election skid and the one we saw heading into the 2016 election.As noted this morning, keep an eye on futures Sunday night into Monday, and especially on Tuesday night as returns come in. Election night 2016 was a wild one for the futures market, featuring a steep plunge when it initially looked like results might be contested, followed by a meteoric rally when it became clear there'd be a victor without much fuss or muss.A wild ride could play out this time if things look testy by late Tuesday night. Or, if it looks relatively smooth, stocks could get a lift. It's arguably not so much who wins, but whether there's a chance of a long, drawn-out chaotic fight for a winner.Late Rally Back; A New Policy From The Fed A fierce recovery effort at the very end of Friday's session might put Monday's open into more solid territory. A late-breaking news item from the Fed about 40 minutes before the close also potentially contributed to the late rally. The Fed said it's reducing minimum loan sizes for smaller businesses that want to use the Fed's lending program. It's also easing restrictions on debt for companies already using the program. The Fed called these moves "two important ways to better target support to smaller businesses that employ millions of workers and are facing continued revenue shortfalls due to the pandemic."Basically, the Fed is trying to inject more money into the economy--something Congress and the White House haven't done with a stimulus since spring--which would possibly drive up economic growth expectations. The idea could be that this might help small businesses bridge the gap between now and any fiscal stimulus.Strong Data Raise Hopes For New Week There are other signs things might improve once the election excitement fades. Economic data have been solid lately. Gross domestic product (GDP) for Q3 came in above estimates yesterday, and initial jobless claims have finally started to ease a bit. New home sales for September were a bit subdued, but that's the only data all week that looked below average.The problem is that the good news is hitting a wall of worry centered on the election, COVID-19, and lack of a stimulus. Until we get those behind us (and it could be a while), risk premium in the market might continue unravelling as we saw this week. Technically, a lot of damage got done on the charts this week. The Dow Jones Industrial Average ($DJI) retested its 200-day moving average (before settling above it--see chart below) and the SPX took out its 50-day and 100-day moving averages. There appears to be potential technical support near the SPX 200-day moving average at around 3130, but that's still a long way down, so perhaps look for bulls to defend the psychological 3200 handle if things fall further.But if you're following corrections, the Nasdaq (COMP) has fallen 10% from its all-time high. The SPX is down 8.7% from its peak, so it's close but not all the way into correction territory.CHART OF THE AFTERNOON: MUSCLE MEMORY? The Dow Jones Industrial Average ($DJI-candlestick) retested its 200-day moving average (blue line) and closed above it. This is a level the index visited back in June and August (yellow circles), so it could be a pivotal level to watch, going forward. Data source: S&P Dow Jones Indices. Chart source: The thinkorswim® platform from TD Ameritrade. For illustrative purposes only. Past performance does not guarantee future results. Roadmap Left At Home As Guidance Lacking One thing besides the virus and election that some thought could potentially "catalyze"(is that a word?) Wall Street from its doldrums is earnings season, which is about half over. As usual, media headlines have zeroed in on the number of companies "beating" Wall Street's expectations. That stands at about 85% so far, but might not be the best way to judge. That's because analyst projections were so conservative this quarter that beating them is like your kid receiving a participation trophy. Investors are getting wise to this, too, as you can see this week from some companies like Microsoft Corporation (NASDAQ: MSFT) reporting a beat but getting punished because of weak guidance.Many companies, including Apple Inc. (NASDAQ: AAPL), are still holding out and declining to provide guidance. Some cite "uncertainty," though it's arguable that no quarter was ever "certain," even before COVID-19 came along. It's quite possible that this lack of guidance could be one factor keeping stocks from getting as much of a lift from earnings as normal.Among the major companies besides AAPL reporting recently but not sharing guidance are General Electric Company (NYSE: GE), Caterpillar Inc. (NYSE: CAT), 3M Co (NYSE: MMM), Xerox Holdings Corp (NYSE: XRX), Raytheon (RTN), and United Parcel Service, Inc. (NYSE: UPS). Knowing what happened last quarter but not getting forecasts for this quarter leaves investors hanging without a road map.One More Glance At FAANGs Earnings from the four reporting FAANGs looked good from a bottom and top-line standpoint, with no major misses. However, it appears that for all but one of the companies, Alphabet Inc (NASDAQ: GOOGL), the pre-earnings exuberance got carried away a bit.That's because it came down not to the top and bottom lines as much as to the stuff under the surface. With Facebook, Inc. (NASDAQ: FB), investors honed in on higher than expected spending levels in Q3. With AAPL, there was disappointment that iPhone sales missed Street expectations It's hard to find anything really unlikable about Amazon.com, Inc.'s (NASDAQ: AMZN) results, but that stock could be suffering a little profit-taking.The iPhone softness in AAPL's quarter as customers waited for the new 5G product might actually end up being a tailwind for AAPL going into its December and March quarters. That's because some of the people who'd previously waited to replace their phones might start doing that in the current quarter. So instead of pulling forward demand, as many Tech companies did early in the pandemic, AAPL kind of "pushed back" demand. Almost every S&P sector lost ground Friday as this disappointing week came to a close, but none got punished harder than Tech. It fell 2.1% on Friday and is down 2% over the last month. Investors might not be used to Tech being on the defensive this way, but considering the high value of that sector going into election season it's not all that surprising to see premiums coming out of there more than other sectors. One asset group that went against the grain Friday was the bond market. Pressure on Treasuries sent the 10-year yield to a new four-month high above 0.87%. Q3 GDP data might have given yields a lift, but it also could reflect the same sort of position-evening we saw in stocks today. People had been trending to the long side of the bond market this week, but didn't want to go into the weekend with that exposure.There was also a pretty muted reaction in the Cboe Volatility Index (VIX) today, as it didn't rise above the psychological 40 level. Maybe there's not as much concern around the election as people originally thought, or it could also reflect people exiting positions ahead of the weekend.Quick Look Ahead Next week features a heavy data calendar, with construction spending, October auto sales, factory orders, and--last but probably first in investors' hearts--the October payrolls report on Friday.From an earnings perspective, a lot of the fireworks are over, but there's no holiday next week. Reporting companies in coming days are expected to include PayPal Holdings Inc (NASDAQ: PYPL), Allstate Corp (NYSE: ALL), General Motors Company (NYSE: GM), Kohl's Corporation (NYSE: KSS), CVS Health Corp (NYSE: CVS), Marriott International Inc (NASDAQ: MAR), and Norwegian Cruise Line Holdings Ltd (NYSE: NCLH). Those last two could be important to watch for updates on travel demand as the U.S. and Europe fend with this new wave of virus cases.TD Ameritrade® commentary for educational purposes only. Member SIPC.Photo by Luca Bravo on UnsplashSee more from Benzinga * Click here for options trades from Benzinga * Apple Falls 4% As iPhone Sales Disappoint, But Most FAANG Results, Including Amazon's, Look Firm * FAANG Fans, On Your Marks: Apple, Amazon, Alphabet And Facebook Earnings Awaited After Close(C) 2020 Benzinga.com. Benzinga does not provide investment advice. All rights reserved. Published:10/30/2020 9:15:20 PM
[Markets] The Most Shocking Winners in Friday's Stock Market Rout The stock market finished October on a terrible note, with big losses that reflected investor discomfort with all the unresolved issues in the markets right now. With declines of between 0.5% and 3% on Friday, the Dow Jones Industrial Average (DJINDICES: ^DJI), S&P 500 (SNPINDEX: ^GSPC), and Nasdaq Composite (NASDAQINDEX: ^IXIC) all finished down for the month, with the Dow leading the markets to the downside with a nearly 5% fall in October. It'd therefore be reasonable to think that cruise ship stocks would continue to be on the defensive in a down market worried about the coronavirus. Published:10/30/2020 4:43:44 PM
[Markets] 5 Biggest Losers in the Dow This Past Week: Boeing Sinks The five worst-performing stocks in the Dow Jones over the past week included Boeing, Walgreens, American Express, UnitedHealth and Visa. Published:10/30/2020 4:24:42 PM
[Markets] Dow ends lower Friday, suffering worst week and month since March Dow ends lower Friday, suffering worst week and month since March Published:10/30/2020 3:22:55 PM
[Markets] Dow futures down nearly 300 points Dow futures down nearly 300 points Published:10/30/2020 8:09:47 AM
[Markets] Von Greyerz: "Get Ready For The Biggest Collapse In Human History" Von Greyerz: "Get Ready For The Biggest Collapse In Human History" Tyler Durden Thu, 10/29/2020 - 20:25

Authored by Egon von Greyerz via GoldSwitzerland.com,

Liftoff & Collapse

Get ready for the biggest collapse in the history of mankind. It will be devastating and reach all parts of society, economic, financial, political & social.

But wait, it won’t happen just yet. Because before that the world will experience a LIFTOFF in markets of gigantic proportions. This will be the grand finale of this financial era. It will involve inflationary liquidity injections of proportions never seen before in history and lead to a massive explosion in many asset markets.

Most investment assets will benefit as the disconnect between markets and reality grows to distortionary proportions.

TRUMP – YOU WIN! BIDEN – YOU WIN!

So there we have it. For investors the outcome of this election is totally irrelevant. In four years time, the difference for the economy and markets between a Trump or Biden victory will be insignificant.

Either one of them only has one choice. They are both facing a bankrupt country which has been running budget deficits since 1930 with four years of exception in the 1940s-50s. The Clinton surpluses were fake. Also, the US has had trade deficits for almost 50 years. The consequence has been an exponentially surging debt which was under $1 trillion when Reagan became President in 1981 and is now $27t. In the next four years, a $40t debt is guaranteed as I forecast four years ago but as the financial system implodes, the debt could easily run into $100s of trillions or $ quadrillions when the derivative bubble bursts.

The global financial system should have collapsed already in 2006-9 but the central banks managed to delay the inevitable demise for over a decade.

SUPER CYCLE BULL MARKETS END IN EUPHORIA

What we must understand is that the end of an economic supercycle doesn’t happen quietly. No, the conditions need to be uber-euphoric with maximum bullishness for the economy and stocks. This means that before this era is over, markets must surge in the final months, even double over a 9-18 months period.

Multiple factors are now in place for this to happen. Firstly both presidential candidates will need not just fistfuls of dollars but quantum computers that can print the required trillions and quadrillions of dollars.

The convenient excuse they have is of course Covid. Individuals not working need money, companies need money, municipalities, states and the Federal government need money.

But we mustn’t forget how the end of the final phase of this economic era started. This was back in Aug-Sep 2019 when the Fed and the ECB shouted out from the roof tops that were going to do what it takes to save the system. They didn’t tell us what the problems were, but it was clear to some of us who understood the fragility of the financial system that it was in dire straits. When the last crisis started in 2006, the Fed’s balance sheet was $830b. At the end of the Great Financial Crisis in 2009, the balance sheet had grown to $2t.

But no one must believe that the problem had been solved by 2009. All it was, was a temporary stay of execution. Why otherwise would the Fed’s balance sheet have grown by another $5t since 2009. Just looking at the predicted budget deficits in the next 4 years, plus accelerating problems in the financial system the Fed’s balance sheet is likely to explode in coming years.

LIQUIDITY INJECTIONS WILL GIVE SHORT TERM BENEFIT TO THE ECONOMY

So the conditions are in place for the biggest liquidity injection in financial history. For many years we have experienced a total disconnect between economic reality and markets. The coming acceleration in money printing and liquidity injections in to the financial system will be so overwhelming that it will not just fuel markets but also give a short term, albeit artificial, boost to the economy.

This is a typical course of events at the beginning of an inflationary phase which leads to hyperinflation as the currency collapses.

The paralysation of the world economy due to Covid will probably peak with the current second wave and therefore add to the optimism in markets. But no one must believe that the pandemic is the cause of the problems in the world economy. No, it has just been a very vicious catalyst which hit an already fragile financial system.

When Covid gradually slows down, the initial optimism combined with the flooding of the system with printed money might last for a year or so. But as the world realises that you cannot solve a debt problem with more debt, the real difficulties in the economy and the financial system will reemerge with a vengeance.

FROM BOOM TO BUST

So let us look at a possible scenario of events following the election:

New president will flood the economy with money & boost stocks

Initial market volatility will settle down quickly and investors will respond optimistically to the new president’s promises of support to every corner of the economy.

Stock markets will surge and could double over a 9-18 month period. No cash will be left on the sidelines. Both institutions and retail investors will throw all the cash they have at the stock market. There will be a frenzy which will surpass the tech stock boom in the 1990s. There will be fanfares and blazing guns as the market seems unstoppable.

But after the likely short-term boom, there will be tears as markets fall by over 90% in real terms. And sadly most investors will ride the stock market all the way down. The big difference this time is that central banks will not and cannot save them.

COMMODITIES WILL BOOM

The biggest beneficiary of this coming boom will be commodity markets which are at a 50 year low versus stocks. Looking at the chart below, the minimum target would be commodities outperforming stocks by 4 to 1. Eventually a new high in commodities against stocks is likely. This would mean commodities outperforming stocks by 20x. The first part of this outperformance will come as stock markets rise. But the final phase will be when general stock markets collapse and commodities continue to strengthen. Goldman Sachs expect commodities to rise 28% in 2021. They expect inflation plus a commodities deficit will drive prices higher. And this is of course what the chart below tells us.

PRECIOUS METALS WILL SHINE

Gold, silver and platinum will vastly outperform stocks. The Dow – Gold ratio will initially reach 1 to 1 where it was in 1980 when gold was $850 and the Dow index 850. Eventually the ratio will reach at least 0.5 to 1 which means that the Dow will lose 97% against gold in the next five years.

Goldman Sachs expects gold to reach $2,300 in 2021 but I believe that target is too conservative. Before gold breaks out above the August high at $2,074, a correction down to $1,800-20 is possible and would not change gold’s unstoppable rise. In this latest phase, gold is in a bull market or more correctly, the currencies are in a bear market since 1999. The continued debasement of the currencies is guaranteed by the central banks since they only have one option – TO PRINT AND PRINT AND PRINT until money dies.

