Archives of “November 17, 2020” day

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Atlanta Fed GDPNow estimate for 4Q rises to 5.4%

  
  Analysis

Big jump in Atlanta Fed GDP estimate from 3.5% last

The Atlanta Fed GDPNow estimate for 4Q rose to 5.4% from 3.5% last.
In their own words:

The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the fourth quarter of 2020 is 5.4 percent on November 17, up from 3.5 percent on November 6. After recent data releases from the U.S. Bureau of Labor Statistics, the U.S. Census Bureau, the U.S. Department of the Treasury’s Bureau of the Fiscal Service, and the Federal Reserve Board of Governors, an increase in the nowcast of fourth-quarter real personal consumption expenditures growth from -0.4 percent to 2.6 percent was slightly offset by a decrease in the nowcast of real gross private domestic investment growth from 28.8 percent to 27.4 percent.

The next GDPNow update is Wednesday, November 18. Please see the “Release Dates” tab below for a list of upcoming releases.

Big jump in Atlanta Fed GDP estimate from 3.5% last

European major indices close mixed on the day

  
Analysis, Global Indices

France’s CAC, Italy’s FTSE MIB close higher

The major European indices are ending the day with mixed results. The provisional closes are showing:

  • German DAX, -0.1%
  • France’s CAC, +0.2%
  • UK’s FTSE 100, -0.9%
  • Spain’s Ibex, -0.6%
  • Italy’s FTSE MIB, +0.7%
In other markets as European/London traders look to exit:
  • Spot gold is trading down $2.45 or -0.13% $1886.36.
  • Spot silver is trading down $0.19 or -0.78% at $24.57
  • WTI crude oil futures are trading down $0.36 or -0.87% at $40.98
A snapshot of the US stock market currently shows:
  • S&P index -12 points or -0.34% at 3614.51
  • NASDAQ index -23 points or -0.20% at 11900
  • Dow -165 points or -0.54% to 9786
In the US in the US debt market, yields remain lower with a flatter yield curve:
US yields lower
In the forex, the GBP remains the strongest of the majors. The AUD has taken over the weakest from the NZD (from the stock market open snapshot).  Overall, the commodity currencies remained the weakest on modest “risk-off” sentiment.  The US dollar remains mixed with gains vs. CAD, AUD and NZD, and declines vs. GBP, EUR, JPY and CHF.

McConnell: Senate still wants to pass more covid aid

  
Analysis, COVID-19

Comment from the Senate majority leader

  • Hopes Congress can reach top line bipartisan agreement on government funding measure by year-end
  • Next few days will show whether Congress can agree on a bipartisan funding package
Politico’s Jake Sherman earlier reported:
There are no conversations right now about another round of Covid relief. None. The White House is silent. The Hill is quiet. That means no new programs, no new money for Americans before the holiday season.

What’s next after the latest dose of vaccine optimism?

  
  Analysis

The market has gotten a look of how things may look like at the end of the pandemic tunnel, but what about the here and now?
European equities are keeping a little softer as US futures are also slightly lower on the session so far, with the exuberance from yesterday starting to show signs of fading.

This is somewhat similar to last week’s price action after the Pfizer news but to a lesser degree, with yesterday’s jump from the Moderna news also less impressive.

SPX
Still, the vaccine optimism in the past week has been great to fuel investor appetite and helped to push the S&P 500 to close at a record high yesterday (⬆).

But is there going to be any solid follow through to that momentum?

The here and now is plagued with negative virus developments as we see high case counts across Europe and the US, prompting tighter restrictions to be implemented.

That is going to take a toll on economic activity in Q4 2020 and possibly Q1 2021, and the market may not quite be pricing in much pessimism on that front.

However, does that really matter when the world is starting to look forward to things becoming normal some time next year (hopefully)?

Investors may not care about the virus situation for now but the longer we go without a vaccine actually being rolled out to the masses, expect there to potentially be more signs of nervousness and shakiness in the market.

