Market Talk – November 18, 2020

Posted Nov 18, 2020 by Martin Armstrong |

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ASIA:

China has declared Australia must take the blame for “a sharp downturn” in relations between the two countries, with a Foreign Ministry spokesman saying all responsibility is on “some people in Australia (who) tend to regard China’s development as a threat.” Relations between Australia and China have been frosty for years, but the situation deteriorated rapidly after Australian Prime Minister Scott Morrison in April called for an international inquiry into the origins of the coronavirus pandemic.

The Reserve Bank of India (RBI) has set up an Innovation Hub for the financial sector and appointed Senapathy (Kris) Gopalakrishnan, co-founder and former co-chairman of Infosys, as the chairperson of the governing council for the entity. The central bank had said in its August monetary policy that it was going to set up a Reserve Bank Innovation Hub (RBIH) to promote innovation across the financial sector by leveraging on technology and creating an environment that would facilitate and foster innovation.

The major Asian stock markets had a mixed day today:

NIKKEI 225 decreased 286.48 points or -1.10% to 25,728.14
Shanghai increased 7.41 points or 0.22% to 3,347.30
Hang Seng increased 129.20 points or 0.49% to 26,544.29
ASX 200 increased 32.90 points or 0.51% to 6,531.10
Kospi increased 6.49 points or 0.26% to 2,545.64
SENSEX increased 227.34 points or 0.52% to 44,180.05
Nifty50 increased 64.05 points or 0.50% to 12,938.25

The major Asian currency markets had a mixed day today:

AUDUSD increased 0.00062 or 0.08% to 0.73029
NZDUSD increased 0.00311 or 0.45% to 0.69207
USDJPY decreased 0.3 or -0.29% to 103.86
USDCNY increased 0.01422 or 0.22% to 6.56156

Precious Metals:

Gold decreased 8.95 USD/t oz. or -0.48% to 1,869.65
Silver decreased 0.194 USD/t. oz or -0.79%% to 24.273

Some economic news from last night:

Japan:

Adjusted Trade Balance decreased from 0.44T to 0.31T

Exports (YoY) (Oct) increased from -4.9% to -0.2%

Imports (YoY) (Oct) increased from -17.4% to -13.3%

Trade Balance (Oct) increased from 687.8B to 872.9B

Australia:

HIA New Home Sales (MoM) decreased from 3.8% to -1.3%

Wage Price Index (YoY) (Q3) decreased from 1.8% to 1.4%

Wage Price Index (QoQ) (Q3) decreased from 0.2% to 0.1%

MI Leading Index (MoM) decreased from 0.2% to 0.1%

New Zealand:

PPI Input (QoQ) (Q3) increased from -0.9% to 0.6%

PPI Output (QoQ) (Q3) remain the same at -0.3%

EUROPE/EMEA:

The United Kingdom will ban the sale of new cars that run only on fossil fuels in 2030, a move that is designed to phase out polluting vehicles earlier than any other major economy and support the country’s recovery from the pandemic. The UK government said in a statement Wednesday that it would end the sale of new gasoline and diesel cars and vans five years earlier than previously planned, putting it on course to be the first G7 country to decarbonize road transport. Sales of new hybrid vehicles will be allowed to continue until 2035.

The major Europe stock markets had a green day today:

CAC 40 increased 28.45 points or 0.52% to 5,511.45
FTSE 100 increased 19.91 points, or 0.31% to 6,385.24
DAX 30 increased 68.42 points or 0.52% to 13,201.89

The major Europe currency markets had a mixed day today:

EURUSD decreased 0.00121 or -0.10% to 1.18513
GBPUSD increased 0.00048 or 0.04% to 1.32658
USDCHF increased 0.00013 or 0.01% to 0.91145

Some economic news from Europe today:

UK:

Car Registration (YoY) (Oct) increased from -4.4% to -1.6%

Car Registration (MoM) (Oct) decreased from 276.1% to -57.0%

Core CPI MoM (MoM) (Oct) decreased from 0.6% to 0.2%

Core CPI (YoY) (Oct) increased from 1.3% to 1.5%

Core PPI Output (MoM) (Oct) increased from 0.1% to 0.2%

Core PPI Output (YoY) (Oct) increased from 0.1% to 0.5%

Core PPI Output (YoY) (Oct) decreased from 0.3% to 0.0%

Core RPI (YoY) (Oct) increased from 1.4% to 1.5%

CPI (MoM) (Oct) decreased from 0.4% to 0.0%

CPI (YoY) (Oct) increased from 0.5% to 0.7%

CPI, n.s.a (Oct) remain the same at 109.10

PPI Input (YoY) (Oct) increased from -2.2% to -1.3%

PPI Input (MoM) (Oct) decreased from 0.3% to 0.2%

PPI Output (YoY) (Oct) increased from -1.6% to -1.4%

PPI Output (MoM) (Oct) increased from -0.1% to 0.0%

RPI (YoY) (Oct) increased from 1.1% to 1.3%

RPI (MoM) (Oct) decreased from 0.3% to 0.0%

Italy:

Italian Car Registration (MoM) (Oct) decreased from 75.8% to 0.5%

Italian Car Registration (YoY) (Oct) decreased from 9.5% to -0.2%

Germany:

German Car Registration (MoM) (Oct) decreased from 5.6% to 3.4%

German Car Registration (YoY) (Oct) decreased from 8.4% to -3.6%

France:

French Car Registration (YoY) (Oct) decreased from -3.0% to -9.5%

French Car Registration (MoM) (Oct) decreased from 62.4% to 1.6%

Euro Zone:

Core CPI (YoY) (Oct) remain the same at 0.2%

Core CPI (MoM) (Oct) remain the same at 0.1%

CPI (YoY) (Oct) remain the same at -0.3%

CPI (MoM) (Oct) increased from 0.1% to 0.2%

CPI ex Tobacco (YoY) (Oct) increased from -0.5% to -0.4%

CPI ex Tobacco (MoM) (Oct) increased from 0.1% to 0.2%

HICP ex Energy & Food (YoY) (Oct) remain the same at 0.4%

HICP ex Energy and Food (MoM) (Oct) remain the same at 0.1%

US/AMERICAS:

Pfizer and BioNtech released detailed promising information about their coronavirus vaccine –BNT162b2. Patients tested with the vaccination were highly likely to ward off the coronavirus after 28 days of the first dosage. They also said that the drug’s effectiveness spans across all races, ethnicities, and ages, including the elderly who are in the highest risk group. They did note that the vaccine may be accompanied by “mild side effects” but now claim it is 94% effective against warding off the virus. The biopharmaceutical companies plan to release their findings to the Food and Drug Administration (FDA) “within days” to give it to the public immediately.

The FDA announced that they plan to meet December 8-10 to discuss coronavirus vaccinations. Pfizer/BioNTech have already recieved FDA approval, and Moderna is expected to pass the test as well. A branch called the Vaccines and Related Biological Products Advisory Committee (VRBPAC) will decide on how to proceed with the vaccination process. Afterward, the Center for Disease Control (CDC) will meet to discuss implemtation and prioritazation to determine who will recieve the vaccines and when.

Bill Gates, who appeared with Pfizer’s CEO on Tuesday, said he anticipates a new world post-pandemic even with a vaccine in place. Gates told the New York Times that he predicts business travel will decline by 50% and working non-remotely will decline 30%. “Just like World War II brought women into the workforce and a lot of that stayed, this idea of, ‘Do I need to go there physically?’ We’re now allowed to ask that,” Gates told reporters in a separate interview. Furthermore, Gates predicts that social interactions will dramatically change as people will begin to spend more time within their communities than at work or with colleagues. Gates also believes real estate will change significantly due to remote working, as people will no longer pay to live in expensive cities since they will not be tied to a physical office.

Boeing’s 737 MAX jet was finally approved to fly from the US Federal Aviation Administration (FAA). The FAA ordered the company to implement advanced training and upgrade their software to ensure that the plane is safe for flight. The 737 Max jet was prohibited from flying after two crashes occured within five months of one another and claimed the lives of 346. According to Reuters, Boeing lose $20 billion due to the ordeal. Although the jet is now approved for flight, many airlines are concerned that travelers will not want to board that model aircraft and are implementing options for travelers.

US Market Closings:

Dow declined 344.93 points or -1.16% to 29,438.42
S&P 500 declined 41.74 points or -1.16% to 3,567.79
Nasdaq declined 97.74 points or -0.82% to 11,801.6
Russell 2000 declined 22.6 points or -1.26% to 1,769.32

Canada Market Closings:

TSX Composite declined 58.24 points or -0.34% to 16,889.82
TSX 60 declined 2.9 points or -0.29% to 1,009.38

Brazil Market Closing:

Bovespa declined 1,129.54 points or -1.05% to 106,119.09

ENERGY:

The oil markets had a green day today:

Crude Oil increased 0.23 USD/BBL or 0.56% to 41.6600
Brent increased 0.46 USD/BBL or 1.05% to 44.2100
Natural gas increased 0.02 USD/MMBtu or 0.74% to 2.7120
Gasoline increased 0.0026 USD/GAL or 0.23% to 1.1558
Heating oil increased 0.0246 USD/GAL or 1.99% to 1.2637

Top commodity gainers: Cocoa (2.28%), Coffee (2.97%), Heating Oil (1.99%), and Palm Oil (3.21%)

Top commodity losers: Lumber (-2.15%), Rubber (-5.07%), Bitumen (-1.05%), and Nickel (-1.30%)

The above data was collected around 16:27 EST on Wednesday.

BONDS:

Japan 0.02%(-0bp), US 2’s 0.18% (+0bps), US 10’s 0.87%(+0bps);US 30’s 1.61%(-2bps), Bunds -0.57% (-1bp), France -0.34% (-2bp), Italy 0.62% (+1bp), Turkey 11.82% (-21bp), Greece 0.78% (+10bp), Portugal 0.07% (+2bp), Spain 0.11% (+3bp) and UK Gilts 0.35% (+2bp).