Archives of “August 2020” month

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China repeats that it will take strong countermeasures as it opposes US-Taiwan meeting

  
  Analysis
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US health secretary, Alex Azar, will travel to Taiwan this month

US China
The trip will mark the highest-level visit by a US official to Taiwan since 1979 and marks a further break from convention in US-China ties in general.
China has come out to voice their displeasure over the situation and have now said that they will be taking firm countermeasures in response.
As much as this looks to be another point of escalation in tensions between the US and China, it still isn’t leading to any material breakdown in the relationship as both countries are still willing to play their respective parts in this whole “show”.

 

From what we have seen with these “strong countermeasures” and “tit-for-tat” response by both sides recently, it has all been child’s play and there is no reason to believe that this time around it will be any different.

Nikkei 225 closes lower by 0.43% at 22,418.15

  
Analysis, Global Indices

A softer day for Asian equities

Nikkei 06-08

Asian stocks are on the retreat in trading today as investors continue to weigh up the virus situation globally as well as the stalemate between US lawmakers on a stimulus deal, alongside the more exuberant mood in Wall Street overnight.

The better mood from US equities isn’t quite translating over with the Hang Seng seen down 1.6% while the Shanghai Composite is also down by 0.8% currently.
That said, the mood in US futures are more calm with S&P 500 futures up ~0.1% but off earlier highs in Asia Pacific trading. All eyes will be on Congress and whether or not they can reach a stimulus deal ahead of the weekend, though optimism is slowly fading.
In the currencies space, the dollar is still keeping a little weaker with EUR/USD up to 1.1885 though keeping in a narrower range for the day – only 23 pips up to 1.1900, extending gains following the BOE decision.
USD/JPY is also lower, down to 105.45 but is settling in a 23 pips range in trading thus far.

Full statement of the BOE August monetary policy meeting decision

  
  Analysis
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The full statement by the BOE on its August policy decision

The Bank of England’s Monetary Policy Committee (MPC) sets monetary policy to meet the 2% inflation target, and in a way that helps to sustain growth and employment. In that context, its challenge at present is to respond to the economic and financial impact of the Covid-19 pandemic. At its meeting ending on 4 August 2020, the MPC voted unanimously to maintain Bank Rate at 0.1%. The Committee voted unanimously for the Bank of England to continue with its existing programmes of UK government bond and sterling non-financial investment-grade corporate bond purchases, financed by the issuance of central bank reserves, maintaining the target for the total stock of these purchases at £745 billion.

The Committee’s projections for activity and inflation are set out in the accompanying August Monetary Policy Report. Although recent developments suggest a less weak starting point for the Committee’s latest projections, it is unclear how informative they are about how the economy will perform further out. The outlook for the UK and global economies remains unusually uncertain. It will depend critically on the evolution of the pandemic, measures taken to protect public health, and how governments, households and businesses respond to these factors. The MPC’s projections assume that the direct impact of Covid-19 on the economy dissipates gradually over the forecast period. Given the inherent uncertainties regarding the evolution of the pandemic, the MPC’s medium-term projections are a less informative guide than usual.

Global activity has strengthened over recent months, although it generally remains below its level in 2019 Q4. Covid-19 has continued to spread rapidly within a number of emerging market economies, however, and there has been a renewed rise in cases in many advanced economies. (more…)