We must remember that gold is the king of the metals and therefore the safest precious metal to hold. But initially at least, silver and platinum will strongly outperform gold but with massive volatility.

Vital to hold physical metals stored in safe vaults in the investor’s name, outside the banking system. It is important not to forget that the risks in the financial system will be at a maximum for the next few years and a failure can happen at any time.

PRECIOUS METALS MINING STOCKS

For the smart investor, this is where more money will be made than in any area of stocks or other investments. Especially the juniors will really shine. But this is a market for specialists. So either best to follow some of the smartest investors in this area or to buy an index of these stocks. There will be many 10-20 baggers and even some 100 baggers but obviously also some losers. So important to have a spread.

The biggest risk with mining stocks is that they are normally held within the financial system. So even though they are a terrific investment opportunity, they are not the best form of wealth preservation. Therefore it is safer to have a much bigger allocation to the physical metals which, even though they will underperform the mining stocks, will see massive capital appreciation.

The chart below shows XAU gold – silver index against the Dow since 1983 when the XAU was introduced. Since then the XAU has lost 95% against the Dow. This fall is likely to be reversed in the next few years with the XAU going up 20x against the Dow . For Dow investors this means losing 95% against mining stocks.

And sadly, this is what will happen to 99% of investors as they stick to their ordinary stocks and miss the most incredible opportunity.

DOLLAR

Printing unlimited amounts of money always has consequences. Since 1971 the dollar has lost 98% in real terms which means against gold since gold is the only money that has survived in history.

The dollar is now starting its final journey to ZERO and as the table shows, even a weak and artificial currency like the euro will outperform the doomed dollar.

A falling dollar will accelerate US inflation until it leads to hyperinflation.

INTEREST RATES

Interest market is probably the most contrarian of all trades today. The whole investment world, including the Fed and the ECB believe that rates will stay at zero or below for years to come. Normally when consensus is that strong, the opposite is more likely to happen.

Also, rising a weaker dollar will cause higher inflation which will put upward pressure on rates. As investors start selling the long end of the bond market, short rates will eventually follow.

Precious metals normally benefit from negative real rates which means that inflation is higher than interest rates. Gold can still rise strongly with high nominal rates as long as inflation is higher. We saw this happen in the 1970s to the early 1980s when rates reached 20% and gold went from $35 to $850. During that time, inflation remained higher than rates.

I remember this period well as I experienced it in the UK with my first mortgage reaching 21%.

FROM BOOM TO BUST

So there is now an opportunity for all investors to double their money in the stock market in the next 9-18 months as ever more liquidity will fuel stock markets.

But a Caveat Emptor (Buyer Beware) warning is in place here. Asset markets are already in a major bubble and the financial system is so fragile that it could break at any time.

So rather than chasing the last leg of this bull market which most investors will do, it will be much better to look at safer alternatives.

I have outlined them above. Physical precious metals and precious metals stocks will outperform all other markets. And these all present the best risk. Both the metals and the metal stocks will boom in the final phase of the stock market boom. And as stock markets top and then crash, the precious metals sector will continue to perform extremely well as currencies are debased.

As I stated above, the general stock market is likely to lose at least 95% against the precious metals sector in the next five years.

There has probably never before been such a clear choice in investment markets but sadly most investors will miss it. They will instead stick to their conventional portfolio which will include a lot of the already overvalued tech stocks.

Holding gold and silver stocks will be the investment opportunity of a life time. But since they are held within a vulnerable financial system, we believe that a these holdings should represent a much smaller percentage than physical metals.

To hold physical gold, silver and platinum outside the fragile banking system is the ultimate form of wealth preservation and insurance against a debt infested and unsafe financial system.

With a portfolio of some precious metals stocks and physical metals, investors will be able to ride out the coming storm and volatility in markets and also benefit financially. Of course there will be volatility also in the metals market but the trend in the next 5+ years is virtually guaranteed.

So better to avoid the coming boom and bust in the general stock markets and stick to metals.

Published:10/29/2020 7:29:36 PM
[Markets] Stocks, Dollar, & Bitcoin Jump; Bonds & Black Gold Dump After Record GDP Stocks, Dollar, & Bitcoin Jump; Bonds & Black Gold Dump After Record GDP Tyler Durden Thu, 10/29/2020 - 16:00

A better than expected record rebound in GDP prompted traders to buy the 'rumor' ahead of tonight's explosive set of earnings from FB, TWTR, AAPL, & AMZN with stocks running stops through gamma pivot levels, technical levels, and rolling over... At around 1315ET, the algos went wild...but a weak close as month-end looms...

As investors rushed in for FOMO...

But no bounce in Europe...

Source: Bloomberg

S&P Futs ran above the 3300 pivot and then took out yesterday's opening ledge stops before rolling over...

Small Caps cluing to their 50DMA, S&P bounced off its 100DMA, Dow bounced off its 200DMA, Nasdaq remains below its 50DMA...

Momentum faded today as value rose marginally...

Source: Bloomberg

XOM held its dividend steady for the first time in decades (but didn't cut it) leaving its yield (in absolute and spread terms) at record highs...

Source: Bloomberg

FANG Stocks soared ahead of tonight's earnings extravaganza...

Source: Bloomberg

As opposed to yesterday's "Sell it all" day, today saw bonds dumped as stocks pumped...

Source: Bloomberg

But bonds made the headlines as an ugly 7Y Auction and reports of a big offering from Boeing (~$5bn) which would require rate-locks sparked a considerable spike in yields, basically erasing the week's yield drop...

Source: Bloomberg

10Y pushed back above 80bps but we can't help but a sense of deja vu all over again as after Boeing's issuance, we will see this pressure unwind...

Source: Bloomberg

Real yields soared higher today (gold largely shrugged it off) to its highest since July (still negative though)...

Source: Bloomberg

The Dollar jumped to 3-week highs before rolling over a little...

Source: Bloomberg

10Y Yields reversed at their 200DMA once again...

Source: Bloomberg

As the Euro tumbled on ECB promises of more money-printing...

Source: Bloomberg

EURUSD's drop stalled perfectly at the 100DMA however...

Source: Bloomberg

Cryptos were mixed today with ETH and BTC higher...

Source: Bloomberg

Bitcoin bounced higher off $13,000 once again...

Source: Bloomberg

WTI crashed to a $34 handle - 5 month lows...

Gold futures extended their losses below $1900...

 

Finally, we note that the market's fear of a contested election has subsided significantly...

 

Published:10/29/2020 3:01:12 PM
[Markets] Stocks are now solidly higher, with the Dow up about 350 points Stocks are now solidly higher, with the Dow up about 350 points Published:10/29/2020 2:01:14 PM
[Markets] Dow Rises 300 Points Ahead of Earnings From U.S. Tech Giants Stocks were higher Thursday following the S&P 500's 3.5% drop in the previous session, the biggest lost since June 11, as economic growth in the U.S. was higher than estimates and jobless claims declined. The Dow Jones Industrial Average rose 302 points, or 1.14%, to 26,822, the S&P 500 rose 1.74% and the tech-heavy Nasdaq was up 2.07% ahead of earnings from Amazon.com , Apple , Alphabet and Facebook . Published:10/29/2020 1:27:39 PM
[Markets] Stocks Rise Ahead of Earnings From U.S. Tech Giants Stocks were higher Thursday following the S&P 500's 3.5% drop in the previous session, the biggest lost since June 11, as economic growth in the U.S. was higher than estimates and jobless claims declined. Gains were held back, however, by a worrying rise in coronavirus cases in the U.S. and Europe and concerns that measures to mitigate the spread of the virus could derail an economic recovery. The Dow Jones Industrial Average rose 154 points, or 0.58%, to 26,674, the S&P 500 rose 1.24% and the tech-heavy Nasdaq was up 1.79% ahead of earnings from Amazon.com , Apple , Alphabet and Facebook . Published:10/29/2020 1:05:45 PM
[Markets] Dow Up on Record U.S. Growth but Virus Rise Makes Outlook Murky Stocks were higher Thursday following the S&P 500's 3.5% drop in the previous session, the biggest lost since June 11, as economic growth in the U.S. was higher than estimates and jobless claims declined. Gains were capped, however, by a worrying rise in coronavirus cases in the U.S. and Europe and concerns that measures to mitigate the spread of the virus could derail an economic recovery. The Dow Jones Industrial Average rose 118 points, or 0.45%, to 26,638, the S&P 500 rose 0.89% and the Nasdaq was up 1.11%. Published:10/29/2020 10:22:43 AM
[Markets] Nasdaq clinging to Thursday gain as Dow's decline accelerates Nasdaq clinging to Thursday gain as Dow's decline accelerates Published:10/29/2020 8:49:24 AM
[Quick Takes] Brown U. Students Want Roman Statues Removed From Campus Claiming They Promote White Supremacy

“It is not that difficult to see how a statue of (Caesar Augustus) would serve as an icon of colonial and imperial domination”

The post Brown U. Students Want Roman Statues Removed From Campus Claiming They Promote White Supremacy first appeared on Le·gal In·sur·rec·tion.

Published:10/29/2020 7:33:16 AM
[Markets] U.S. Stock Futures Rebound After Worst Selloff in Four Months (Bloomberg) -- U.S. stock futures climbed as investors looked for positive catalysts after concern over coronavirus infections and tougher lockdowns Wednesday spurred the market’s worst decline in more than four months.S&P 500 futures contracts expiring in December were up 1% as of 10:41 a.m. in Tokyo. Contracts on the Nasdaq 100 rose 0.8% while those on the Dow Jones Industrial Average gained 1%.The S&P 500 Index fell 3.5% Wednesday, the biggest drop since June 11, amid a surge in Covid-19 hospitalizations, especially in the Midwest. European stocks also tumbled, as France imposed a new nationwide lockdown and Germany moved to implement one-month partial restrictions.Asian stocks emerged less scathed as trading opened Thursday, with the MSCI Asia Pacific Index falling 0.6% as U.S. futures turned higher.With news about Europe’s stricter virus measures “digested,” the market “will switch back to the election,” said Ben Emons, head of global macro strategy at Medley Global Advisors. “The blue wave remains priced in, which means the market will refocus on stimulus.”House Speaker Nancy Pelosi said she hopes the current selloff in U.S. stocks will prompt President Donald Trump to agree to Democratic demands in stalled stimulus talks and end a three-month stalemate that has added to tension ahead of the Nov. 3 vote. Polls predict Trump will be defeated by Joe Biden, whose Democratic Party is also expected to win control of Congress.Positive news from Regeneron Pharmaceuticals Inc.’s late-stage trial of an antibody cocktail therapy for Covid-19 and possible measures from the European Central Bank should add “positive momentum” heading into the U.S. equity market open Thursday, according to Medley’s Emons. Investors will also be looking toward earnings reports due after the close from major tech companies including Apple Inc., Amazon.com Inc. and Facebook Inc.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P. Published:10/28/2020 10:16:36 PM
[Markets] Europe stocks slide, Dow futures drop over 400 points on COVID-19 lockdown fears Europe stocks slide, Dow futures drop over 400 points on COVID-19 lockdown fears Published:10/28/2020 5:00:54 AM
[Markets] Did the New Bear Market Just Begin? The stock market finally remembered it was October and gave investors an early Halloween scare on Monday. Declines were steepest for the Dow Jones Industrials (DJINDICES: ^DJI), but the S&P 500 (SNPINDEX: ^GSPC) and Nasdaq Composite were still down between 1.5% and 2%. The Dow had been down more than 900 points at times during Monday's trading session. Published:10/26/2020 5:56:17 PM
[Markets] Stock market news live updates: Stock futures tick higher after Dow's worst drop in nearly two months Stock futures opened flat to slightly higher Monday evening after a selloff on Wall Street pushed the Dow and S&P 500 to their biggest one-day drops in more than a month. Published:10/26/2020 5:28:45 PM
[Markets] Dow ends down 650 points, suffering worst day since early September Dow ends down 650 points, suffering worst day since early September Published:10/26/2020 3:28:29 PM
[Markets] Dow Closes Off 650, 2.3%, on Virus Surge and Stimulus Doubt Stocks end sharply lower, with the Dow off 2.3%, as coronavirus infections surge and stimulus negotiations remain stalemated. Published:10/26/2020 3:28:29 PM
[Markets] The Dow is down more than 700 points midday, with all 30 components falling The Dow is down more than 700 points midday, with all 30 components falling Published:10/26/2020 11:54:11 AM
[Markets] Large-/Small-Caps Crushed As Nasdaq Goes Green Large-/Small-Caps Crushed As Nasdaq Goes Green Tyler Durden Mon, 10/26/2020 - 10:18

Update 1015ET: The COVID-reflation trade is back as value is puked...

And momo is soaring...

Algos have stormed Nasdaq into the green... (but it's not holding)...

And at the same time, large-cap (Dow) and small-cap (Russell 2000) stocks are plunging...

Meanwhile, bonds haven't moved.

*  *  *

The algos are large and in charge this morning, as they ramp Nasdaq back to overnight highs...

Small Caps and The Dow are being dumped as Nasdaq explodes...

Sorry but WTF!!!

Published:10/26/2020 9:29:08 AM
[Markets] Gold And Crypto: Is This How Charts Look Before A Monetary Collapse? Gold And Crypto: Is This How Charts Look Before A Monetary Collapse? Tyler Durden Sat, 10/24/2020 - 08:10

Authored by Hubert Moolman,

It is the the massive debt. It cannot be serviced. It will collapse the whole system.

The gold, silver and cryptocurrencies charts are showing signs of going parabolic. The US dollar is close to confirming a massive breakdown.

Gold, silver and cryptocurrencies all provide “crisis value” by simply being an acceptable debt-based-fiat alternative. It is only later in this crisis that we will see a divergence between cryptocurrency and precious metals.

For now, they are likely to move higher together.

Gold has recently made new all-time highs, and seems ready to go higher after a decent consolidation. The importance of the 2011 all-time high can be seen on these charts:

I have marked two fractals (ABC). Both fractals start from the Dow/Gold ratio peaks (1966 and 1999). For these to continue the similarity, the level ($1920) at A and C needs to be surpassed on the current fractal.

