Archives of “December 2020” month

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China’s digital currency

  
  Analysis

How is a digital yuan shaping up to be

Royal
In China, nearly 86% of payments are now digital, occurring mostly via mobile phones. The whole transaction happens with a click of a button, a fingerprint scan, or even using facial recognition. The digital Yuan is not a cryptocurrency, instead it is issued and managed by the Chinese central bank just like its fiat currency.

China’s Early Adopters

Still in its early stages and trials, the digital currency has one reason to exist, to create a cashless future. The difference between the digital currency and current electronic payments is that this currency will be directly transferred in or out of your electronic banking wallet, unlike the traditional e-banking system where an individual’s funds get deducted from his/her account value. On another note, a digital currency does not need to have paper banknotes to back up its true “theoretical” value, however a digital Yuan will be virtually created.

Economic Impact (more…)

Germany December ZEW survey current situation -66.5 vs -66.0 expected

  
  Analysis

latest data released by ZEW – 8 December 2020

  • Prior -64.3
  • Expectations 55.0 vs 46.0 expected
  • Prior 39.0
  • Eurozone expectations 54.4
  • Prior 32.8

The jump in the expectations component is what stands out in the report here as ZEW notes that the announcement of imminent vaccine approvals has made market experts more confident about the future outlook.

Once again, this feeds into the narrative that the market continues to be largely more forward looking and that will dictate sentiment in risk trades in the big picture.

Japan Q3 final GDP q/q annualized +22.9% vs +21.4% expected

  
Analysis, Economy

Japan’s third look at Q3 GDP

  • Prelim reading was +21.4% q/q annualized
  • Prior was -28.1%
  • GDP sa +5.3% q/q vs. expected 5.0%, prior -7.9%
  • GDP nominal +5.5% q/q vs. expected 5.2%, prior -7.6%
  • GDP deflator (an inflation indication) % vs. expected 1.1%, prior 1.3%
  • Private consumption +5.1% vs. expected 4.7% q/q, prior -7.9%
  • Business spending -2.4% vs. expected -3.1%, prior -4.7%
  • Inventories cut 0.2 pp from GDP
This is a decent upgrade and a solid surprise.

Japanese October household spending +1.9% y/y vs +2.8% expected

  
Analysis, Economy

Japanese spending and earnings report

Japanese October household spending
  • Prior was -10.2%
  • Spending +2.1% m/m vs +1.0% exp
Labor cash earnings -0.8% y/y

  • expected -0.7% y/y, prior -0.9%

Real cash earnings -0.2% y/y

  • expected -0.4% y/y, prior -1.1%

The headline spending numbers are a bit softer than hoped for but this is the first y/y rise in 13 months.

With Japan set to unveil another stimulus package, it’s all blue sky from here.

Dec Japan Reuters Tankan manufacturing -9 vs -13 prior

  
Analysis, Economy

The Reuters Japan December survey

  • Best reading in 10 months
  • Prior was -13
  • Non-manufacturing -4
  • Prior non-manufacturing -13
Looking at the future indexes. The manufacturing Marc 2021 index was at -5 and non-manufacturing at -4.
These are good numbers and highlight the continuing recovery in Japan. Manufacturing was around -5 before the pandemic so we’re almost square. Non-manufacturing was at +15 pre-pandemic so it has a bit more work to do.
Dec Japan Reuters Tankan manufacturing
Today’s fresh round of stimulus will likely add to the upbeat mood.

US passed on opportunity to buy more Pfizer vaccine doses, may now have to wait until June

  
Analysis, COVID-19

Longer timeline for US vaccines hurts equity futures

Longer timeline for US vaccines hurts equity futures
The US purchased enough of the Pfizer vaccine to protect 50 million Americans but declined to buy even more doses in June, according to the NYT.
That means the country will move to the back of the line as it works to get enough for the entire country.
Ultimately, that may not matter because other vaccine candidate could be enough to vaccinate the rest of the country.
“We are confident that we will have 100 million doses of Pfizer’s vaccine as agreed to in our contract, and beyond that, we have five other vaccine candidates,” a spokeswoman for the Department of Health and Human Services said.
In a sign that the US may be scrambling for more, Trump tomorrow plans on Tuesday to sign an executive order “to ensure that United States government prioritizes getting the vaccine to American citizens before sending it to other nations.”
It’s not clear if that order carries any legal power.
A Fox report earlier today the vaccine could be authorized by the FDA as early as Friday.
In terms of the economics, 50m vaccines won’t be enough to achieve herd immunity though it will certainly protect many of the most-vulnerable. If the US can’t procure more doses before June — as this report says — it could potentially push back the timeline for a full reopening.
In markets, US equity futures are down 0.5%, likely as a result of this.

Dow closes lower for the 1st time in 5 days. NASDAQ record close

  
Analysis, US Market

S&P moves lower and snaps 2 day win streak

The US stock market is ending the session with mixed results. While the NASDAQ index closed at yet another record high. The Dow industrial average snapped a 4 day win streak. The S&P close lower.

A snapshot of the major indices shows:
  • S&P index fell 7.16 points or -0.19% to 3691.96. The high reached 3697.41. The low extended to 3678.88. The high today fell short of the all-time intraday high reached on Friday at 3699.20
  • NASDAQ index rose 55.713 points or 0.45% to 12519.94.  It was a record close for the index. The high reached 12536.22.  That was a new all time intraday high price.
  • The Dow industrial average fell 148.47 points or -0.49% to 30069.79. It’s high reached 30233.03. The low extended to 29967.22.  The high today was a new all-time intraday high
Some winners today included:
  • Palantir, up 21.59%
  • US steel, +11.92%
  • Tesla, +7.16%
  • Corsair, +5.47%
  • American Airlines, +4.88%
  • Nio ADR, +4.77%
  • Rite Aid, +3.91%
  • Netflix, +3.51%
  • Whirlpool, +2.62%
  • Boeing, +2.26%
  • Pfizer, +2.23%
  • Broadcom, +2.19%
  • Square, +2.11%
Losers today included:
  • Intel, -3.40%
  • Goodrx, -3.03%
  • Rackspace, -2.92%
  • Chevron, -2.69%
  • Walgreen boots, -2.28%
  • Intuitive Surgical -2.06%
  • Northrop Grumman, -2.04%
  • Beyond Meat, -2.01%
  • Marriott, -1.98%
  • Chubb, -1.98%
  • IBM, -1.95%
  • Uber, -1.93%
  • General Dynamics, -1.92%
  • Caterpillar, -1.89%
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