Tech Stocks Rebound, Covid Cases Soaring, and a Holiday is Observed

November 11, 2020

On the eleventh day of the eleventh month of 1918, an armistice was signed in Compiegne, France between World War I allies and Germany that ended the so-called “war to end all wars.” Each year on November 11th, that event 102 years ago is commemorated in three countries but by three different names: Armistice Day in France, Remembrance Day in Canada to honor and remember the men and women who have served Canada during times of war, conflict and peace, and Veterans Day in the United States to honor all men and women, and not just those who gave their lives, who have served in the U.S. armed forces.

U.S. banks but not the stock markets are closed today. U.S. futures have risen led by a rebound in tech stocks, which had a difficult session on Tuesday. Share prices in the Pacific Rim closed up 1.8% in Japan, 1.7% in Australia, 1.4% in Taiwan and 1.0% in India. European markets thus far show gains today of 0.8% in the U.K., 0.5% in Italy and Spain, and 0.4% in Germany.

This November 11 resembles the one in 1918 in a unique way. The Spanish Flu epidemic that eventually took 50 million lives around the world was intensifying rapidly in the fall of 1918, and the Covid-19 pandemic has likewise intensified this month. Over the past 24 hours, global deaths surpassed 10k including more than 1,400 in the United States. U.S. hospitalizations and a 143k leap in identified new U.S. Covid cases in the past 24 hours are both record highs.

The dollar fell 0.7% overnight against New Zealand’s kiwi but otherwise notched gains of 0.6% relative to the Mexican peso, 0.4% versus the euro, 0.2% relative to the loonie and Swiss franc and 0.1% against the Australian dollar, Chinese yuan and pound sterling. Dollar/yen is steady.

The price of West Texas Intermediate oil jumped 2.7% overnight and is hovering near $42.5 per barrel, highest since the start of September. Gold dipped 0.3% to a 3-1/2 month low.

Ten-year sovereign debt yields slipped two and one basis points in Germany and Japan, but rose two bps in Great Britain.

The New Zealand dollar rose to a 20-month high against is U.S. counterpart following the Reserve Bank of New Zealand’s scheduled policy review The record low 0.25% Official Cash Rate was not changed. Such had been cut by 75 basis points last March and from as high as 3.50% prior to June 2015. Officials also reaffirmed its quantitative stimulus intended to buy a maximum of NZD 100 billion by mid-2022. Most significantly, however, a new funding-for-lending program equal to NZD 28 billion was introduced to incentivise banks to lend and to promote an eventual rise in CPI inflation and employment back to target. Officials note that Covid has been contained comparatively well in New Zealand and that such enabled the economy to be more resilient than assumed earlier. However, the economic downturn was New Zealand’s deepest since the 1930s nonetheless, risks are skewed to the downside, and significant monetary and fiscal stimulus is still required. The statement leaves open the future possibility of more monetary support and doesn’t rule out the possibility of negative interest rates.

On-year growth in Japanese M2 money equaled 9.0% last month, up from 8.5% in the third quarter, 5.3% in 2Q and 3.0% in 1Q. The year-on-year drop in Japanese machine tool orders of 5.9% in October, however, was the smallest in two years. A 31.1% on-year plunge occurred as recently as July.

Australian consumer confidence according to Westpac Bank’s monthly index rose 2.5% this month to its best level since the final quarter of 2014.

A 1.4% monthly drop in Indonesian retail sales in September trimmed the 12-month rate of decline to a 6-month low of 8.7%.

South Korea’s unemployment rate rose 0.3 percentage points to a 3-month high of 4.2% in October. That was also 0.7 percentage points higher than the October 2019 level.

Following three straight monthly increases totaling just over 30% altogether, Mexican industrial production stagnated in September. But the year-on-year rate of decline narrowed further to 6.2% compared to a 12-month plunge of 30.6% recorded back in May.

Retail sales in Brazil grew 0.6% in September and by 7.3% compared to a year earlier.

Turkey’s current account swung from a $2.829 billion surplus in September 2019 to a $23.64 billion deficit one year later. September’s deficit was the tenth shortfall in a row.

Portuguese consumer prices ticked up 0.1% last month, which left the 12-month inflation rate unchanged at minus 0.1%. Romanian CPI inflation dropped 0.3 percentage points to a 25-month low of 2.2% in October.

Theories abound about what President Trump is trying to accomplish with a flood of seemingly frivolous lawsuits contesting vote counts in several states. One thought is that he hopes to delay winner certifications beyond the deadline in enough states to deprive Biden of 270 electoral votes and to thereby shift the ultimate decision from voters to the House of Representatives. In such a case, the outcome no longer becomes proportional to population. Instead, each state delegation in the House would get a single vote, and since Republicans control a majority of state delegations but not of members, victory could be seized by Trump from the jaws of defeat.

Copyright 2020, Larry Greenberg. All rights reserved. No secondary distribution without express permission.


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