We’ve already seen the breakout, now price has just been consolidating around that level. It is very close to blasting higher.

From a cycle analysis point of view, we are right at a point where a sustained multi-year gold rally is possible:

The top chart is gold from about 1997 to 2020 (current fractal), and the bottom chart is gold from about 1965 to 1980 (70s fractals). If the current fractal continues to follow the 70s fractal, then we could see gold continue to multiples of its current all-time high.

Currently, we are just after, or close to, a major Dow peak in the economic cycle. Again, you can see that the 2011 peak is an important indicator to confirm these fractals as relevant. It could also be considered a marker after which the chart is likely to go parabolic.

Bitcoin has been quiet, but could be ready to move higher at a frightening pace. Here is an updated chart that I shared on my blog previously:

The setup for Bitcoin is very similar to the end of 2013, based on these fractals. Price has completed a successful breakout at the wedge, and the retrace is also done.

We are likely in a move towards the $100 000 level at least.

The outlook for silver is really the same: continue on its parabolic path.

Published:10/24/2020 7:23:33 AM
[Markets] Dow closes lower Friday; major U.S. stock indexes book weekly declines Dow closes lower Friday; major U.S. stock indexes book weekly declines Published:10/23/2020 3:21:50 PM
[Markets] GLOBAL MARKETS-Investors left hanging as stimulus talks drag on U.S. House Speaker Nancy Pelosi said it still was possible to get another round of COVID-19 aid before the election, but that it was up to President Donald Trump to act, including talking to reluctant Senate Republicans, if he wants it. The Dow Jones Industrial Average was down 148.98 points, or 0.53%, at 28,214.68, the S&P 500 was down 6.23 points, or 0.18%, at 3,447.26. U.S. President Donald Trump trails former vice president Joe Biden in national polls, but the contest is much tighter in some battleground states where the election will likely be decided. Published:10/23/2020 2:21:48 PM
[Markets] US STOCKS-Dow slips, S&P flat as stimulus stalemate weighs The Dow traded lower on Friday, while the S&P 500 and Nasdaq were little changed in choppy trading, pressured by a stalemate in negotiations on a new U.S. coronavirus aid bill as investors turned cautious ahead of the Nov. 3 presidential election. U.S. House Speaker Nancy Pelosi said it still was possible to get another round of COVID-19 aid before the election, but that it was up to President Donald Trump to act, including talking to reluctant Senate Republicans, if he wants it. Published:10/23/2020 1:53:55 PM
[Markets] US STOCKS-S&P 500, Dow edge higher on hopes of progress in stimulus talks The S&P 500 and the Dow rose on Friday, with investors expecting progress in talks on the next coronavirus aid bill as the Nov. 3 presidential election drew closer. The Nasdaq was weighed down by a 10% slump in chipmaker Intel Corp after it reported a drop in margins as consumers bought cheaper laptops and pandemic-stricken businesses and governments clamped down on data center spending. Published:10/23/2020 9:52:16 AM
[Markets] Intel's 10% skid keys Dow retreat to negative territory Intel's 10% skid keys Dow retreat to negative territory Published:10/23/2020 9:52:16 AM
[Markets] Market Dashboard: Eye on Chart Support, Investor Psychology All the major equity indices closed higher Thursday with positive internals. While no violations of resistance or trend were registered, the S&P 500 (see below), DJIA, Nasdaq Composite and Nasdaq 100 all saw successful tests of their near-term support levels and closed near their intraday highs. All the indices remain in near-term neutral trends except for the Dow Jones Transports and Value Line Arithmetic Index, which remain bullish. Published:10/23/2020 8:50:19 AM
[Markets] Dow industrials on track for weekly loss ahead of Friday opening bell Dow industrials on track for weekly loss ahead of Friday opening bell Published:10/23/2020 7:58:12 AM
[Markets] Global Markets Rise Despite Fading Odds Of Stimulus Deal Global Markets Rise Despite Fading Odds Of Stimulus Deal Tyler Durden Fri, 10/23/2020 - 08:14

S&P futures and European stocks rose on positive corporate earnings and German PMI data, while Treasurys reversed an earlier loss, even though the rapidly approaching election means the chance of a fiscal deal getting passed by Congress ahead of Nov. 3 now seems increasingly distant.

In pre-market trading, Intel tumbled 9% after a surprise drop in data-center sales. Gilead Sciences jumped after its antiviral therapy becoming the first drug formally cleared to treat Covid-19.

The final debate between Trump and Biden on Thursday presented few surprises for election watchers and if anything, merely reinforced investor caution heading into the Nov. 3 election.  While Biden blamed Donald Trump for the deaths of more than 220,000 Americans in the coronavirus pandemic in the debate late Thursday, and Trump accused Biden of corruption in China and Ukraine, their exchanges didn’t move markets much.

While S&P 500 futures dipped slightly after the debate, they were mostly flat by late Asian trade. The underlying index had gained about 0.5% in the previous day on hopes that the U.S. Congress and the White House could soon strike a deal on another round of COVID-19 stimulus, with bank stocks leading gains on the back of a sharp jump in yields.

"The sense I get looking at US futures is that the market, after this debate, does not appear very convinced that Mr Trump was able to increase his odds of winning the elections,” said Chetan Seth, Equity strategist at Nomura in Singapore.

European stocks are expected to claw back some of this week’s losses, with the Stoxx 600 up 0.8% on Friday, headed for its first increase this week. Barclays jumped after reporting improved stocks trading, lifting U.K. banking shares. Carmakers climbed after Daimler AG raised its profit forecast and Renault SA topped revenue estimates, the latest signs the global auto industry is emerging from its worst slump in decades. The euro strengthened as regional manufacturing data also exceeded estimates, even as services PMIs continued to sink: the Markit composite monthly measure of business activity in the euro zone fell to a four-month low of 49.4 in October from 50.4 in September. Within the report is a clear, divergent trend of manufacturing strength being offset by damage to services from the second wave of the pandemic

  • EU Markit Services Flash PMI 46.2 vs. Exp. 47.0
  • EU Markit Manufacturing Flash PMI 54.4 vs. Exp. 53.1
  • EU Markit Comp Flash PMI 49.4 vs. Exp. 49.3

Earlier in the session, shares in Asia hardly moved, with MSCI’s index of Asia-Pacific shares ex-Japan flat while Japan’s Nikkei ticked up 0.2%. Most markets in the region were up, with Hong Kong's Hang Seng Index advancing 0.5% and India's S&P BSE Sensex Index rising 0.4%, while China's Shanghai Composite slid 1%. The Topix added 0.3%, with Nexon and Bridgestone contributing the most to the move. The Shanghai Composite Index retreated 1%, driven by China Life and Kweichow Moutai.

Despite Friday's stock strength, it now appears a fiscal deal is virtually impossible due to the rapidly approaching election and the lack of deal. Adding to the problem is the increasing resistance from Senate Republicans to voting on the multi-trillion dollar package, with there being a real possibility they would not vote in favor of a package even after the election. House Democrats are starting to say that they would be unwilling to come back to Washington to pass a bill if Senate support isn't in place.

"The focus is shifting toward de-risking,” said Eleanor Creagh, a market strategist at Saxo Capital Markets, on Bloomberg TV. "There’s a range of outcomes from the elections that could have a huge capacity to change market sentiment and dynamics very quickly."

Ahead of last night's debate, investors had fully priced in a Blue Sweep, where Democrats win both chambers of Congress alongside a Biden presidency. While Democrats plan to raise taxes on corporate profits and capital gains could hit share prices, their pledge on large stimulus is seen as offsetting those blows.

"A lot of people are now talking about K-shaped recovery in the economy. My sense is that the money will move around within the stock market, rather than flowing outside under the ‘triple blue’ scenario,” a senior manager of trading at a major Japanese bank told Reuters.

The clean energy sector is seen as a potential winner at the expense of traditional energy firms under a Biden presidency. The Dow Jones oil and gas index is down nearly 49% this year. Biden reiterated his campaign pledge of net-zero-emissions by 2050. Meanwhile, the Nasdaq, which had led the market’s rally, has underperformed lately, having lost 1.4% so far this week also on concerns Democrats could take a harder stance on big tech firms. Investors could also take profits on them before any increase in capital gains tax.

“A blue wave may lead to concerns about the impact on the tech sector, while a Biden win and a split Congress may imply another four years of limited policy changes and politicking,” said Mary Nicola, senior economist at Pinebridge Investments in Singapore.

Expectations of bigger government stimulus have also boosted U.S. treasury yields. The 10-year U.S. Treasuries yield rose to 4 1/2-month high of 0.870% on Thursday and last stood at 0.8615%. Yields were cheaper by less than 1bp across the curve, 10-year yields ~0.86%, testing 200-DMA with curve spreads little changed. In Europe, gilts lagged Treasuries while bunds traded broadly in line; Italian bonds outperform by 4bp after large buying in screens and a 5,120 10-year BTP futures block trade.

In FX, the Bloomberg Dollar Spot Index fell for a fourth day this week, erasing yesterday’s modest rebound, as risk sentiment improved; the euro rose to a session high after a strong manufacturing PMI report out of Germany. Risk-sensitive currencies, such as the Australian dollar and the Norwegian krone, led gains among Group-of-10 peers after rebounding from losses during the Asia session. The pound edged up and was on track for its biggest weekly gain since early October amid optimism Britain and the European Union are edging closer to a Brexit trade deal. U.K. retail sales rose more than expected last month as demand for home improvement products and food contributed to the biggest quarterly jump on record. The volume of goods sold in stores and online gained 1.5% from August. The yen also climbed, adding to an earlier advance, and was on track for a second week of gains

Elsewhere, China’s yuan climbed after an official with the country’s foreign exchange watchdog said Friday the currency’s appreciation has been “relatively moderate.” The Chinese currency traded 6.6767 per dollar in offshore trade, off 27-month high of 6.6278 touched on Wednesday.

In commodities, oil prices eased slightly, giving up part of the previous day’s gains. Brent futures dropped 0.6% to $42.19 per barrel while U.S. crude futures shed 0.7% to $40.35 per barrel. Gold was modestly higher.

Economic data include Markit PMI readings. Scheduled earnings include American Express. Intel slumps in premarket trading after disappointing results, Gilead gains on FDA approval for its coronavirus treatment

Market Snapshots

  • S&P 500 futures up 0.2% to 3,455.75
  • STOXX Europe 600 up 0.6% to 362.53
  • MXAP up 0.2% to 176.31
  • MXAPJ up 0.07% to 585.43
  • Nikkei up 0.2% to 23,516.59
  • Topix up 0.3% to 1,625.32
  • Hang Seng Index up 0.5% to 24,918.78
  • Shanghai Composite down 1% to 3,278.00
  • Sensex up 0.4% to 40,705.02
  • Australia S&P/ASX 200 down 0.1% to 6,167.05
  • Kospi up 0.2% to 2,360.81
  • Brent Futures down 0.09% to $42.42/bbl
  • Gold spot up 0.4% to $1,911.18
  • U.S. Dollar Index down 0.2% to 92.77
  • German 10Y yield fell 0.6 bps to -0.572%
  • Euro up 0.2% to $1.1842
  • Brent Futures down 0.09% to $42.42/bbl
  • Italian 10Y yield rose 2.1 bps to 0.6%
  • Spanish 10Y yield fell 1.8 bps to 0.205%

Top Overnight News from Bloomberg

  • President Donald Trump and Democratic presidential candidate Joe Biden traded charges of secretly taking money from foreign interests, after the former vice president addressed head-on Trump’s efforts to portray him as corrupt
  • European governments began to deploy curfews more widely, as the coronavirus pandemic gained momentum across the continent and France reported more than 40,000 new cases for the first time
  • The U.K. signed a trade deal with Japan on Friday, its first with a major economy since Brexit, as the clock runs down on British efforts to reach an agreement with the EU by the end of the year
  • The Riksbank governor, Stefan Ingves, fears the economic outlook is deteriorating amid signs the coronavirus pandemic is tightening its grip across Europe, and ensnaring Sweden again too
  • The resistance among Senate Republicans to the near-$2 trillion stimulus package under negotiation between House Speaker Nancy Pelosi and the White House has spurred some House Democrats to oppose the idea of a pre-election vote on any bill
  • Governments around Europe began to deploy curfews more widely, as the coronavirus pandemic gained momentum across the continent, with France reporting more than 40,000 new cases for the first time
  • China mulls further easing limits on cross-border investment by domestic institutions and individuals, with QDII as one of the approaches, State Administration of Foreign Exchange Spokeswoman Wang Chunying says at a briefing
  • The U.K. signed a trade deal with Japan on Friday, its first with a major economy since Brexit, as the clock runs down on British efforts to reach an agreement with the EU by the end of the year
  • The U.K. is set to sign a trade deal with Japan in Tokyo on Friday, its first with a major economy since Brexit, as the clock runs down on British efforts to reach an agreement with the EU by the end of the year
  • Oil headed for a modest weekly decline as fresh optimism that a U.S. stimulus deal is imminent was overshadowed by the threat a resurgent coronavirus poses to energy demand in Europe and the U.S.

A quick look at global markets courtesy of NewsSquawk

Asia-Pac equities traded mostly higher after a lukewarm handover from Wall Street whereby all three majors closed in the green but the Nasdaq narrowly underperformed amid losses across the tech sector, whilst Intel shares slumped almost 10% after-hours post-earnings amid new weakness in its data center business. US equity futures reopened with mild gains before drifting modestly lower during the Presidential Debate, albeit with no explicit comment driving price action at the time as the two candidates stuck to their respective scripts. Thereafter, following the more sanguine debate, ES, NQ and YM nursed losses to trade higher by 0.1-0.2%. ASX 200 (-0.1%) remained the laggard as the index was subdued by its mining sector. Nikkei 225 (+0.2%) extended on gains despite the firmer Yen, with outperformance in the industrial names, whilst Mitsubishi Heavy Industries stood as the outperformer amid source reports the group is closer to a final decision on freezing regional Spacejet program. KOSPI (+0.2%) traded between gains and losses before gaining a firmer footing in positive territory. Hang Seng (+0.5%) and Shanghai Comp (-1.0%) eked mild amid gains initially another PBoC liquidity operation, whilst comments from Chinese President Xi did little to sway the indices; though this did wane for the Shanghai index as the session came to a close. Finally, 10yr JGB futures continued to track the broader fixed income futures complex.

