Archives of “December 2020” month

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Nikkei 225 closes higher by 0.18% at 26,806.67

  
Analysis, Global Indices

Asian equities keep higher after the Fed yesterday

Nikkei 17-12
Modest gains for Japanese stocks, with the rest of the region seeing a similar mood. The Hang Seng is up 0.3% while the Shanghai Composite is up 0.8%.
Elsewhere, US futures are up by ~0.3% as we look towards European trading with Nasdaq futures near record highs. US stimulus talks are dragging on but the market is keeping hope of a more optimistic outcome for the time being.

 

In the currencies space, the dollar is the weakest performer following the Fed decision yesterday – which mainly reaffirmed the status quo in the market.

US FDA welcomes extra doses of Pfizer COVID-19 vaccine, sees potential 40% boost to supply

  
  Analysis

US Food and Drug Administration:

 

  • says Pfizer vaccine vials hold extra doses, expanding supply
  • says “given the public health emergency, FDA is advising that it is acceptable to use every full dose obtainable”
  • pharmacists have found a way to squeeze extra doses out of vials of Pfizer’s vaccine, potentially expanding nation’s scarce supply by up to 40%

 

Report from Politico, via Reuters

Fundamental valuation of Bitcoin is USD 400,000

  
Analysis, BITCOIN

Guggenheim Global Chief Investment Officer Scott Minerd comments on Wednesday in a Bloomberg interview

(Scott Minerd is the chief investment officer for $5.3bn Guggenheim Macro Opportunities Fund)
  • says his team’s fundamental work suggests Bitcoin should be worth $400K
  • “It’s based on the scarcity and relative valuation such as things like gold as a percentage of GDP. So you know, Bitcoin actually has a lot of the attributes of gold and at the same time has an unusual value in terms of transactions.”
Its no secret the fund likes BTC, this from about 3 weeks agaio:
  • A Guggenheim fund may invest up to 10% of assets in bitcoin
BTC has been on a roll, fresh highs Wednesday US time:
  • Bitcoin breaks above $20,000 for the first time ever.
And, its gone higher since:
Guggenheim Global Chief Investment Officer Scott Minerd comments on Wednesday in a Bloomberg interview

FOMC statement: Will continue pace of bond buys until ‘substantial’ progress on goals

  
  Analysis

Highlights of the December 16, 2020 FOMC statement

FOMC in better times
  • No change in weighted average maturity of portfolio
  • Rates left unchanged at 0.00%-0.25%
  • Interest on excess reserves % vs +0.10% expected
  • Repeats that “committed to using its full range of tools to support the U.S. economy”
  • Will continue to buy $80B/month in Treasuries and $40B/month in MBS
  • Will continue bond buys “until substantial further progress has been made toward the Committee’s maximum employment and price stability goals.”
  • Repeats that “The ongoing public health crisis will continue to weigh on economic activity, employment, and inflation in the near term, and poses considerable risks to the economic outlook over the medium term”
  • Dot plot at end of 2023 remains at zero.
  • Full text
What’s new is the guidance about when the Fed will start to taper QE. We’re left with the question of what is ‘substantial progress’? You would have to think that’s a couple points lower in unemployment and a continued rise in inflation. Clearly, it leaves the Fed plenty of wiggle room.
The Fed set up the sequencing here saying it will taper after “substantial progress” but will keep policy “accommodative” until they “achieve inflation moderately above 2 percent for some time.”

FOMC statement from the December 16 rate meeting

  
  Analysis

No change in rates

The Federal Reserve is committed to using its full range of tools to support the U.S. economy in this challenging time, thereby promoting its maximum employment and price stability goals.

The COVID-19 pandemic is causing tremendous human and economic hardship across the United States and around the world. Economic activity and employment have continued to recover but remain well below their levels at the beginning of the year. Weaker demand and earlier declines in oil prices have been holding down consumer price inflation. Overall financial conditions remain accommodative, in part reflecting policy measures to support the economy and the flow of credit to U.S. households and businesses.

The path of the economy will depend significantly on the course of the virus. The ongoing public health crisis will continue to weigh on economic activity, employment, and inflation in the near term, and poses considerable risks to the economic outlook over the medium term.

