Archives of “December 15, 2020” day

rss

EU publishes sweeping rules for tech giants

  
  Analysis

Face fines up to 10%/Breakup

The EU has published sweeping rules for tech giants saying:
  • tech giants could face hefty fines, breakups
  • fines could be up to 10% of annual global revenue for noncompliance
  • beekeeper platforms banned from unfair practices
  • tech platforms need to remove illegal content under EU rules
The NASDAQ index is trading up 95 points at the time of the release. The index is now up 102 points or 0.82% 12542.84

The Bank of Canada’s last rate statement

  
  Analysis

What did we learn?

In the latest Bank of Canada statement they kept interest rates unchanged at 0.25% and their QE program unaltered too at $4 billion per week. The Bank of Canada recognised that the recovery was well underway and will adjust its QE purchases as required to help bring inflation back on target.

Future projections

In terms of future projections the Bank of Canada is following the Federal Reserve and the Reserve Bank of Australia with no interest rates hikes seen until 2023.

The Bank of Canada recognised that economic momentum heading into the fourth quarter appears to be stronger than was expected in October but, in recent weeks, record high cases of COVID-19 in many parts of Canada are forcing re-impositions of restrictions. The Bank of Canada is expecting that to drag growth lower for the first quarter of 2021. The Bank of Canada is expecting a delay in the recovery as the vaccine takes time to roll out. All in all it was a holding statement and there was nothing obviously actionable from it.

You can read the full statement here

World Health Organisation hedges their portfolio

  
Analysis, COVID-19

Of vaccines

Of vaccines
  • Wants a diversified portfolio of vaccines
  • Making sure to hedge bets
  • WHO’s Aylward looking at expanding manufacturing capacity of monoclonal antibodies for use against COVID-19
  • In talks with Pfizer and Moderna on whether their products can be part of an early roll out of Covax vaccines at prices’s ‘appropriate’ to populations
  • ‘Strong committment’ from Pfizer CEO to make vaccine prices work for lower income countries.

Will the Fed fail to twist?

  
  Analysis

via Bloomberg

I came across an interesting piece on Bloomberg making a case for the Fed not to twist tomorrow. It is as follows:
1. Financial conditions are already at their easiest ever
2. Rate sensitive industries, like housing, are surging. Doing more may trigger a housing bubble
3. Vaccines are on their way, so no sense of urgency.
4. Democrats could still win two seats in the Senate and gain full control of Congress and White House
5. Do nothing now means options are on the table for later.

Gold call-skew recovers

  
  Analysis

Via Bloomberg

Via Bloomberg 
  • highest end of week value since mid-November
  • a stronger positive reading means investors are willing to pay more for calls than puts that have strike prices the same distance away from current prices
  • spot gold 2nd minth volatility rose a third week to end Friday at 16.96%
Gold still holding above its 200DMA. If the Fed twist that should support gold via the weaker dollar and give it a boost into year end and New year seasonal demand.

China November Industrial Production 7.0% y/y (vs. expected 7.0%)

  
Analysis, Economy

Chinese ‘activity’ data for November 2020.

Industrial Production 7.0% y/y

  • expected 7.0%, prior was 6.9%

Industrial Production YTD 2.3% y/y

  • expected 2.3%, prior was 1.8%

Fixed Assets (excluding rural) YTD 2.6% y/y

  • expected 2.6%, prior was 1.8%

Retail Sales 5.0% y/y

  • expected 5.0%, prior was 4.3%

Retail Sales YTD -4.8% y/y …. the only ‘beat’, not as negative as expected

  • expected -4.9%, prior was -5.9%

Huh. All central expectations are bang on the money except for that one tiny beat noted above.

JP Morgan lay out a scenario where demand for bitcoin surges an additional $600bn

  
Analysis, BITCOIN

JPM comments on the crypto, comes via a Bloomberg report, citing a recent $100m investment in Bitcoin by Massachusetts Mutual Life Insurance Co.

JPM say this highlights the potential for additional institutional demand in coming years
  • suggests adoption of Bitcoin is spreading from family offices and wealthy investors to insurance firms and pension funds
Says that even a small allocations toward the cryptocurrency could be significant
  • “MassMutual’s Bitcoin purchases represent another milestone in the Bitcoin adoption by institutional investors”
More from the note:
  • If pension funds, insurance co.s across developed markets (US, eurozone, Japan) allocate 1% of assets to Bitcoin, that would result in additional Bitcoin demand of $600 billion (compared to the current market cap around $356 billion – Bloomberg citing CoinMarketCap.)
JPM add a caveat:
  • these traditional investors face regulatory hurdles relating to risk levels and liability mismatches which would limit their investment into BTC.
JPM comments on the crypto, comes via a Bloomberg report, citing a recent $100m investment in Bitcoin by Massachusetts Mutual Life Insurance Co. 

Rumour is the Bank of Japan will extend its corporate funding program at this week’s meeting

  
  Analysis

That headline comes via Japanese media, Nikkei (which does tend to get a bit of a heads up from time-to-time).

  • BOJ to extend the deadline for financing support measures for companies that support the new coronavirus
  • by about 6 months (currently scheduled to end in March 2021, so a 6 month extension would take it through to September 2021)
  • extension due to increased concerns about a downturn in the economy
Elsewhere, UBS Securities in Tokyo are expecting the BOJ to
  • emphasize policy coordination with the government
  • also an extended program through to September
Sony Financial flags a risk of a rising yen after the meeting, saying markets may perceive the BOJ extension measures as less bold than actions by other major central banks.

—

Bank of Japan monetary policy decision meeting is on the 17th to 18th.
That headline comes via Japanese media, Nikkei (which does tend to get a bit of a heads up from time-to-time).
Go to top