Top Asian News

  • Goldman Admits Role in Record $1.6 Billion 1MDB Bribe Spree
  • Japan Maintains Severe Assessment of Economy in October
  • Walmart Unit Invests $204 Million in Birla’s Retail Business
  • Japanese Stocks Gain on U.S. Recovery Signal Amid Calm Debate

European equities (Eurostoxx 50 +0.9%) trade higher across the board after a pick-up in sentiment shortly after the cash open. It’s been a busy morning of data for the region with French PMIs, highlighting the diverging fortunes of the services and manufacturing sectors with the former extending its advances into negative territory, leaving the composite reading for France at 47.3 vs. prev. 48.5. Thereafter, Germany posted a strong showing for its crucial manufacturing sector (58.0 vs. prev. 56.4) , which helped extend the upside in the DAX (+0.7%), albeit declines in the services sector acted as a weight on the still-positive composite reading (54.5 vs. prev. 54.7). The Eurozone-wide release conformed to the overall viewpoint that despite the manufacturing industry holding up in the early stages of Q4, the services sector is clearly falling victim to the resurgence of the virus. IHS Markit have cautioned that “the eurozone is at increased risk of falling into a double-dip downturn”. Asides from this morning’s macro data releases, there have been a raft of corporate updates with solid earnings from Barclays (+7.3%) prompting outperformance of the banking sector after the Co. reported Q3 profit-before-tax of GBP 1.1bln vs. Exp. GBP 0.5bln amid a notable decline in bad loan provisions and strong performance in its consumer business. Elsewhere, energy names are also firmer in a continuation of yesterday’s advances despite crude prices being relatively unchanged on the session. Earnings from Daimler (+2.0%) and Renault (+1.6%) have supported the autos sector, whilst 9M results from Michelin (+2.6%) have also served as a source of encouragement from the broader industry. In a busy morning of earnings for the CAC 40 (+1.0%), Accor (+4.5%) are a clear outperformer despite results highlighting that impact on activity from the COVID crisis, to the downside in France, Kering (-2.6%) lags amid weak performance in its Gucci division. Elsewhere, notable laggards post-earnings include ABB (-2.8%) and Electrolux (-2.0%) with the former acting as a weight on the underperforming SMI (U/C).

Top European News

  • U.K. Regulator Investigating 14 Firms, 6 People in Cum-Ex Cases
  • U.K. Recovery Looks Past it Peak as Virus Curbs Erode Growth
  • Nordea Soars After Trouncing Estimates and Pledging Dividend

In FX, it remains to be seen whether the Greenback can withstand renewed downside pressure after overcoming several wobbles late yesterday and extending recovery gains overnight, but for now the signs are looking ominous as certain G10 rivals rebound on a combination of fundamental and technical factors. Indeed, the index is beating a relatively hasty retreat from a 93.129 peak to 92.724, thus far, ahead of Markit’s US flash PMIs that may or may not help the Dollar regroup.

  • AUD – The Aussie is back in the ascendency and outperforming with some assistance from encouraging PMIs and the fact that it survived a test of support ahead of 0.7100 vs its US counterpart in the form of the 100 DMA (0.7106) and 1.0650 or so against the Kiwi. However, 0.7150 and 1.0700 may cap further upside barring another pronounced upturn in broad risk sentiment.
  • CHF/JPY/GBP/EUR/NZD – All firmer vs the Buck, either by default or in their own right, as the Franc revisits 0.9050 from lows not far off 0.9100, Yen approaches 104.50 compared to sub-104.90 and Pound bounces from circa 1.3050 to just over 1.3100 at one stage. Note, Japanese CPI was slightly less deflationary than expected and UK retail sales much stronger than forecast in contrast to rather mixed preliminary PMIs, but none of these macro releases seemed to impact, though Cable may be drawn to unusually large option expiry interest from 1.3090 to 1.3100 in just over 1 bn. Conversely, the Euro appeared to derive some from the Eurozone surveys revealing faster than anticipated activity in Germany’s manufacturing sector that boosted the composite and pan prints to partly offset misses in services vs consensus. Eur/Usd has subsequently accelerated through the 50 DMA (1.1795), 1.1800, a Fib retracement level aligning with the 100 HMA (at 1.1806) to just shy of 1.1850, but could be hampered by circa 1.4 bn expiries between 1.1840-50. Back down under, the Kiwi is inching closer to 0.6700 even though NZ CPI was weaker expected in Q3.

In commodities, WTI and Brent futures have been somewhat choppy throughout the session but largely following the directional performance of the equity complex, albeit with magnitudes more contained and the benchmarks only modestly positive at present. Fundamental drivers explicitly for the complex remain sparse aside from the ever-present COVID-19 demand concerns and OPEC+ related supply issues. Instead, geopolitical reports could draw attention in the sessions ahead with  reports today indicating that the conflict in Libya has been resolved with all sides agreeing to a permanent ceasefire – a factor of note given the frequent force majeures for some of the nations most significant facilities. Additionally, tensions are seemingly rising regarding Iranian oil sanctions as WSJ reports indicate that US Officials are frustrated that allies are not taking enough aggressive action to enforce the sanctions; amid reports that Persian Gulf waters are being utilised as a waypoint for smugglers out of Iran. Looking ahead, the session’s only crude event of note is the weekly Baker Hughes rig count which last week saw a 12-rig increase for oil facilities. Action for spot gold has once again been dictated by the USD with the precious metal gleaning support from the DXY’s gradual demise throughout the session. At present, the metal is firmer by around USD 6/oz and in proximity to session highs above the relatively contained levels seen in APAC hours.

US Event Calendar

  • 9:45am: Markit US Manufacturing PMI, est. 53.5, prior 53.2
  • 9:45am: Markit US Services PMI, est. 54.6, prior 54.6
  • 9:45am: Markit US Composite PMI, prior 54.3

DB's Jim Reid concludes the overnight wrap

Global equity markets fluctuated and sovereign bonds sold off yesterday as investors weighed up further positive reports on the likelihood of US stimulus against a further deterioration in the coronavirus situation. By the close, yields on 10yr Treasuries had gained +3.4bps to hit a 4-month high of 0.856%, as Speaker Pelosi said that herself and Secretary Mnuchin were “just about there” when it came to reaching a stimulus deal. By the end of the day yesterday, the Speaker noted three sticking points: aid to state and local governments, school funding and a liability shield for employers. However, there remain questions as to whether the Republican-controlled Senate would pass such a deal, even if it happened after Election Day on November 3. A few senior ranking Senate Republicans are still wary, with Senate Appropriations Chairman Shelby noting that he had not seen any detail yet and that “it’s about two minutes to midnight, and we’re not going to pass anything until we see the particulars.” With all members of the House up for re-election, Speaker Pelosi noted that some are of the party’s lawmakers have said they may not leave the campaign trail prior to November 3 if the Senate does not commit to acting.

US equities rallied later in the session, and the S&P 500 posted a gain of +0.52% as cyclicals led the index higher, with the NASDAQ seeing a slightly smaller advance of +0.19%. As bets on the likelihood of further stimulus gathered pace, there was another bear-steepening in US Treasuries, with 10yr yields up as mentioned (though down -0.8bps this morning) while the 2s10s curve steepened +3.0bps to reach its steepest level in over 2 years, and the 5s30s reached its steepest in 3 years. In Europe, there was a similar cyclical outperformance with Autos (+0.65) and Banks (+0.55%) leading the way but the STOXX 600 finished down -0.14% for its 4th consecutive decline. In fixed income, yields on 10yr bunds (+2.1bps), OATs (+2.4bps) and BTPs (+2.1bps) all moved higher.

Staying on the US, overnight the second and final US Presidential Debate took place and was far a more orderly one than the first. While the question of foreign interference and contacts was once again raised, the majority of the debate focused on the pandemic, the economy, race relations and climate change. Early indications are that both candidates more or less held their own, which would be good news for Joe Biden who came into the night leading by high single digits in national polling averages.

For those interested in more election content, our US economists here at DB put out a note yesterday (link here) looking at the economic implications of the different potential outcomes. Their view is that a blue sweep where Biden wins the presidency and the Democrats take the Senate would provide the most fiscal stimulus to the economy in 2021, whereas the second most likely outcome (a Biden presidency along with a Republican Senate) would be the most negative for growth next year. Though we’ll obviously have to wait and see if last night’s debate has any impact on the polls, the FiveThirtyEight and RealClearPolitics averages currently show a Biden lead of 9.9pts and 7.9pts respectively.

Overnight, equity markets are trading higher in Asia, with the Nikkei (+0.44%), Hang Seng (+0.61%), Shanghai Comp (+0.13%) and Kospi (+0.44%) all up, though S&P 500 futures are broadly flat. Looking at the flash PMIs that are out so far, Australia has seen an uptick in its composite reading to 53.6 (vs. 51.1 previously), while Japan has seen a smaller rise to 46.7 (vs. 46.6 previously). Attention will remain on the European and US releases today, as they represent one of the initial data points we have on economic activity into October, particularly in Europe where fewer high frequency indicators like jobless claims are available. For the Euro Area, there has been a weakening in the mobility indicators since late September, so the question will be whether this translates into reduced economic activity as well. The consensus expectation on Bloomberg for the Euro Area composite PMI is that it’ll fall back to 49.2, which would mark the first time since June that the composite PMI has been below the 50-mark that separates expansion from contraction.

In terms of the pandemic, yet further rises in coronavirus cases continued to dampen investor sentiment, with the number of new cases continuing to escalate in Europe in particular. In the last 24 hours, the continent saw a record number of daily cases reported in numerous countries, including France, Italy, Poland, the Netherlands, Romania, Slovenia, and Denmark. Unsurprisingly, there’ve been more moves to impose restrictions, and yesterday France (which reported a record of more than 40,000 cases) announced an extension of its curfew to cover an additional 38 departments, while in the UK, Chancellor Sunak announced that the government would increase its levels of financial support to those affected economically by the pandemic. In the US, cases rose by over 68,000 with daily records in Illinois and Ohio. According to the mayor, Chicago will put a night-time curfew for non-essential businesses in place starting Friday for at least two weeks.

In terms of yesterday’s other data, the weekly initial jobless claims from the US came in at a lower-than-expected 787k in the week through October 17, which itself was a decline from the previous week’s downwardly revised 842k reading, as well as being the lowest number since the start of the pandemic. The continuing claims number for the week through October 10 also fell to a post-pandemic low 8.373m (vs. 9.625m expected), though with both the initial and continuing claims, it’s worth bearing in mind that both are still above their peak levels following the global financial crisis, so there’s still some way back to anything like normality in the labour market. Otherwise, the European Commission’s advance consumer confidence indicator for the Euro Area fell back in October to -15.5, which was its worst reading since May.

To the day ahead now, and the release of the aforementioned flash PMIs from around the world are likely to be the main highlight. Otherwise, the Russian central bank will be deciding on rates, BoE Deputy Governor Ramsden will speak, and American Express will be releasing earnings.

Published:10/23/2020 7:20:24 AM
[Markets] U.S. stock indexes give up early gains; Salesforce and IBM are top Dow decliners U.S. stock indexes give up early gains; Salesforce and IBM are top Dow decliners Published:10/22/2020 9:37:11 AM
[Markets] Dow tops estimates on profit, sales for the third quarter Dow tops estimates on profit, sales for the third quarter Published:10/22/2020 5:38:52 AM
[Markets] How Long Can The Fed Keep This Time Bomb From Exploding? How Long Can The Fed Keep This Time Bomb From Exploding? Tyler Durden Wed, 10/21/2020 - 17:00

Authored by Pavel Mordasov via The Mises Institute,

Since the outbreak of the coronavirus, the United States has experienced one of the most unprecedented economic interventions in all of its history. Since March and April both the Federal Reserve and the US federal government have injected trillions into the economy in hopes of stabilizing it and reducing unemployment. At the expense of the public, both institutions have handicapped themselves for the future, and it will be extremely difficult to ever return to a “normalized” policy situation without triggering a larger economic crisis.

On February 11, 2020, Federal Reserve chairman Jerome Powell delivered a semiannual report wherein he laid out the present risks that both the Fed and the federal government face. Some of the risks addressed were low interest rates spurred by the Fed and burdensome debt from the federal government that would limit the ability of both institutions to provide the necessary stability when an economy goes into a downturn. By the next day, the Dow Jones had reached an all-time high of 29,551.42. The rise in equity prices sparked confidence in the market and, for the most part, overlooked the risks that the coronavirus had in store for both the nation and the world.

By March, as concerns over the covid-19 virus spread, many investors began to question the sustainability of profits for businesses as mass lockdowns became a policy implemented throughout the world. On March 11, the World Health Organization (WHO) declared the coronavirus a pandemic, as the world had over 118,000 cases, and on that same day, the United States entered into a bear market as the Dow fell 20 percent from its peak. 

Immediately following, the Federal Reserve on March 13 began to inject $1.5 trillion in liquidity through repurchase operations (short-term loans) through incremental portions of $500 billion over the next three months. In addition, the Fed two days later cut the federal funds rate an entire percent, to 0–0.25 percent, and injected an additional $700 billion in liquidity into the markets. The intervention by the Fed was not well accepted, as the Dow Jones declined another 12.3 percent, reaching what Wall Street viewed as a low of 18,591.93 on March 23.

