Risk On Despite Gigantic Hacking Incident

December 14, 2020

Russia again is being accused of an enormous cyber crime centered on Google. Many, many passwords have been compromised.

Global Covid cases over the past 3 days (72 hours) totaled just slightly less than 2 million, and the worldwide death count was nearly 30k. There were almost 700k cases and over 6.5k deaths in the United States, and Germany has imposed a strict lockdown of social gatherings.

But investors this Monday are looking at positives such as the initial administration of vaccines against the disease, a scheduled vote today of the U.S. electoral college that will give Biden over 270 votes, some upbeat economic data, and continuing talks to pass a U.S. fiscal stimulus and an EU/British trade deal.

The dollar tumbled most sharply against sterling, 1.4% overnight, and also fell 0.5% versus the peso and Australian dollar, 0.4% relative to the kiwi and euro, and 0.3% versus the loonie, yen and Swiss franc. The trade-weighted dollar slipped to another fresh 32-month low.

Ten-year sovereign debt yields are 8, 4, and 3 basis points higher in the U.K., U.S. and Germany. West Texas Intermediate crude oil advanced 1.0%, aided also by the second tanker explosion in three weeks near Saudi Arabia. The price of gold is 0.7% softer.

Stock markets in Europe show gains today of 1.7% in Spain, 1.3% in Germany, 1.2% in Italy and 1.1% in France, and the U.S. S&P and Dow in futures trading are up 0.7% and 0.8%. In the Pacific Rim, share prices went up 1.3% in Indonesia and Singapore, 0.7% in China, and 0.3% in Japan, Australia, and India but also dropped 0.8% in New Zealand, 0.4% in Hong Kong, and 0.3% in South Korea.

In Euroland, industrial production advanced 2.1% in October, their biggest monthly gain in three months and to just 3.5% below the pre-pandemic level last February.

Japanese industrial production in October got revised to an even greater monthly 4.0% jump, and the year-on-year drops, which crested at 19.8% in the second quarter, narrowed to 3.0%. Capacity usage leaped 6.0% in October, cutting its 12-month decline to 2.5% from 26.3% in 2Q.

Japan’s monthly tertiary index of service sector activity increased 1.0% in October on top of a 2.3% rise in September. The on-year decline was 1.9%, down from 8.9% in July.

The Bank of Japan quarterly Tankan survey of businesses revealed a 3-quarter high in perceived business conditions faced by large and small manufacturers and non-manufacturers alike. The results were better than analyst expectations. Nonetheless, the current fiscal year ending next month will go down as a very difficult year. Sales, earnings and planned investment are projected to decline 9.1%, 35.3%, and 3.1%.

Ireland’s construction purchasing managers index broke a string of three consecutive sub-50 monthly readings, jumping 4.9 index points to a 15-month high in November of 53.5.

Turkish retail sales and industrial production recorded monthly increases of 4.2% and 1.1% in October and on-year advances of 12.0% and 10.2%.

Brazil’s economic activity index rose 0.9% in October.

Manufacturing output in Hong Kong remained very weak, dropping 2.5% last quarter and notching its greatest on-year decline (7.4%) in 11 years.

Many price statistics were reported today:

  • Chinese house price inflation slid 0.3 percentage points to a 57-month low of 4.0%.
  • German WPI inflation of negative 1.7% in November was the least deflationary in 9 months.
  • Indian WPI inflation of 1.55% last month was only marginally above October’s 1.48%, and CPI inflation fell 0.7 percentage points to a 3-month low of 6.93%.
  • Greek imports prices plunged 12.7% between October 2019 and October 2020.
  • Portuguese CPI inflation of -0.2% in November slid to a 6-month low.
  • Finnish CPI inflation remained at 0.2% for a fourth straight month in November.

The Central Bank of Kazakhstan left its interest rate benchmark unchanged at 9.0%. A net 25-basis point decline over the course of 2020 masks considerable volatility. The rate was raised 275 basis points last March, then slashed 250 bps in April and another 50 bps in July.

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

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