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Coronavirus – Abbott launches a $5 Covid-19 test, 15 min turnaround. No lab required.

  
  Analysis
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This is the Abbott BinaxNOW™ COVID-19 Ag Card test

  • The test delivers results in just 15 minutes
  • no instrumentation required
The firm cite:
  • demonstrated sensitivity of 97.1% and specificity of 98.5% in clinical study
  • Company will ship tens of millions of tests in September, ramping to 50 million tests a month at the beginning of October
Note – not a vaccine, not a cure, not palliative. ‘Just’ a test.
But, rapid testing can enhance detection and subsequent isolation and help inprove the ‘R’ number (get it lower). So it is significant.
ps. This new test has been in the news, so its not a ‘breaking’ development.
This is the Abbott BinaxNOW™ COVID-19 Ag Card test

China reportedly said to expect record amount of US soybean purchases this year

  
  Analysis
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Bloomberg reports, citing people familiar with the matter

The report says that China is said to expect a record amount of US soybean purchases this year as “lower prices help to boost purchases pledged under the Phase One trade deal”.
Adding that the total imports from the US will probably reach about 40 million tonnes in 2020, which will be around 25% more than the 2017 level – the baseline year for the deal.
That said, one of the sources did provide a caveat in saying that despite the forecast and expectation, China’s imports will ultimately be decided by soybean prices and the impact of the virus pandemic i.e. no firm commitment.
I don’t think the report here is a coincidence after customs data yesterday showed that Chinese imports of US soybeans were unusually low in July this year, while imports of Brazil soybeans surged considerably.
For some context, China’s purchases of US farm goods up until July are at just ~27% of the target implied by the Phase One trade deal.
US China

Germany Q2 final GDP -9.7% vs -10.1% q/q prelim

  
Analysis, Economy
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Latest data released by Destatis – 25 August 2020

  • Non-seasonally adjusted GDP -11.3% vs -11.7% y/y prelim
  • Working day adjusted GDP -11.3% vs -11.7% y/y prelim
  • Private consumption -10.9% vs -9.8% q/q expected
  • Prior -3.2%; revised to -2.5%
  • Government spending +1.5% vs +1.5% q/q expected
  • Prior +0.2%; revised to +0.6%
  • Capital investment -7.9% vs -12.2% q/q expected
  • Prior -0.2%; revised to -0.5%
Slight delay in the release by the source. The preliminary report can be found here.
The German economy shrank by slightly less than initially estimated, but it still is the biggest quarterly contraction on record amid the fallout from lockdown measures and the virus outbreak in general from April to June.
There was a heavy drag on consumption/spending but that is largely unsurprising and that contributed to the sharp decline in economic activity seen last quarter.

India is phasing out equipment from Huawei and other Chinese companies from its telecoms networks

  
  Analysis
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The Financial Times with the report on more moves against Huawei.

Main issue seems to be over the China-India border clashes
  • no formal written ban on Chinese equipment suppliers like Huawei and ZTE, nor any public pronouncements have been made
  • but key ministries have clearly indicated that local telecom service providers should avoid using Chinese equipment
The FT cites:
  • “It’s open now that the government is not going to allow Chinese equipment,” a top telecom industry executive told the FT. “There is now clarity . . . It’s really game over.”

The Financial Times with the report on more moves against Huawei.

US election Joe Biden says ‘No new taxes’ for anyone making less than $400,000

  
  Analysis
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Democratic presidential nominee Joe Biden interview in US media (ABC)

  • “I will raise taxes for anybody making over $400,000”
  • “no new taxes” would be raised for anyone making under $400,000
We should begin to get policy announcements such as this in coming weeks.

Link here to the report for more
Biden and Harris:
Democratic presidential nominee Joe Biden interview in US media (ABC)

China health official says China has officially launched emergency use of COVID19 vaccines

  
  Analysis
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Coronavirus weekend news – Chinese media, Global Times, reports via Twitter that an official at the country’s National Health Commission:

  • says China has officially launched emergency use of a vaccine
  • the vaccine has been in clinical trial since July 22
GT also report on a more than 20,000 person phase III clinical trial in the UAE of Sinopharm’s COVID19 vaccine
  • has shown a high level of safety
  • efficacy is currently under observation
Coronavirus weekend news - Chinese media, Global Times, reports via Twitter that an official at the country's National Health Commission:
Both of the GT items are tweets only, not accompanied by further articles for more information.
There is one more that is accompanied by an article – saying that China’s first recombinant protein COVID-19 vaccine made from insect cells has been approved for clinical trials by the National Medical Products Administration.
  • vaccine is being developed by the State Key Laboratory of Biological Therapy of Sichuan University affiliated West China Hospital
  • vaccine uses insect cells to multiply in the culture medium and introduces the gene of COVID-19 into insect cells, which means the cell can be used as a factory to produce high-quality recombinant vaccine proteins and purify them for refinement.
  • vaccine was tested on monkeys and other animals, and was found to have a good protective effect against COVID-19 infection, with no obvious side effects
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Given the history of how markets view vaccine news (generally positively) this threefer from the GT might be a boost for sentiment on Monday. There is still plenty of time left over the weekend for less than favourable stories to develop, stay tuned.