While panic brewed in the markets, state governments across the United States began to impose stay-at-home orders during the month of March that would last up until the end of May in most areas. The stay-at-home orders ordered any “nonessential” business to be closed, whether it was movie theaters, gyms, or sporting events. In response, Congress formulated a stimulus plan known as the CARES Act (Coronavirus Aid, Relief, and Economic Security Act) that would provide $2.2 trillion of liquidity to businesses in the forms of loans and grants and checks of up to $1,200 to individuals depending on their income. After days of debate, it was passed by Congress and finally signed by President Trump on March 27. The stay-at-home orders, which closed or partially closed many businesses, were in effect, resulted in the unemployment rate rising to 4.4 percent, with 701,000 jobs lost by the end of March.

More stimulus followed in April as the Fed decided to embark on providing an additional $2.3 trillion in liquidity that would provide funding for different-sized corporations and target asset prices to keep them from falling. Within the CARES Act, the Paycheck Protection Program (PPP), which was used to distribute low-cost loans to businesses, immediately ran out of money. As a result, Congress, with the approval of President Trump, created a new stimulus package on April 24 to provide an additional $484 billion in funding to small businesses. Unemployment surged in April to an alarming 14.7 percent, with over 23.1 million Americans losing their jobs.

The fever for cheap money did not stop. The US Treasury announced on May 4 that they would borrow a record $2.99 trillion from April to June, when at the time the federal debt stood at an astronomical $24.974 trillion. Furthermore, on May 12, US representative for New York Nita Lowley proposed the HEROES Act (Health and Economic Recovery Omnibus Emergency Solutions Act), an additional $3 trillion stimulus package which would provide additional relief to both households and businesses. Although there was controversy, the bill managed to pass the House on May 15 by a vote of 208 to 199. As the number of coronavirus cases throughout the world began to slowly decrease, the unemployment numbers continued to skyrocket, with unemployment claims rising to a high of 42.879 million by the end of May.

Figure 1.1: Federal Reserve Total Assets, January 1 to September 30, 2020

Source: FRED ("Assets: Total Assets: Total Assets (Less Eliminations from Consolidation): Wednesday Level (WALCL)," accessed Sept. 30, 2020), https://fred.stlouisfed.org/series/WALCL.

As we near the next election, there have been over 3.8 million jobs permanently lost following the lockdowns in the United States.

Since the start of 2020, the Federal Reserve has pursued an aggressive expansion of monetary policy amid the coronavirus, injecting trillions into the economy. As seen in figure 1.1, at the start of the year, the Federal Reserve’s balance sheet rose astronomically, by 69.95 percent from $4.17 trillion to $7.09 trillion by September 30. While the Fed’s balance sheet increased, the M1 money supply followed suit, which includes physical paper money, checking accounts, demand deposits, and other highly liquid assets, rising 41.31 percent from $3.95 trillion at the beginning of 2020 to $5.58 trillion by October 1. When the covid-19 panic began, the Fed had $4.12 trillion in liabilities and only $39 billion in capital at hand. As of October 1, the situation has worsened, with Fed now having $7.02 trillion in liabilities and $39.2 billion in capital.

With interest rates being artificially manipulated by the Federal Reserve and kept at historically low levels of 0–0.25 percent, the federal government can get away with borrowing more money than ever before. This has enabled to the Treasury to increase its debt by 16.5 percent from $23.17 trillion at the beginning of the year to $27 trillion by October 1. It is important to note that last year the federal government paid $574.59 billion in interest on $23.201 trillion in debt, which is an average interest rate of 2.48 percent on the debt. With last year’s picture in mind, the question that we must ask ourselves is how much more expensive our debt will become by the end of this year, as the Treasury has already paid out $484 billion in interest as it nears the final quarter. In addition, how much more expensive will the debt become when the Fed determines it appropriate to allow interest rates to rise again? Can the Fed afford to ever let this happen?

Even though the equity market looks as though it has corrected itself, the Fed is in a precarious position that calls into question its ability to mitigate another disaster if one presents itself before it can wind down on its balance sheet. The Fed’s situation would not be as concerning if the federal government itself were more fiscally run, which would give it more room to provide liquidity. However, with complete abandonment of fiscal responsibility by our policymakers, running deficits since 2001 and working to pass another stimulus package of $2.2 trillion on top of that should leave the American public asking how much longer fanatically driven stimulus of phony money will go on.

The answer may be longer than usual, as Federal Reserve chairman Jerome Powell after the September Federal Open Market Committee meeting stated that they intend on keeping rates low for several years and at least until 2023 to keep the economy afloat. It is no surprise that the Treasury danced to the same song as the Fed, with Secretary of the Treasury Steven Mnuchin stressing that he is prepared to request additional fiscal stimulus from Congress to help spur the economy as he deems fit.

As politicians and economists in Washington deem what is appropriate for the American people, it will be the very individual for whom these policies were intended who will have to eventually pay for these policies, whether through inflation or taxation. Unfortunately for the American citizen, when the plans of Washington are successful, it is the politicians and their special interests who reap the rewards. At the same time, any mistakes incurred are deferred upon the citizen. The reader must ask themselves again, How much longer will this go on?

Unfortunately, the policies of intervening within the market may go on for much longer than we hope, for the addiction to cheap money only increases the appetite of a hungry government. As the prominent Austrian economist, Henry Hazlitt said,

The only way government bureaucrats know of keeping prosperity going is to inflate some more—to increase the deficit or to pump more money into the system.

Published:10/21/2020 4:01:26 PM
[Markets] Where's the Market Headed Now? What the Charts and Data Reveal All the indices, in our opinion, are in near-term neutral trends with the exceptions of the Dow Jones Transports and Value Line Arithmetic Index staying positive. While breadth was positive, it was not sufficient to alter the current negative trends for the cumulative advance/decline lines on the All Exchange, NYSE and Nasdaq. The Dow Transports did create a bearish stochastic crossover signal that now leaves only the S&P MidCap 400 and Value Line failing to do so over the past week. Published:10/21/2020 8:26:01 AM
[Markets] GLOBAL-MARKETS-U.S. stocks gain, dollar falls as stimulus hopes grow House of Representatives Speaker Nancy Pelosi and Treasury Secretary Steve Mnuchin will talk again on Tuesday, after a 53-minute telephone conversation on Monday "continued to narrow their differences" about the coronavirus aid package, a Pelosi spokesman said on Twitter. Pelosi has set the end of Tuesday as a self-imposed deadline for reaching a deal on a package. The Dow Jones Industrial Average rose 50.43 points, or 0.18%, at the open to 28,245.85. Published:10/20/2020 9:20:28 AM
[Markets] IBM is the lone premarket decliner among the Dow 30 IBM is the lone premarket decliner among the Dow 30 Published:10/20/2020 8:17:09 AM
[Markets] Futures Rebound On Stimulus Optimism Ahead Of "Do Or Die" Deadline Futures Rebound On Stimulus Optimism Ahead Of "Do Or Die" Deadline Tyler Durden Tue, 10/20/2020 - 08:09

If futures are higher, it's due to stimulus optimism; if futures are lower, then stimulus fears dominate etc, you know the drill by now... so by that logic with Eminis trading 0.7% higher this morning, optimism is apparently on the rise again after yesterday's rout, even as we approach today's deal ultimatum, or "do-or-die" moment as Bloomberg called it, for Nancy Pelosi and Steven Mnuchin to clinch a pre-election virus relief deal. Late on Monday, the two were said to narrow their differences after a 53-minute telephone conversation on Monday where they "continued to narrow their differences" about the coronavirus aid package, and will talk again today but still remain at odds over the scope of aid. In any case, the good news is that after today the farce may finally be over at least until after the election. Treasury yields rose and the dollar slipped, while oil and gold fluctuated. The Aussie slid after an RBA official suggested short-term rates may fall below zero.

Sure enough, as Reuters puts it, "stock index futures rose on Tuesday on expectations that Washington lawmakers would be able to settle their differences for an economic stimulus bill to pass before the Nov. 3 presidential elections." And as Reuters also adds "Uncertainty over the fiscal stimulus weighed on Wall Street's main indexes on Monday, with analysts expecting market turbulence to increase with only two weeks left until Election Day." So simple, a 99 cent algo could write this market narrative.

Elsewhere, Goldman is in focus after a Bloomberg report it reached a long-awaited settlement with the DOJ to pay more than $2 billion for the bank’s role in Malaysia’s 1MDB scandal, to avoid criminal charges. Procter & Gamble shares rose in the pre-market on the best organic sales growth since 2005. Netflix Inc added 0.9% in premarket trading as investors awaited the the streaming giant's membership additions in the third quarter. International Business Machines Corp tumbled - again - after cloud growth slowed and total revenue hit a new 21st century low: its shares were down 2.9% last after the company stayed away from issuing a current-quarter forecast, citing economic uncertainty related to the COVID-19 pandemic.

European stocks recovered from early losses on Friday, following a bearish Asian session where investors adjusted their risk exposure before the U.S. elections two weeks away. Record COVID-19 cases in Europe also weighed on sentiment. MSCI's European Index was up 0.4% while the STOXX 600 was up 0.2, after initially falling as fears about the economic impact of lockdown restrictions outweighed some strong earnings. UBS gained the Swiss banking giant's credit, FX and rates traders performed better than almost all of their rivals in New York as they took advantage of a virus-fueled trading bonanza. Total revenue rose 41%, beating JPMorgan and Citi but falling short of Goldman. UBS also beat on profit and said it lined up $1.5 billion for share buybacks.

New, tougher restrictions to limit the spread of coronavirus in Europe weighed on sentiment. Ireland announced some of Europe’s strictest constraints on Monday, telling people not to travel more than five kilometers from home. New restrictions were also approved in the Lombardy region of Italy. France reported a massive increase in the number of people hospitalised.

Earlier in the session, Asian stocks fell, led by the energy and finance sectors, after climbing in the last session. Markets in the region were mixed, with South Korea's Kospi and China's Shanghai Composite gaining, while Japan's Topix and Australia's S&P/ASX 200 slid. The Topix lost 0.7%, with SoftBank and Nintendo contributing the most to the move. The Shanghai Composite Index rose 0.5%, driven by Kweichow Moutai and Foshan Haitian.

With just two weeks until the U.S. presidential elections on Nov. 3, analysts said that investors were reining in their riskier bets. Meanwhile attention is on the outcome of today's stimulus negotiations.

"The likelihood of a deal taking place appears no more likely now than it was a week ago,” said Michael Hewson, chief market analyst at CMC Markets. The lack of action is particularly concerning in light of rising COVID-19 cases in the United States, he said. "While equity markets appear to be struggling in the short term, the lack of a fiscal stimulus deal in the next two weeks is probably neither here nor there. Most investors expect to see some sort of fiscal stimulus in the next six months, whoever gets in, with the only unknown being around the size and scale, and the timing. The problem for stock markets is that they want to see it now."

In FX, the dollar was again lower with the Bloomberg Dollar Index sliding as the greenback fell against most of its Group-of-10 peers; the euro advanced, topping 1.18 per dollar as European equities reversed an early decline. Australia’s dollar weakened after RBA Assistant Governor Kent said the Board is considering the case for further easing, there is some room to cut the Cash Rate further, one option is to purchase longer-dated bonds - bond purchases would be regular and aimed to bring down yield. Kent also said expansion of balance sheet is adding monetary stimulus, need policy support to be provided for some time given. Kent remarked that the Bank Bill Swap Rate (BBSW) could move into negative territory in the case of further RBA easing. He also reiterated that the central bank will not increase Cash Rate until actual inflation is sustainably in the target range. RBA has not done a formal policy framework review.

RBA Minutes noted the Board discussed the case for additional monetary easing to support jobs and the overall economy. As in previous meetings, members discussed the options of reducing the targets for the cash rate and the 3-year yield towards zero, without going negative, and buying government bonds further along the yield curve. While members noted that the Australian dollar exchange rate was broadly consistent with its fundamental determinants, a lower exchange rate would provide more stimulus to the Australian economy in the recovery phase.

New Zealand’s currency also declined on speculation the central bank may act to lower borrowing costs. In minutes of its October meeeting, Australia’s central bank said further policy easing is likely to “gain more traction” as restrictions are lifted across the economy and agreed the governor would flag the shift to targeting actual over forecast inflation. The pound swung between gains and losses after the U.K. rebuffed the European Union’s effort to restart deadlocked trade negotiations and as investors waited for evidence that the two sides are reconciling their differences.

In rates, Treasuries were lower again with the curve steeper in early U.S. trading as front-end yields remain anchored while long-end yields were cheaper by ~2bp, 10-year by 1.5bp at 0.784% after breaching Monday’s high. Risk appetite stirred during Asia session and European morning, lifting S&P 500 futures, as investors eyed potential for agreement in stimulus talks today.  Euro zone government bond yields rose, with the benchmark 10-year German yield holding near recent seven-month lows at -0.623%.

Gold edged down while oil prices were little changed after three days of declines on fears that a resurgence of COVID-19 infections would stifle the recovery in fuel demand. Brent crude futures were trading down 2 cents, or 0.4%, at $42.44 a barrel recovering ground after falling as low as $42.19 earlier in the session.

Looking at the day ahead, we have earnings from Procter & Gamble, Netflix, Texas Instruments, Philip Morris International and Lockheed Martin. Central bank speakers include Fed Vice Chair Quarles, the Fed’s Bostic and Evans, the ECB’s Hernandez de Cos and the BoE’s Vlieghe. And data releases include US housing starts and building permits for September.

