Covid on Everyone’s Mind

December 4, 2020

The United States set record highs yesterday for Covid cases, hospitalizations, and deaths. Over the past 24 hours, the U.S. has accrued over 2800 deaths and reported more than 216k cases. Global deaths so far now hover around 1.5 million people.

A bipartisan U.S. fiscal stimulus before Xmas of slightly under $1 trillion is looking likelier.

A trade accord between the EU and U.K. still has some chance, but it’s smaller than the odds for a U.S. fiscal stimulus.

Investors await November U.S. labor market statistics. Fewer jobs were likely created, and some analysts wonder if there might not have been any positive jobs growth. Canadian labor market data also get released thisĀ  morning.

The dollar lost more modest ground overnight, including a 0.6% drop versus the Mexican peso.

Share prices overnight rose 1.0% in India. The Reserve Bank of India Monetary Policy Committee, despite its first recession in many many years, did not cut its 4.0% repo rate further. That rate earlier was reduced 75 basis points in March and another 40 bps in May, but inflation is running above target and its expected path, so monetary policy is accommodative but not increasingly so.

In other stock market action, Japan’s Nikkei dipped 0.2%, the Shanghai Composite Chinese index edged 0.1% higher, and the German Dax is 0.1% lower. U.S. futures are up modestly ahead of the jobs report, and the 10-year Treasury yield is 2 basis points firmer.

Among commodities, the prices of oil and gold have risen 0.9% and 0.2%. Oil moved up after OPEC and Russia agreed to a smaller production hike than sought of 0.5 million barrel per day.

German industrial orders grew 2.9% in October on top of a 1.1% September increase. This increase was double expectations and shifted the year-on-year change into the black (+1.8%) for the first time since theĀ  pandemic. Export and domestic orders both increased strongly.

Euroland’s construction purchasing managers index bounced from a 5-month low of 44.9 in October to a 2-month high of 45.6 in November. The construction PMI readings for Germany, France and Italy were each higher than in October but below the 50 no change threshold. Only in Italy (49.8) did construction conditions not deteriorate appreciably further.

Britain’s construction PMI, in contrast, rebounded from a 5-month low of 53.1 in October to a 2-month high of 54.7.

Australia’s construction PMI also cleared the 50 no change level by a big margin, climbing 2.6 index points in November to a 31-month high of 55.3. A separate Australian data release today revised the monthly increase of October retail sales down 0.2 percentage points to 1.4%.

JUST IN: Fewer U.S. non-farm payroll jobs were created in November (245k) than had been forecast. That total is down from revised jobs growth of 610k in October and 711k in September. The unemployment rate fell 0.2 percentage points to 6.7%, but combined unemployment and underemployment was at 12.0% in the latest month. Average hourly earnings rose 0.3% on month and 4.4% on year.

Greek real GDP only rebounded 2.3% last quarter after plunging 14.1% in the second quarter. GDP remained 11.7% less than a year earlier. Net exports exerted a big drag on growth.

Irish GDP, in contrast, jumped 11.1% on quarter in 3Q following back-to-back drops of 3.5% in 1Q and 3.2% in the second quarter. This resulted in year-on-year growth of 8.1%, which was even larger than the 6.3% GDP expansion between the third quarters of 2018 and 2019.

Italian retail sales rose 0.6% in October and recorded a 12-month increase of 2.9%. This was the third straight year-on-year advance. Back in March, retail sales had been 69.4% weaker than its year-earlier level.

France’s government fiscal deficit in January-November of EUR 159.9 billion was 48.5% larger than a year earlier.

In Thailand, consumer prices have posted negative on-year changes for nine straight months, but the 0.4% drop in November was the smallest of that streak. In the Philippines, consumer prices shot up 1.1% on month in November, most in 117 months, and recorded a 20-month high on-year inflation pace of 3.3%.

Retail sales in Singapore recorded a year-on-year drop for the 21st straight time in October, this time of 8.6%. South Korea’s $11.66 billion current account surplus in October was 49% bigger than a year earlier.

British new car sales over the first eleven months of 2020 were 30.7% fewer than a year before.

Canadian jobs growth, in contrast to the slower-than-forecast U.S. counterpart, jumped 62.1k in November, three times what analysts were anticipating. Canada also experienced a 0.4 percentage point decline in its jobless rate to 8.5% and slower on-year growth in average wage earnings of 4.8% last month.

Canada’s October trade deficit of C$ 3.763 billion was similar to the September shortfall of C$ 3.817 billion but twice the size of the C$ 1.81 billion deficit in October 2019. Compared to the year-earlier month, exports fell 4.9%, while imports dipped just 0.9%.

One of President Trump’s most consistently held beliefs is that an activist policy of stiff bilateral tariffs against one’s competitors will result in a much improved overall trade balance. The U.S. goods and services trade deficit widened $63.123 billion in October from $43.029 billion a year earlier. The ten-month imbalance of $536.7 billion was 9.5% greater than a year earlier.

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



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