The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. With inflation running persistently below this longer-run goal, the Committee will aim to achieve inflation moderately above 2 percent for some time so that inflation averages 2 percent over time and longer-term inflation expectations remain well anchored at 2 percent. The Committee expects to maintain an accommodative stance of monetary policy until these outcomes are achieved. The Committee decided to keep the target range for the federal funds rate at 0 to 1/4 percent and expects it will be appropriate to maintain this target range until labor market conditions have reached levels consistent with the Committee’s assessments of maximum employment and inflation has risen to 2 percent and is on track to moderately exceed 2 percent for some time. In addition, the Federal Reserve will continue to increase its holdings of Treasury securities by at least $80 billion per month and of agency mortgage-backed securities by at least $40 billion per month until substantial further progress has been made toward the Committee’s maximum employment and price stability goals. These asset purchases help foster smooth market functioning and accommodative financial conditions, thereby supporting the flow of credit to households and businesses. (more…)

Downside for cable may be limited to 1.25, upside limited to 1.36

  
Analysis, Forex

Commentary on sterling via Scoita, leading off with a very fair observation indeed:

  • The outlook for GBP remains fluid, with the precise trade framework which will govern the UK’s trade relationship with the EU after Brexit at the end of the month still to be determined. 
Yep.
Further (bolding mine):
  • It remains unclear whether a trade deal can be reached, however. 
  • No deal will be negative for the GBP—and the EUR, to an extent—while a last-minute agreement will leave both sides of The Channel under-prepared for the new regime. 
  • We expect any early year EUR softness to remain relatively contained. And we also feel that a lot of bad news is already factored into the GBP, tilting medium-term risks towards the topside and suggesting shorter-term weakness may be limited to the 1.25/1.27 area.
‘Limited’ to 1.25 (even 1.27) …. I’ll take that!
A separate analysis from the bank:
  • Brexit negotiations … a fully-fledged trade compact with Europe and a settlement on the status of Northern Ireland are likely to remain pending agenda items into 2021 even if initial deals are concluded before the holidays. 
  • dim view of the UK’s prospects is compounded by Westminster’s uneven response to the COVID-19 pandemic
  • “We believe the GBP is gearing up for a sharp decline toward or below the 1.30 mark upon a final announcement that trade discussions have concluded without a deal; upside remains limited (1.36) given the still-low odds of a deal.”
Commentary on sterling via Scoita, leading off with a very fair observation indeed:

Mixed ending for the major US indices today

  
Analysis, US Market

Dow lags. S&P up marginally. Nasdaq closes at record highs

The major US indices are ending the session with mixed results. The Dow was the laggard and declined. The S&P is closing more or less near unchanged. The NASDAQ index is closing higher.  In fact the NASDAQ close at a record high today.
The final numbers are showing:
  • S&P index up 6.55 points or 0.18% to 3701.17. The high price reached 3711.27. The low price extended to 3688.57
  • Nasdaq index rose 63.128 points or 0.5% to 12658.18. The high price reached 12687.32. The low extended to 12566.38
  • Dow fell 44.77 points or -0.15% to 30154.54. The high price reached 30236.03. The low price extended to 30080.11
Some winners today included:
  • Airbnb, +10.62%
  • Corsair, +6.4%
  • Chipotle, +4.14%
  • Paypal, +3.89%
  • US steel, +3.35%
  • Chewy, +3.34%
  • Box, +3.17%
  • Square, +3.17%
  • Exxon Mobil, +2.94%
  • FireEye, +2.84%
  • Crowdstrike, +2.78%
  • Nio, +2.69%
  • Alibaba, +2.66%
  • Intuit, +2.5%
  • Microsoft, +2.38%
Some losers today included:
  • Rite Aid, -6.71%
  • United Airlines, -3.10%
  • Alcoa, -2.66%
  • Pfizer, -2.25%
  • Walgreens, -2.15%
  • Corning, -2.08%
  • Palantir, -1.97%
  • Delta Air Lines, -1.84%
  • Honeywell, -1.83%
  • General Electric -1.71%
  • Tesla, -1.68%
  • Boeing, -1.63%
  • Southwest air, -1.49%
  • GoodRX, -1.46%
  • Emerson, -1.42%
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