Market Snapshot

  • S&P 500 futures up 0.6% to 3,442.50
  • Brent futures down 0.6% to $42.38/bbl
  • Gold spot up 0.1% to $1,905.95
  • U.S. Dollar Index down 0.2% to 93.29
  • STOXX Europe 600 up 0.2% to 367.49
  • MXAP down 0.3% to 175.21
  • MXAPJ down 0.01% to 582.59
  • Nikkei down 0.4% to 23,567.04
  • Topix down 0.8% to 1,625.74
  • Hang Seng Index up 0.1% to 24,569.54
  • Shanghai Composite up 0.5% to 3,328.10
  • Sensex up 0.2% to 40,518.88
  • Australia S&P/ASX 200 down 0.7% to 6,184.58
  • Kospi up 0.5% to 2,358.41
  • German 10Y yield rose 0.4 bps to -0.624%
  • Euro up 0.07% to $1.1777
  • Italian 10Y yield rose 6.9 bps to 0.518%
  • Spanish 10Y yield rose 1.6 bps to 0.175%

Top Overnight News from Bloomberg

  • Ireland and Wales announced renewed lockdowns and Italy’s financial center sought a curfew, as Europe steps up efforts to regain control of the coronavirus pandemic
  • The European Union’s first offering of social bonds was said to receive orders of more than 233 billion euros ($275 billion), a record in the euro area
  • The ECB takes the crusade to revive faith in its inflation- fighting credentials to members of the public on Wednesday. They’ll get to share their views with President Christine Lagarde, who vowed at the start of her term just under a year ago to make the central bank better understood, and chief economist Philip Lane
  • Goldman Sachs Group Inc. has reached a long-awaited pact with the U.S. Department of Justice to pay more than $2 billion for the bank’s role in Malaysia’s 1MDB scandal, and the deal may be announced within days, according to people familiar with the matter
  • China’s hotels and restaurants, one of the hardest-hit sectors of the economy during the coronavirus pandemic, remained a significant drag on growth in the third quarter even as the recovery gained momentum

A quick look at global markets courtesy of NewsSquawk:

Major Asia-Pac indices traded with losses across the board after Wall Street suffered a broad decline following reports which suggested a State-side stimulus deal is not sounding imminent based on comments from the House Speaker and Committee Chairs. US equity futures opened electronic trade in modest positive territory, but have since came off highs and traded sideways throughout the night, with ES, NQ and YM still holding onto some gains heading into the European open. Back to APAC, ASX 200 (-0.7%) was pressured by its mining sector, albeit the index saw some fleeting upside in light of further the dovish RBA rhetoric, this time from Assistant Governor Kent. Nikkei 225 (-0.5%) failed to benefit from the JPY dynamics as the index felt the weight of losses across its industrial sector. KOSPI (+0.5) initially conformed to the losses in the region, with Hyundai and its affiliate Kia posting losses between 3-4% after the former warned that Q3 profits will be hit by charges related to engine problems. Meanwhile, SK Hynix traded in the red after the chipmaker confirmed that it is to purchase Intel’s NAND memory business. Elsewhere, the humdrum tone reverberated into China, with Hang Seng (U/C) and Shanghai Comp. (+0.4%) modestly softer for much of the session despite another PBoC liquidity injection and a non-event LPR setting as anticipated; however, the bourse did pick up somewhat in the tail-end of APAC trade.

Top Asian News

  • Orr Says RBNZ Prepared to Use All Tools to Counter Deflation
  • Thai Central Bank Chief Signals Support Amid Uneven Recovery
  • RBA Sees Monetary Policy Having More Traction as Economy Reopens
  • H.K.- Singapore Bubble May Have 1 Return Flight per Day Initially

European equities (Eurostoxx 50 +0.1%) trade mixed to flat in what has been a relatively indecisive session thus far with little in the way of incremental macro newsflow since yesterday’s close. Slightly outperformance has been observed in the CAC 40 (+0.3%) with Accor (+6.0%) top of the index after a broker upgrade from JP Morgan with the bank upbeat on the Co. “as it streamlines costs, simplifies its business, whilst its sound BS should support small/midscale M&A, allowing the company to emerge from the crisis stronger”. Sectors are mixed with not much in the way of breadth across the broader categories; oil & gas is the main outlier to the downside amid modest losses in the crude complex. Travel & leisure names have been granted some reprieve amid plans to open up international travel to the UK with Heathrow implemented a rapid COVID-19 testing operation for some destinations. As such, IAG (+6.3%), whose British Airways will be one of the first to offer testing, sit at the top of the Stoxx 600, gains are slightly less pronounced for some of the budget airlines such as easyJet (+4.0%) and Ryanair (+2.5%). Elsewhere, support has also been observed in the banking sector post-earnings from UBS (+2.2%) with the Co. far exceeding Q3 net income expectations in what was its “best Q3 earnings in a decade”. Additionally, the Co. announced it has set aside USD 1.5bln for potential share buybacks and currently has USD 1bln available to be paid out as a cash dividend in 2021. Reckitt Benckiser (+1.4%) are another gainer this morning after Q3 earnings were boosted by surging Dettol sales throughout the pandemic. To the downside, Tele2 (-1.5%) are the Stoxx 600 laggard post-earnings, albeit having pared back much of the initial downside, in a session that has featured several Scandi updates, including Stora Enso, Swedbank and Yara International.

Top European News

  • Lockdowns Return to Ireland and Wales in Europe’s Virus Response
  • Italian State Lender CDP Bids With Funds for 88% of Autostrade
  • Boohoo Falls on Report Audit Firms Decline to Work With Retailer
  • ECB Carves Out Its Own Path in the Mission to Revive Inflation

In FX, the race to the bottom is back on down under, and even though a 15 bp RBA rate cut looms larger than the next batch of RBNZ stimulus, the tables have turned to the detriment of the Kiwi. Indeed, Nzd/Usd has relinquished 0.6600+ status and breached the 100 DMA at 0.6586, as the Aud/Nzd cross rebounds from sub-1.0700 and Aud/Usd pivots 0.7050. To recap, minutes from the October policy meeting coupled with comments from RBA Deputy Governor Kent all but sealed an ease early next month, with the latter also noting that Bank Bill Swap rates may also fall below 0% if benchmark rates are reduced further, while RBNZ Governor Orr remarked that there is ample room to deliver more QE and an update on tools will be forthcoming in November.

  • USD – Antipodean underperformance aside, the Buck is mixed vs G10 rivals as broad risk sentiment recovers and the DXY hovers just above Monday’s base within a 93.204-512 range ahead of US housing data, a few Fed speakers and House Speaker Pelosi’s deadline for a pre-election fiscal stimulus deal that looks unrealistic or optimistic at this stage.
  • EUR/CHF/GBP/CAD/JPY – The Euro is maintaining momentum above 1.1750 vs the Greenback and seems well flanked by decent option expiry interest at 1.1745 (1.4 bn) and between 1.1790-1.1800 (1.3 bn) to the upside that also incorporates yesterday’s high and the 50 DMA (1.1795). Meanwhile, the Franc continues to straddle 0.9100 with little reaction to Swiss trade data showing a narrower surplus, but key watch exports declining at a similar pace to the previous month, and the Pound is holding around 1.2950 awaiting BoE commentary from Vlieghe and any further Brexit developments ahead of speeches by the European Commission President von der Leyen and her VP Sefcovic. However, Sterling looks a bit leggy against the single currency as Eur/Gbp probes 0.9100 amidst reports of RHS flows, though recent peaks circa 0.9120-25 may cap further upside irrespective of charts indicating a break of a descending channel. Elsewhere, the Loonie is hovering just above 1.3200 in advance of Canadian inflation on Wednesday and the Yen has slipped a fraction to trade either side of 105.50 following overnight source reports suggesting that the BoJ will downgrade GDP and CPI forecasts when it meets next week.
  • SCANDI/EM – Not a lot of movement or deviation in Eur/Sek around 10.2800 on the back of standard Riksbank rhetoric, but Usd/Cnh and Usd/Cny have fallen further to fresh 2+ year troughs near 6.6700 and 6.6800 respectively as the PBoC gradually lowers its daily midpoint setting for the onshore Yuan and maintained LPRs for the 6th consecutive month.

In commodities, a relatively slow session for the commodity space thus far in terms of fundamental updates as the dust settles following yesterday’s JMMC meeting, which ended up making no recommendation to change policy prior to 2021; the next gathering is November 17th ahead of the full OPEC+ event at the month’s end. Perhaps most notably from the meeting, reports highlight there was no indication of Russia putting forward a compensation plan for their 430k/bbl of overproduction; as such, attention will turn to whether the likes of Saudi put pressure on Russia to unveil a plan and whether some of the other over-complying members follow Russia’s lead on this matter in the months ahead. Price action throughout the session has been choppy but relatively contained compared with the action seen yesterday; currently, benchmarks remain in proximity to the unchanged mark but closer to the top-end of the day’s range. Crude explicitly, the sessions highlight will be the private inventory report which may well display another crude drawdown given a significant magnitude of production remained shut-in last week given the after-effects of Hurricane Delta. As a reminder, last week’s report printed a draw of 5.4mln which was followed by the EIA reading of a 3.818mln draw. Moving to metals, spot gold has been uneventful and in proximity to flat levels for the majority of the session following similar price action in the later-half of APAC trade. However, most recently the precious metal has gleaned some strength from further downside in the DXY as sentiment stateside remains cautiously firm as the Democrats stimulus deadline approaches. Separately, BHP updated that their copper operations in South America are still being affected by COVID-19 related measures but nonetheless copper production came in at 413k/T vs. Exp. 394k/T for Q1.

US Event Calendar

  • 8:30am: Housing Starts, est. 1.47m, prior 1.42m; MoM, est. 3.46%, prior -5.1%
  • 8:30am: Building Permits, est. 1.52m, prior 1.47m; MoM, est. 2.98%, prior -0.9%

DB's Jim Reid concludes the overnight wrap

US equity markets lost significant ground yesterday amidst ongoing stimulus discussions as investors awaited a raft of earnings releases which heat up from today. Over the weekend speaker Pelosi set the end of today as the deadline to make progress ahead of the election. So today could be interesting.

In terms of the latest, Treasury Secretary Mnuchin and Speaker Pelosi spoke late in the session yesterday, but the Speaker told fellow Democratic lawmakers afterwards that significant areas of disagreement continue to get in the way of a deal. The two sides remain talking ahead of today’s deadline. While the Republican-led Senate has been reluctant to pass a stimulus bill above the $500 billion level that Majority leader McConnell has supported, President Trump has indicated that he is willing to go up to the $2.2 trillion range that Democrats have demanded. Mr Trump said yesterday that if an agreement with Democrats is reached, he would “lean” on Republican Senators to “come along.”

Regardless, the confirmation that the two sides remain significantly apart saw the S&P 500 fall over 1.1% in the last 90 minutes of trading, though the index had been dripping lower throughout the day as risk sentiment soured after a healthy start. By the end of the session, the S&P 500 had lost -1.63%, while the VIX index rose +1.8pts in its 6thconsecutive move higher.

Overnight, S&P 500 futures (+0.34%) are trading back up a little on headlines that the House Speaker Pelosi and Treasury Secretary Mnuchin have “continued to narrow their differences” on a coronavirus relief package. So expect the dance to continue today.

The large losses yesterday saw every industry in the S&P lower on the day, with the Tech (-1.87%) and Energy (-2.10%) sectors leading the declines. In spite of the heavy tech losses, especially among the recent mega cap winners, the NASDAQ (-1.65%) fell largely in line with the S&P. The Dow Jones (-1.44%) also moved lower, while in Europe, the STOXX 600 lost just -0.18% – having closed prior to the US stimulus headlines roiling markets.

Asian markets are trading lower tracking Wall Street’s move from yesterday. The Nikkei (-0.55%), Hang Seng (-0.09%), Shanghai Comp (-0.13%), Kospi (-0.21%) and Asx (-0.63%) are all down.

On the coronavirus, there were further concerning developments from the US and Europe, as the number of confirmed global cases passed the 40m mark yesterday, and governments around the world moved to re-impose restrictions once again. Here in the UK, a further 18,830 cases were reported yesterday as Wales announced a 2-week ‘firebreak’ that would start on Friday evening. In practice, this means that people will be told to stay at home, apart from certain exceptions, with pubs, restaurants and non-essential shops all closing. Prime Minister Johnson has come under pressure to pursue a similar move in England, with opposition Labour leader Keir Starmer having already called for one to be imposed. Elsewhere in Europe, case numbers also remained at elevated levels as you’ll see in the table below. Monday reporting is always a little challenging to interpret though due to the weekend impact.

In terms of further restrictions, Ireland is moving closer towards a full lockdown as of Wednesday night. The new restrictions will close all retail, restaurants and pubs, while schools will remain open. Elsewhere Austria changed the limit on gatherings to 6 people indoors and 12 people outdoors, while Slovenia announced that a 9pm-6am curfew would come into force from today. So far most countries seem relatively keen to keep schools open as much as possible which is a huge economic swing factor given that it governs what parents can do.

Over in the US, weekly cases are set to rise above 400k per week for the first time since early August, with the majority of the outbreaks in regions that either had yet to experience significant caseloads or had relatively moderate first waves. Overnight, the US CDC has issued a “strong recommendation” for mask-wearing by both passengers and operators on planes, trains, buses and taxis. On a related note, Our chart of the day yesterday (link here) actually looked at the average age of deaths across a number of countries from Covid-19, and the US stood out in having a much lower average age of death than the other developed countries at 75.8 (vs. 80-82) in most of the others. Separately, one note of optimism from the US was that the Transport Security Administration said that they had over 1 million passengers go through a security checkpoint on Sunday for the first time since March, while the weekly volume from Oct 12-18 was also the highest since the start of the pandemic.

On the vaccine front, Moderna said overnight that the US government could authorise emergency use of its Covid-19 vaccine in December if it gets positive interim results in November from a large clinical trial. A reminder that even the UK is working to mobilise for a possible vaccine rollout by December. So a month to watch.

Over in fixed income, sovereign bonds lost ground for the most part yesterday, with yields on 10yr Treasuries up +2.3bps, as the 2s10s curve also steeped +1.9bps. Meanwhile in southern Europe, yields on 10yr Italian BTPs came off their all-time closing low on Friday, as they moved up +7.5bps, whilst Spanish (+4.1bps) and Greek (+4.1bps) bonds similarly lost ground. Bunds and gilts were the exception to this pattern however with 10yr bund yields down another -0.6bps to a fresh 7-month low of -0.63%, while those on gilts fell -1.3bps.

