Archives of “October 27, 2020” day

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Supreme Court ruling and Trump’s latest comments highlight contested election risk

  
  Analysis

Supreme Court rules that main-in votes received after the deadline won’t count

Supreme Court rules that main-in votes received after the deadline won't count
The US Supreme Court ruled late yesterday on what could be a decisive factor in the US election. They said the mail-in votes post-marked on or before the election wouldn’t count if received after Nov 3.
A district court had mandated a six-day extension to retrieve slow-arriving mail but the 5-3 decision along ideological lines rejected that. In writing for the majority, Kavanaugh said that “suspicions of impropriety” will result of “absentee ballots flow in after election day and potentially flip the results of an election.”
Kagan dissented and said there is no result to ‘flip’ until all valid votes are counted and that nothing would be more “suspicious” or “improper” than refusing to tally votes once the clock strike midnight.
In a sign of what could be to come, Trump latched onto the idea today and said:
“It would be very very proper and very nice if a winner were declared on November 3rd, instead of counting ballots for two weeks, which is totally inappropriate and I don’t believe that that’s by our laws. I don’t believe that. So we’ll see what happens.”
If Trump tries to declare an early victory and it ends up in the Supreme Court, today’s decision is a sign of what’s to come.
Even if he’s well-behind on election night or afterwards, the market will be hesitant to move until he concedes. There’s a material risk that he never concedes.

(more…)

European equity’s end the session lower

  
Analysis, Global Indices

Spain’s Ibex falls over 2%

The major European equity indexes are ending the session lower. The biggest decliner is Spain’s Ibex which fell over 2% on the day.

The final numbers are showing:
  • German DAX, -0.93%
  • France’s CAC, -1.77%
  • UK’s FTSE 100, -1.09%
  • Spain’s Ibex, -2.14%
  • Italy’s FTSE MIB, -1.53%
in other markets as London/European traders look to exit:
  • spot gold is trading up $7 or 0.37% $1909.20
  • spot silver is up $0.16 or 0.66% at $24.44
  • WTI crude oil futures are up $0.96 or 2.49% $39.52

EU warns there won’t be enough vaccines for the whole EU population by end-2021

  
  Analysis

That’s depressing

This is a Reuters report, citing sources. It’s not surprising if you have been following the numbers.
It will be a big leap forward if we can get the elderly and healthcare workers vaccinated. I also expect that a large part of the population won’t want the vaccine so all those who want it will probably get it before the end of 2021.
That should get things pretty close to normal.

Pfizer says planning Phase 2/3 study of coronavirus antiviral drug in late 2020, early 2021

  
  Analysis

But the firm says they still plan to apply for emergency use of its coronavirus vaccine in late November, if the data is positive

However, the data monitoring committee has not conducted interim efficacy analysis of the vaccine yet. So, that stands in the way of the firm from applying for emergency-use authorisation approval from the FDA.
As for the headline, that will mark a crucial development phase in the vaccine as we have seen several mishaps already over the past few weeks:

PBOC reportedly asks banks to neutralise counter-cyclical factor in CNY fixing formula

  
  Analysis

Reuters reports on the matter

PBOC
The report says that the PBOC has asked banks to suspend the use of the counter-cyclical factor in its daily yuan midpoint fixing, citing two sources.

 

Adding that the Chinese central bank has requested some of the 14 midpoint contributing banks to submit and “adjust” their models to “better reflect” flexibility in the yuan exchange rate and let the currency become more market-driven.
I think this news is bigger than what the market will take it for.
For some context, the counter-cyclical factor is a tool introduced to stem any unwanted volatility that could lead to undesirable movement – usually weaker – in the yuan.
It was introduced back in May 2017 after USD/CNY appreciated close to 7.00 back then and was removed at the start of 2018 when it helped to drive the pair lower.
It was then brought back in August 2018 when the pair quickly appreciated back towards 7.00 and has stuck ever since.
I may be reading this a bit wrong but the suspension of the counter-cyclical factor could end up working both ways.
If that is the case, then it sure looks like a signal that the PBOC is hinting that the 6% drop in USD/CNY since the end of May is enough for now.

Spain says that it will raise corporate, wealth taxes

  
  Analysis

Spanish deputy prime minister, Pablo Iglesias, remarks

That will certainly not go down well with large Spanish firms, amid the hit taken from the virus pandemic already. Just a reminder that spending is but a reflection of tax timings, and many countries will also follow to increase taxes in the next 5-10 years because someone has to be paying for all the fiscal measures in place.

Germany’s Altmaier says will likely see 20,000 new daily virus cases at the end of the week

  
  Analysis

Comments by German economy minister, Peter Altmaier

  • Number of new infections in Germany is growing exponentially
After the typical ‘Monday effect’, Germany reported another 11,409 new cases in the past 24 hours and that marks a fifth day out of six that cases breached the 10,000 mark.
It was reported yesterday that Merkel is planning to introduce ‘lockdown light’ to curb the spread of infections and even if schools will stay open, the prospect of bars and restaurants being closed will surely weigh heavily on economic conditions.

Nickel and Copper set to gain on electric vehicle surge

  
  Analysis

Commodities set to gain on green car shift

Commodities set to gain on green car shift

The rise of electric vehicles is gaining pace with more and more vehicles available and a growing infrastructure to support them. According to Morgan Stanley electric-car sales are seen to boost Nickel the most of all the commodities used in producing an electric vehicle. Here is a rundown of how they see this panning out:

Electric vehicles represent a new demand factor for Nickel which is only set to grow. They anticipate an exponential growth over the next 5-10 years from present levels of around 3%. Morgan Stanley expect a growing deficit after ‘years of underinvestment’ in new mine output, which should help support prices.

Cobalt to lose favour

Over time Cobalt is going to be filtered out of Electric vehicles batteries over the next decade in preference to Nickel. The demand for cobalt is expected to reach 71 kt by 2025 and then to drop  down to 60kt by 2030.

Copper should gain

Electric Vehicles are thought to account for 9.4% of copper demand by 2030 compared with the current level of 2.4%.

Manganese set to benefit from Tesla demand

Tesla’s new manganese rich batteries are set to drive demand for manganese too.

So, over the medium to longer term there is upside pressure for copper, Nickel and Manganese

15 Trading Lessons from the The Big Short

  
Analysis, Education
  1. The Big ShortIt’s possible to be right about a market move, but your timing can be too early.
  2. If you trade too big, you can lose all your capital before you have the time to be proven right.
  3. AAA agency ratings are more to make their clients who sell bonds happy than to protect investors.
  4. In markets that are not liquid, you can get in trouble by being right but your assets not reflecting it with a big move.
  5. When there is no risk of ruin to bankers and mortgage brokers they will risk the ruin of their companies and the world economy in pursuit of quick and easy money.
  6. When there is little ‘skin in the game’ bankers and mortgage brokers take risks that they are not held accountable for.
  7. Macro traders have to be able to take a lot of heat and losses on their positions before they are right.
  8. Hedge fund investors want consistent returns on their money and not drawdowns. They are quick to pull their money out during a losing streak.
  9. You want to have a large risk/reward ratio on your trades. Betting $1 for a chance to make $20 is a good trade.
  10. There is a lot of fraud in the financial world.
  11. Financial fraud is almost never prosecuted in the banking world.
  12. The SEC has little oversight in the banking industry.
  13. Bailouts can cause you to lose on a trade you would have made money on.
  14. You have to take your profits off the table while they are available.
  15. “Whenever you find yourself on the side of the majority, it is time to pause and reflect.” – Mark Twain
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