Baker Hughes oil rigs 183 vs. 172 last week

  
  Analysis
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Total rig counts up to 254 from 244 last week

In a surprise, the Baker Hughes rig counts moved higher this week.

  • Total rigs moved to 254 from 244 last week. This is the 1st increase in 24 weeks.
  • Oil rigs rose by 11 to 183 from 172 last week. This is the largest weekly gain since January
  • Gas rigs fell by 1 on the week to 69 from 70 last week
The oil rigs reached the lowest level since 2005 last week. The move up to 183 is the highest since July 3 when rigs came in at 185.
Oil rigs
Crude oil is trading at $41.65 for the October contract. That is little changed to the pre-release level.
Looking at the daily chart below, the contract remains above its 50 day average at $40.95 (white moving average line in the chart below) and below its 200 day moving average of $43.41. The range since August 6 as a low $41.33 and a high of $43.29. The low today reached $41.46 just above the low of that range.
In between the moving averages sits the 50% retracement of the 2020 trading range which comes in at even $42. As I type, the price has moved higher and currently trades at $42 – right at that 50% level. Get above and we could see further upside momentum.
At some point, the ups and downs will cease and we will get a break. The moving averages will represent key breakpoints. Focus on those levels.
Crude oil prices for the October contract

US weekly oil inventories -1632K vs -2850K expected

  
Analysis, Crude
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Weekly US petroleum inventory data

  • Prior was -4512K
  • Gasoline -3322K vs -1000K expected
  • Distillates +152K vs -1200K expected
  • Refinery utilization -0.1% vs +0.3% expected
  • Production unchanged at 10.7 mbpd
API data late yesterday:
  • Crude -4264K
  • Gasoline +4991K
  • Distillates -964K
Crude rose about 20 cents on the headlines to $42.79 per barrel. The headline isn’t as bullish as anticipated but the gasoline drawdown was larger.
US weekly oil inventories
The OPEC JMMC meeting is also taking place right now with Russia’s Novak stressing the need for full compliance.

FOMC meeting minutes, what to expect later?

  
  Analysis
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Likely more noise more than anything else

Fed

The market will be keenly eyeing the release of the July FOMC meeting minutes later today but it is unlikely to tell us much that we don’t already know at the moment.

The Fed has acknowledged that the economic situation is starting to worsen a little and cast a bit of a dark cloud over the outlook in 2H 2020, considering the fact that the virus situation was escalating rather rapidly across the US last month.
If anything, I would say the minutes should just reaffirm that sentiment and also highlight that the Fed will still do whatever it takes to bolster the economy.
Other than that, there may be room to look out for potential policy changes/tweaks – possibly on future communication – but that is unlikely to offer much as the longer-term plan remains in tact (still just be mindful of this space in any case).
While the market may be looking to the minutes for further suggestions, it is not likely to change the themes that we have been seeing so far to start the week.
The softer outlook may be a signal for equities to pause after hitting all-time highs but for the dollar, election uncertainty and the stalemate on stimulus talks have been factors that are weighing on the currency; and those won’t be going away.
The dollar gave up on some key technical levels in trading yesterday but amid a tricky August so far, let’s see if sellers have the conviction to follow through ahead of the weekend.

ICYMI – Yonhap on North Korea’s up to 60 nuclear weapons & world’s third-largest stockpile of chemical weapons

  
Analysis, Politics
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Yonhap (South Korean media) cited a U.S. Department of the Army report, “North Korean tactics” published in July.

  • “Estimates for North Korean nuclear weapons range from 20-60 bombs, with the capability to produce 6 new devices each year” 
  • “North Korea sought nuclear weapons because its leaders thought the threat of a nuclear attack would prevent other countries from contemplating a regime change” 
ps. I am expecting something from NK today:
  • North Korea says it will convene a high level meeting on Wednesday – matter of ‘crucial significance’
Kim’s ‘Mission accomplished’ grin:
Yonhap (South Korean media) cited a U.S. Department of the Army report, "North Korean tactics" published in July. 
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