Onto Brexit, and in spite of Prime Minister Johnson’s Friday statement that the UK should get ready to leave the transition period without a trade agreement in place, the two sides’ chief negotiators spoke once again yesterday. In a tweet afterwards, the EU’s Michel Barnier said that “I confirmed that the EU remains available to intensify talks in London this week, on all subjects, and based on legal texts. We now wait for the UK’s reaction." Sterling strengthened by +0.26% against the US dollar yesterday, though this seemed to be more of a dollar-negative story as the dollar index lost -0.27%. Overnight, Bloomberg has reported that the UK is rebuffing the EU’s effort to restart their deadlocked trade negotiations, holding out for more concessions from the bloc before it is prepared to restart talks. The same report though quoted three unidentified EU officials as saying that they expect the negotiations to resume in London by the end of the week. A bit like the US fiscal stimulus, this is now a political dance. We hope no one stumbles!

Staying on politics, there weren’t a great deal of updates on the US election yesterday as the polls continued to show a solid lead for Joe Biden. His chances of victory in FiveThirtyEight’s model now stand at a campaign high of 88%, while the Democrats’ odds of controlling the Senate are at 74%. This week’s debate on Thursday will be the main highlight, but the unprecedented quantity of early voting in this election means that the ability to change the trajectory of the race is diminishing with each passing day. Overnight, the Commission on Presidential Debates has said that President Donald Trump and Democratic nominee Joe Biden will have their microphones turned off during parts of the final presidential debate while adding that each candidate will have an uninterrupted two minutes to speak at the beginning of each of the six 15-minute segments of the debate. Their mics will be turned on again for “a period of open discussion” in the segment’s remaining time. The change comes after the chaotic first debate in which both the candidates talked over the moderator and each other. The list of topic in this Thursday’s debate include Covid-19, American families, race in America, climate change, national security and leadership.

There also wasn’t much in the way of data yesterday, though the NAHB’s housing market index in the US for October rose to another record high of 85 (vs. 83 expected).

Published:10/20/2020 7:15:38 AM
[Markets] Dow futures climb on signs of progress in stimulus talks Dow futures climb on signs of progress in stimulus talks Published:10/20/2020 6:44:47 AM
[Markets] E-mini Dow Jones Industrial Average (YM) Futures Technical Analysis – Strong Over 28040, Weak Under 28025 The direction of the December E-mini Dow Jones Industrial Average futures contract on Tuesday is likely to be determined by trader reaction to 28040. Published:10/20/2020 6:14:38 AM
[Markets] Dow futures rise, European stocks steady ahead of stimulus talks deadline Dow futures rise, European stocks steady ahead of stimulus talks deadline Published:10/20/2020 5:15:43 AM
[Markets] Markets Sell Off, IBM (IBM) Reports Q3 Earnings Although indexes are riding three-week winning streaks (four weeks on the Nasdaq), the streak-inside-the-streak shows the Dow and S&P 500 down for the fourth session in the past five, and the Nasdaq down five straight days. Published:10/19/2020 5:40:18 PM
[Markets] Dow ends up over 100 points on upbeat retail sales data Dow ends up over 100 points on upbeat retail sales data Published:10/16/2020 3:27:17 PM
[Markets] Stock Markets' March Higher Resumes as Hertz Soars, Array Shines The stock market reversed course and pushed higher on Friday morning, with many investors hoping that the Dow Jones Industrial Average (DJINDICES: ^DJI) might finally be poised to climb into record territory before 2020 ends. Shortly before 11:30 a.m. EDT today, the Dow Jones Industrial Average (DJINDICES: ^DJI) was higher by 222 points to 28,716. Hertz Global Holdings (NYSE: HTZ) has been a favorite among short-term traders, and the latest news out of its bankruptcy proceeding led to a big jump in its stock price despite its dubious impact on Hertz's financial prospects. Published:10/16/2020 12:27:03 PM
[Markets] Retail-sales and consumer-sentiment data keep Dow on track to snap losing streak Retail-sales and consumer-sentiment data keep Dow on track to snap losing streak Published:10/16/2020 9:52:03 AM
[Markets] Futures Flat On Stalled Stimulus, Europe Elevated On Earnings Futures Flat On Stalled Stimulus, Europe Elevated On Earnings Tyler Durden Fri, 10/16/2020 - 07:45

US equity futures were modestly green in a quiet overnight session, as optimism about a fresh stimulus package collapsed, while investors assess the potential return of lockdowns in Europe as the region struggles to contain the virus spread. S&P 500 futures were little changed, while Nasdaq contracts rose 0.2%. Eminis were up 0.2% to 3,482 boosted by Boeing and Pfizer shares (see below) which helped push futures on the S&P 500 and Dow Jones Industrial Average into the green after they drifted most of the day. Treasuries held gains, while the dollar slipped with crude oil.

PFizer shares rose 1% in premarket trading after it said it would file for U.S. emergency approval of its COVID-19 vaccine candidate being developed along with Germany's BioNTech as soon as a safety milestone is achieved in the third week of November. BioNTech's U.S.-listed shares jumped 2.4%. There was also a revival of trade war concerns, after the European Union and the U.S. exchanged tariff threats this week regarding illegal state aid for Boeing. Separately, the planemaker’s stock was up in pre-market trading after the company’s 737 Max model was judged safe to fly by Europe’s aviation regulator.

On the stimulus front, Treasury Secretary Steven Mnuchin told House Speaker Nancy Pelosi Thursday that President Donald Trump would personally lobby to get reluctant Senate Republicans behind any stimulus deal they reach. However, Senate Majority Leader Mitch McConnell rejected that, saying he could not sell a much larger package to his members, and that the Senate would vote on a narrow stimulus plan worth about $500 billion next week. In short: no deal until after the election, precisely as we have been saying since August.

"It’s a tug-of-war between risks that are well flagged, the pandemic, the U.S. election, Brexit, and at the same time hope that these same risks can be resolved in matter of weeks or months", said Emmanuel Cau, head of European equity strategy at Barclays. “In the meantime, it’s hard for investors to take positions on the short term given all the uncertainties,” he said. “Looking forward to 2021, there’s a good probability these risks will be behind us.”

In Europe, the benchmark Stoxx 600 Index rose as much as 1% but was still set for a weekly loss after European stocks lost over 2% on Thursday as new social restrictions in Europe, including a curfew in major French cities and tighter restrictions in London, spooked investors. Positive corporate newsflow outweighed concerns over rising coronavirus cases and the state of progress in Brexit trade talks. Car sales surprised to the upside, while Daimler and LVMH both beat estimates, and Thyssenkrupp surged after Liberty Steel Group said it will make a multibillion-euro bid for the German company’s European steel unit.

Earlier in the session, the MSCI Asia Pacific Index slipped 0.2% led by the industrials and IT sectors. Markets in the region were mixed, with Thailand's SET and Japan's Topix falling, while Hong Kong's Hang Seng Index and India's S&P BSE Sensex Index increased. The Topix lost 0.9%, with Toyota and Sony contributing the most to the move. The Shanghai Composite Index rose 0.1%, driven by China Life and ICBC.

Brexit was in focus, with U.K. Prime Minister Boris Johnson saying the U.K. will now get ready to leave the European Union’s single market and customs union without a new free trade deal in place, blaming the bloc for refusing to offer good enough terms. He said he would always be willing to hear from the EU if the bloc’s leaders came back to the U.K. with “a fundamental change of approach.” Last month, the British leader set a deadline of Oct. 15 for an agreement to be struck -- or clearly within sight -- saying there would be no point continuing talks beyond this week without adequate progress. Sterling fluctuated on the news.

Elsewhere in FX, the euro also regained some ground, rising about 0.2% to $1.1731 as investors shifted from perceived safe havens such as the dollar and the yen to riskier currencies.

In rates, Treasuries extended advance in early U.S. session following bigger rally in gilts after U.K. Prime minister Boris Johnson said the country should prepare for Australian-style trade terms with the EU after Brexit negotiations failed to produce an alternative. Gilts spiked to session highs, lifting Treasuries. Treasury yields are richer by 0.5bp to 1.5bp across the curve in bull-flattening move; 10-year yields lower by 1bp at 0.722% with both gilts and bunds outperforming by ~1bp.  Germany’s 10-year bond yield was set for its biggest weekly drop since August as doubts grew about the economic recovery in the euro zone.

In commodities, oil prices continued to slide, dragged down by concerns that resurgent COVID-19 cases in Europe and the United States would curtail demand. Brent crude futures for December dropped 0.5% to $42.65 a barrel. WTI  crude futures for November delivery dipped 0.4%, to $40.81 a barrel. Spot gold prices were flat at $1,909.05 but looked set for their first weekly drop in three.

Macro-economic data to watch include retail sales, industrial production and University of Michigan Confidence, while Bank of New York Mellon, Citizens Financial, JB Hunt, Kansas City Southern, Schlumberger NV, State Street, VF Corp are among companies reporting earnings

Market Snapshot

  • S&P 500 futures up 0.1% to 3,479.50
  • STOXX Europe 600 up 0.7% to 365.50
  • MXAP down 0.3% to 174.47
  • MXAPJ unchanged at 579.29
  • Nikkei down 0.4% to 23,410.63
  • Topix down 0.9% to 1,617.69
  • Hang Seng Index up 0.9% to 24,386.79
  • Shanghai Composite up 0.1% to 3,336.36
  • Sensex up 0.8% to 40,038.80
  • Australia S&P/ASX 200 down 0.5% to 6,176.79
  • Kospi down 0.8% to 2,341.53
  • Brent futures down 0.6% to $42.92/bbl
  • Gold spot little changed at $1,909.72
  • U.S. Dollar Index down 0.2% to 93.69
  • German 10Y yield fell 1.2 bps to -0.622%
  • Euro up 0.05% to $1.1714
  • Italian 10Y yield rose 4.0 bps to 0.495%
  • Spanish 10Y yield unchanged at 0.148%

Top Overnight News from Bloomberg

  • Italy’s government is assessing its environmental funding needs, taking an initial step toward selling its first green bond, according to people familiar with the decision
  • Chinese police have launched an investigation linked to cryptocurrency exchange giant OKEx, forcing one of the world’s largest Bitcoin trading platforms to block users globally from withdrawing money
  • Treasury Secretary Steven Mnuchin told House Speaker Nancy Pelosi Thursday that President Donald Trump will personally lobby to get reluctant Senate Republicans behind any stimulus deal they reach
  • Covid-19 is hitting the most populous states in the U.S. Midwest, with cases surging in Illinois, Ohio and Michigan. Europe continued to report some of the highest numbers of cases since spring. Remdesivir has no definite effect on a hospitalized patient’s chances of survival, a clinical trial by the World Health Organization found
  • In dueling town halls, President Donald Trump embraced controversial conspiracy theories and sparred with the moderator, while Democrat Joe Biden offered policy-focused answers aimed at avoiding anything that could imperil his lead in the polls
  • Oil headed lower in Asian trading as the prospect of a resurgent virus forcing more stay-at-home measures in Europe and the U.S. outweighed a bigger-than-expected drop in American stockpiles
  • The U.S. will “strike much harder” if the European Union goes ahead with tariffs on $4 billion worth of American products, President Trump said
  • New Zealand Prime Minister Jacinda Ardern looks set for a resounding election victory on Saturday as voters applaud her masterful handling of the coronavirus pandemic

A look at global markets courtesy of NewsSquawk

Asia-Pac equities traded mostly lower following a string of lacklustre cash opens, and after another downbeat handover from Wall Street, where the major indices posted a third consecutive down-day as pre-election stimulus hopes fizzle out and with parts of Europe reimposing targeted COVID-19 restrictions amid the resurgence of the virus. European and US equity futures drifted higher throughout most of the night before erasing the bulk of their gains heading into the European open and with no specific news flow driving price action. ASX200 (-0.5%) was flat for a large part of the session as strength in financials were countered by a weak performance across travel and leisure names, whilst concerns mounted over Australia’s deteriorating relationship with China. Nikkei 225 (-0.4%) was caged in a tight band for most of the session and losses accelerated after a downside breach of the 23,500 level, but Fast Retailing shares rose some 4.5% at one point despite revenue and profits declining in the 12-months ending August, as same-store-sales rebounded over 20% in Q4 which drove expectations for a FY21 recovery. KOSPI (-0.8%) remained in negative territory with participants pinning the losses on virus woes. Shanghai Comp. (+0.1%) opened with modest gains as the PBoC underwent another liquidity injection via 7-day reverse repos at a maintained rate, but the index later erased gains with reports also resurfacing that China is set to pass a new law that would restrict sensitive exports vital to national security. Hang Seng (+0.5%) outperformed in a reversal from yesterday’s sub-par performance, and as SMIC shares opened higher by 6% after a guidance upgrade. Finally, 10yr JGB futures firmed overnight before waning off best levels as it tracked USTs.

Top Asian News

  • Singapore-Hong Kong Air Fares Jump 40% on Travel Bubble Plan
  • Billionaire Lucio Tan’s Bank Expects Bad-Loan Provisions to Drop
  • China Drug Stock Jumps After Doctor Endorses Treatment for Covid
  • Thai Leaders Have No Easy Options to End Anti-Monarchy Protests

European equities (Eurostoxx 50 +1.0%) trade on a firmer footing in what appears to be more a trimming of yesterday’s heavy losses rather than an outright pick-up in sentiment across the region as incremental macro newsflow remains light. The CAC 40 (+1.3%) has outperformed from the get-go following LVMH’s (+6.4%) Q3 update which saw the Co. exceed revenue expectations citing strong performance in the US and China; Kering (+3.8%), Burberry (+3.0%) and Christian Dior (+7.3%) trade higher in sympathy with the consumer discretionary sector the clear outperformer. Elsewhere, it’s been a session of solid gains thus far for the auto sector with Daimler (+3.4%) leading the charge after its prelim Q3 EBIT exceeded market expectations and the Co. stating that it has seen a faster than expected market recovery and a particularly strong September performance. Furthermore, Renault (+3.8%) have also been supported amid reports the Co. is intending to launch a range of electric vehicles targeting ‘middle class’ consumers, whilst its CEO said the Co. does not have a liquidity problem. Additionally, for the sector, some positivity was garnered from the latest EU27 car registrations which rose 3.1% in September (prev. -18.1%). In terms of stocks specifics, Thyssenkrupp (+15.0%) are a clear standout performer today after Liberty House announced a bid for the Co’s steel operations. Subsequently, the IG Metall Union in the German NRW state rejected Liberty Steel's bid, suggesting that such a takeover could lead to job losses, however, it is yet to be seen if their objections will be enough to derail the acquisition. To the downside, BT (-1.8%) have hampered the performance of the telecom sector today amid ongoing scepticism suggesting that PM Johnson’s pledge to connect the country to fast broadband by 2025 is considered to be unrealistic.