But at the same time, if vaccine hurdles continue to be crossed, investors may not care as the future looks inviting and with easy money still present, that could be all that matters.

For now, there is a slight pullback to yesterday’s push higher. The 3,600 level in the S&P 500 will be a key one to watch with the 2 September high closer to 3,588 going to turn into a support level that may define the strength of investor appetite this week.

Break below those levels and there could be a steeper drop to follow in equities/risk. But keep above, and that provides a platform for buyers to start getting greedier.

US futures a little lower ahead of European morning trade

  
Analysis, US Market

A bit of a fizzle once again after the early optimism to start the new week?

SPX

S&P 500 futures are down 0.4% with Dow futures seen down 0.3% ahead of European trading today, with Nasdaq futures keeping more flat for the moment.

It is still early in the day but after closing at record highs yesterday, is there going to be a bit of a fizzle – similar to what we saw after the Pfizer news last week?
The more tepid tones above is keeping major currencies more guarded to start the day with narrower ranges still prevailing. EUR/USD is trading within a 16 pips range between 1.1851 and 1.1867 while USD/JPY is little changed close to 104.50.
For the former, there are large expiries seen @ 1.1850 and 1.1900 today so that could very well keep price action in-check before they roll off later on in the day.
Elsewhere, AUD/USD is little changed with price still holding below near-term resistance closer to 0.7340 and NZD/USD is still tinkering around the 0.6900 handle to start the day.
In other news, just be aware that the S&P 500 is about to get more tech-ish starting from 21 December as Tesla will be joining the index and account for ~1% of the index.
That is likely to lead to a flurry of index rebalancing in the coming days/weeks, with S&P stating that index funds will have to sell about $51 billion worth of shares of companies already in the S&P 500 and use that money to buy Tesla to correctly reflect the index.

Moody’s on the new tripolar world order – widespread credit risks

  
  Analysis

Moody’s says the tripolar world economy is led by China, the EU and the US.

  • will impact trade and supply chains, regulation, tech, and the role of governments.
  • says will be enhanced intraregional trade but this will be partly offset by slowein interregional trade
  • investment and capital flows will be more influenced by politics
This not really a new idea of course. It’ll be interesting to see if the move toward tripolar slows or recedes with the new US administration in place on January 20.

Germany reports 14,419 new coronavirus cases in latest update today

  
Analysis, COVID-19

Another 267 deaths reported, the highest daily total since 22 April

Germany
The daily case count is sitting higher again after the typical Monday low count but if you want to look at the positives, at least it isn’t growing exponentially and settling in the higher range of tens of thousands of cases.
The 267 deaths reported is the highest since 22 April though, bringing the total tally to 12,814 persons, as the number of deaths has steadily increased in recent weeks.
In terms of healthcare capacity, there are 3,436 coronavirus patients requiring intensive care as of yesterday with 6,950 (25%) units still available across the country.
The increase is not quite nearly the doubling as seen a few weeks back but compared to two weeks ago on 2 November, there were 2,243 coronavirus patients requiring intensive care so that is still an increase of nearly 1,200 patients during the period.
German authorities met up yesterday with Merkel saying that “I could have imagined imposing further contact restrictions today, but there was no majority for that”.
Instead, local authorities are planning to decide next week if further restrictions would be needed going into December, although Merkel did acknowledge that case numbers are stabilising in Germany but still “too slowly”.

A US coronavirus economic relief package remains elusive

  
Analysis, COVID-19

Senate Republicans with separate interivews, but similar comments.

Senator Roy Blunt:
  • There seems to be more interest in trying to move a omnibus [government funding] package, and more serious discussion about that, than I’ve heard so far about a COVID package.
Senator Shelby:
  • senate will not be passing gigantic stimulus measure now
  • doubtful a large relief bill would pass later
  • maybe some potential fortargeted measures
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