BOE leaves bank rate unchanged at 0.10%

  
Analysis, Economy

BOE announces its latest monetary policy decision – 6 August 2020

  • Prior 0.10%
  • Bank rate votes 0-0-9 vs 0-0-9 expected
  • Asset purchase program total £745 billion
  • Will continue to minor the situation closely
  • Stands ready to adjust monetary policy accordingly
  • UK GDP expected to have been over 20% lower in Q2 2020 than Q4 2019
  • Higher frequency indicators imply that spending has recovered significantly
  • Projections assume that direct impact of the virus will dissipate gradually
  • Housing market activity appears to have returned to close to normal levels
  • Doesn’t intend to tighten policy until there is clear evidence that significant progress is being made in eliminating spare capacity and 2% inflation is sustained
  • Risks to the outlook are judged to be skewed to the downside
  • Sees UK GDP at -9.5% in 2020 (previously -14%)
  • Sees UK GDP at +9% in 2021 (previously +15%)
  • Sees UK GDP at +3.5% in 2022 (previously +3%)
  • Sees UK CPI at 0.25% in 2020 (previously 0.60%)
  • Sees UK CPI at 1.75% in 2021 (previously 0.50%)
  • Sees UK CPI at 2.00% in 2022 (previously 2.00%)
There are positives and negatives to take away but on the balance of things, it is more skewed to the former by the slightest bit. But in terms of key policy decisions, nothing has really changed as the BOE reaffirms their commitment to support the economic recovery.
In terms of positives, they are seeing that the economic downturn isn’t as severe – the language and current year projection show that – and that is something for bulls to chew on. In terms of negatives, it’s mostly on the inflation narrative over the next few months.
However, policymakers still see a modest recovery in inflation next year so that’s another positive takeaway but for now, it means more accommodative policy will stay for longer.
On the issue of negative rates, they side-stepped that by saying that they have other instruments to tweak such as asset purchases and forward guidance for now.
The pound is rising to fresh session highs against the dollar following the decision, with cable up to 1.3180 from around 1.3130 before the announcement.

Amazon’s Bezos sold $1.9 billion of his shares …. yours!

  
  Analysis
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Reuters with the report on stock sales by Amazon head and founder Jeff Bezos.

  • During the first two working days of August, Bezos sold over 600,000 shares
  • part of a previously announced trading plan
Bezos now only has 54.9 million shares left (roughly $176 billion). I know you’ll join me in sending thoughts and prayers. 😀
Reuters with the report on stock sales by Amazon head and founder Jeff Bezos.

Fauci says its likely there will be tens of million of vaccine doses by the end of this year

  
  Analysis
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US infectious diseases expert Fauci speaking in an interview with Reuters

Expects a safe and effective vaccine will have received approval by the end of 2020
  • says there is a middle ground where the country can prudently open amid the coronavirus
  • says some sections of the country have done well but other parts are on fire
  • says he does expect a safe and effective vaccine to receive approval by year end
  • says manufacturers say a billion doses of vaccine will be available by the end of 2021
  • we will likely have tens of millions of doses of vaccine by the end of this year
  • he would be satisfied by a trial that included thousands of people and showed no signs of unexpected severe adverse events
  • he has not seen any indication of pressure from white house on vaccine
  •  says regulatory authorities have promised that safety and efficacy of vaccine will be paramount concern

US infectious diseases expert Fauci speaking in an interview with Reuters 

NASDAQ closes at a record close for the 31st time in 2020

  
Analysis, US Market
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The NASDAQ Stock Market. Known as NASDAQ, is an American stock exchange. NASDAQ , #AFFILIATE, #American, #stock, #exchange, #NASDAQ, #Stock #adMajor indices close near session highs

The NASDAQ index is closing at a record high for the 31st time in 2020. The index moved above the 11,000 level for the 1st time ever, but is closing just below that milestone at 10,998.39.

  • The S&P index closes 2% from its all-time high and is up 4 sessions in a row
  • The Dow led the way with a 1.39% gain and also closed higher for the 4th consecutive day
A look at the final numbers shows:
  • S&P index up 21.21 points or 0.64% at 3327.72. The high price reached 3330.77. The low price extended to 3317.37
  • NASDAQ index closed up 57.23 points or 0.52% at 10998.39. It’s high price reached 11002.11. The low price extended to 10943.72
  • The Dow industrial average surged by 372.84 points or 1.39% to 27201.32. The high price reached 27221.67. The low price extended to 26924.78
Disney was the big winner today after they pivoted movie strategy by announcing they would release the movie Mulan on their Disney+ channel on September 4 at a one-time price of $30 to subscribers.
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