Top European News

  • LVMH Bounces Back on Demand for Louis Vuitton and Dior Bags
  • Thyssenkrupp Jumps as Gupta’s Liberty Said to Bid for Steel Unit
  • Europe Car Sales Rise 1.1% in Surprise First Gain of the Year
  • Daimler, Volvo Post Surprise Profits on Shaky Auto Reprieve

In FX, positive vibes from both sides of the UK-EU divide ahead of the final day of the Summit have given Sterling a lift as chances of clinching a trade deal are kept alive, with Cable back on the 1.2900 handle and Eur/Gbp backing off from the high 0.9000s after Foreign Minister Raab claimed that negotiators are close to agreement and the Irish PM said Barnier has been granted the flexibility to continue discussions. However, PM Johnson still has the final say and there is little sign of compromise on the well documented key issues that stand in the way of an accord so the bar remains high and Pound prone to further disappointment, while Moody’s ratings review after hours also poses a threat to sentiment.

  • USD – Brexit aside, the broad risk tone has settled down to dampen some demand for the Dollar and major pairs have reverted to more restrained ranges as a result, as the DXY retreats from highs just shy of Thursday’s 93.910 peak within a 93.883-665 range. The pullback may also be partly psychological and consolidative ahead of primary US data in the form of retail sales and ip before 2 Fed speakers (Williams and Bullard) and preliminary Michigan sentiment, while a firm rebound in the YUAN is also likely to be weighing on the Greenback more generally given the Cny and Cnh both reclaiming 6.7000+ status.
  • JPY/NZD – The Yen and Kiwi are benefiting from the waning Buck, with the former back above 105.50 and flanked by decent option expiry interest (3 bn between 105.00-05 and 1.2 bn from 105.35 to 105.40), and the latter pivoting 0.6600 in the run up to NZ elections and getting regional support from favourable Aud/Nzd crosswinds.
  • EUR/CAD/CHF/AUD – All narrowly mixed vs their US counterpart as the Euro keeps tabs on 1.1700, just, Loonie paring losses from sub-1.3260 towards 1.3200 in advance of Canadian manufacturing sales and less of a drag via crude prices. Elsewhere, the Franc is straddling 0.9150 again and Aussie underperforming below 0.7100 and the 100 DMA (0.7096) in wake of more worrying reports on the Chinese trade front as cotton exports are said to be added to the embargo list and could be subject to tariffs as big as 40%.
  • SCANDI/EM – Further divergence between the Sek and underperforming Nok even though oil is attempting to stabilise and Riksbank’s Ingves may cover exchange rate moves during a speech at the IMF, but the Zar appears content with Gold’s recovery to trade above Usd 1900/oz, albeit by only a few bucks. Conversely, the Brl could be vulnerable following the latest political antics and the resignation of Brazilian President Bolsonaro’s Deputy Senate leader who was caught by police concealing COVID aid funds in his underwear.

In commodities, WTI and Brent front month futures are modestly subdued this morning diverging somewhat from the modestly firmer performance seen in European bourses, with US futures relatively flat; focus for the complex has returned to the supply-side given updates in Libya. Crude production for the country is now said to have hit 500k BPD displaying a significant rise from the October 5th figure of 290k BPD; the increase comes alongside the El Sharara field getting back to around 110k BPD capacity but still someway from the 300k BPD capacity the field is targeting in the near-term. The production increase will likely draw the focus of OPEC’s JMMC gathering on October 19th, among other factors including compliance and plans for the OPEC+ demand schedule, particularly as while the Libyan supply has substantially increased it is still someway off Q4-2019’s figure of circa 1.2mln BPD. Elsewhere, the schedule for crude explicitly is light aside from the usual Baker Hughes rig count. Moving to metals, spot gold is essentially flat on the day residing within comparatively tight ranges of USD 10/oz; given the lack of fundamental newsflow the driver for the metal is once again the USD which is similarly exhibiting lacklustre and range-bound action. Regarding copper, ING highlight that discussions at the Candelaria mine in Chile are still unresolved, regarded as one of the largest copper reserves in the world, and the most recent updates indicate that strike action could still occur next week.

US Event Calendar

  • 8:30am: Retail Sales Advance MoM, est. 0.8%, prior 0.6%; Ex Auto MoM, est. 0.4%, prior 0.7%
  • 8:30am: Retail Sales Control Group, est. 0.3%, prior -0.1%
  • 9:15am: Industrial Production MoM, est. 0.5%, prior 0.4%; Capacity Utilization, est. 71.8%, prior 71.4%
  • 9:15am: Manufacturing (SIC) Production, est. 0.6%, prior 1.0%
  • 10am: Business Inventories, est. 0.4%, prior 0.1%
  • 10am: U. of Mich. Sentiment, est. 80.5, prior 80.4; Current Conditions, est. 88.5, prior 87.8; Expectations, est. 77, prior 75.6
  • 4pm: Net Long-term TIC Flows

DB's Jim Reid concludes the overnight wrap

It’s the last day of this half term today and the school are allowing the children to come as their favourite book character. As much as my wife has tried to persuade our 5 year old Maisie to go as her own book heroines Lizzy Bennet from Pride and Prejudice or Jane Eyre, Maisie will only go as one thing. Elsa from Frozen. I said to her that Frozen is not a book and she ran to the shelf and showed me a Frozen 2 sticker and colouring in book. So who am I to argue. Hopefully this will pass the school’s no superheroes policy. By the way I wanted her to go as Arya Stark.

Talking of the Starks, winter was coming for a large part of yesterday (virus numbers, weak data, lack of stimulus) before a bit of dragon breath warmed things up late in the session. European equities earlier saw major declines as governments across the continent moved to ramp up restrictions, with the STOXX 600 (-2.08%), the DAX (-2.49%) and the CAC 40 (-2.11%) all moving lower. The US however regained its footing and only closed -0.15% having recovered from being down as much as -1.37% in the early moments of trading yesterday and around -0.75% as Europe went home. Tech (-0.44%) and biotech (-1.69%) stocks were among the largest laggards on the day with the NASDAQ falling -0.47%, although it also rebounded from large early losses (-1.78%). Meanwhile the VIX index of volatility gained +0.57pts to its highest level in a week, having risen every day this week.

The main driver behind the declines was the pandemic, with yesterday seeing a number of further concerning developments for investors to digest. In terms of the numbers, Europe continued to move in the wrong direction, with Italy reporting another record of 8,803 cases, raising fears that the country is moving in a similar direction to France and the UK, while the Netherlands also reported a record 7,857 cases which given its population is just under 30% of Italy’s, is a big number. See the per 10k number in the table below. France saw over 30k new cases, a record that eclipses the previous high of nearly 27k this past Saturday. Germany also saw a record number of infections, with the 7,185 new cases surpassing the previous peak in late March (pre mass testing). This comes as reports indicate that Chancellor Merkel is concerned that the new restrictions agreed to by the regional leaders do not go far enough. In the UK, a further 18,996 cases were confirmed as the government raised the London alert level to high, meaning that residents can no longer mix with other households indoors from tomorrow. Over in Poland, further restrictions were also imposed, while at the summit of EU leaders in Brussels (more on which below), Commission President Ursula von der Leyen went into self-isolation (again) after she was informed that a member of her front office had tested positive that morning.

In better news overnight, Reuters has reported that Britain’s National Health Service is in talks with groups including the British Medical Association about mobilising for a potential rollout of a Covid-19 vaccine by December. The report added that there is c. a 50/50 chance that the vaccine can begin to be administered that month.

Over in the US, cases continue to rise throughout the Midwest with Illinois, Ohio and Michigan all approaching new case levels comparable with the height of their first waves – albeit at much higher testing levels. With Ohio, Michigan and Wisconsin all potential swing states the effects on next month’s election will be closely followed. The main Covid news came from the Biden campaign, where VP nominee Kamala Harris cancelled her travel plans until Monday after communications director along with a member of her flight crew tested positive. We’re told that Harris herself tested negative on Wednesday, but that travel was stopped “out of an abundance of caution”. Neither of the positive individuals were in contact with Biden however, and both he and President Trump went ahead with their separately planned town hall events last night in lieu of the debate that was otherwise supposed to have taken place.

Staying on US politics, President Trump said yesterday that he would be open to increasing the $1.8 trillion stimulus bill that he had pushed in the past. It was also reported that House Speaker Pelosi and Secretary Mnuchin continue to discuss potential deals though nothing remains likely to pass in the short term. This is especially true after Senate Majority leader McConnell said that his planned $500 billion bill is “appropriate” and rejected calls for higher levels of funding. Markets took this in its stride, but if Democrats do win the White House but are unable to take back the Senate it may call into question just how much stimulus could be passed in the next 6 months and beyond. Meanwhile, Treasury Secretary Mnuchin has told Pelosi overnight that President Trump will personally lobby to get reluctant Senate Republicans behind any stimulus deal they reach.

Asian markets are largely trading lower this morning outside of the Hang Seng (+0.78%) which is up. The Nikkei (-0.26%), Shanghai Comp (-0.28%), Kospi ( -0.85%) and Asx (-0.41%) are all down. Meanwhile, European futures are pointing to a positive open after the late US rally with those on the Stoxx 50 (+0.60%), FTSE 100 (+0.72%) and Dax (+0.59%) all up. Across the other side of Atlantic, S&P 500 futures are trading broadly flat while those on Nasdaq are down -0.16%. Elsewhere, crude oil prices are down c. -1%.

Brexit was back in the headlines yesterday, as EU leaders agreed at their summit to continue negotiations with the UK over the coming weeks, calling on the UK to “make the necessary moves to make an agreement possible.” The UK’s chief negotiator Frost said he was “surprised by suggestion that to get an agreement all future moves must come from U.K. It’s an unusual approach to conducting a negotiation.” The UK have said they’ll set out their next steps following the Council, so we await to see what’s said and whether they decide to continue negotiating or more likely on what terms. Prime Minister Johnson is planning a statement later today.

Over in sovereign bond markets, southern Europe saw a noticeable selloff yesterday, in line with the broader risk-off move elsewhere. Italian debt saw its remarkable rally come to an end, as 10yr yields came off their record low the previous day to close +4.0bps, while Greek (+5.5bps) and Spanish (+1.4bps) yields also rose. With risk assets rallying back towards flat in the US, core countries diverged with 10yr bund yields down -2.9bps at -0.61%, their lowest level since March, as US Treasuries saw a +0.7bps move to 0.732%. Other safe havens made gains yesterday, with the US dollar index up (+0.51%) for the third day this week, while gold prices were up +0.38% to finish over $1900/oz.

In the US, the latest weekly initial jobless claims for the week through October 10 showed an unexpected uptick to 898k (vs. 825k expected), which was its highest level in 7 weeks. The reading will only add to concerns that the labour market recovery is running out of steam, not least with the lack of further stimulus and fresh rises in the number of Covid cases. Otherwise, the Empire State manufacturing survey fell to 10.5 (vs. 14 expected), while the Philadelphia Fed’s business outlook survey rose to 32.3 (vs. 14.8 expected) - the highest since February.

To the day ahead now, and the data releases out from the US include September’s retail sales, industrial production and capacity utilisation, as well as the preliminary University of Michigan sentiment indicator for October. In the Euro Area, there’ll also be the trade balance for August and the final CPI reading for September. Otherwise, central bank speakers include the Fed’s Williams and Bullard, and earnings releases include Honeywell International and BNY Mellon. Finally, the European Council will conclude.

Published:10/16/2020 6:52:41 AM
[Markets] Banks, Big-Tech, & Black Gold Bust As Bitcoin & Bond Yields Bounce Banks, Big-Tech, & Black Gold Bust As Bitcoin & Bond Yields Bounce Tyler Durden Thu, 10/15/2020 - 16:00

A 3rd day lower in a row for big-tech-heavy Nasdaq...

US equity markets tumbled overnight on the back of reaccelerating COVID cases and the concomitant lockdowns across Europe. Once the US cash markets opened, we were off to the races with Small Caps and Trannies ramped back into the green (and Dow & S&P tried their best). Nasdaq underperformed again...

On the week, thanks to today's buying panic during the day, S&P and Small Caps managed to scramble back into the green (Dow is red on the week while Nasdaq is holding gains for now, ahead of tomorrow's op-ex)...

Today's rampage was all about squeezing the shorts once again...

Source: Bloomberg

Notably, Nasdaq scrambled back above its Zero Gamma level (289 for QQQ) ahead of tomorrow's significant op-ex shift...

After the early week outperformance, Nasdaq has given back a lot of its gains against Small Caps into today;s close...

Europe had a bad day...

Source: Bloomberg

After an ugly week, things didn't get much better today for banks with Goldman actually erasing all its gains and Wells unable to mount any rebound...

Source: Bloomberg

Cyclicals were rallied back to unch...

Source: Bloomberg

Momo was weak today as value rallied...

Source: Bloomberg

Treasury yields ended the day modestly higher, with bonds sold from the US open as stocks rallied...

Source: Bloomberg

10Y Yields ended higher by around 1bps...

Source: Bloomberg

Cable was weak once again as UK-EU talks broke down...

Source: Bloomberg

And that helped lift the dollar...

Source: Bloomberg

A seriously chaotic day in black gold today with WTI dumped and pumped but ending lower...

Gold rallied on the day, with futures back above $1900...

And Silver futures found support at $24 once again...

 

Finally, liquidity in the US equity markets is plunging once again...

Source: Bloomberg

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