Eli Lilly Seeks Emergency FDA Approval For Antiviral; Italy Mandates Masks Outdoors, NFL Outbreak Grows: Live Updates Tyler Durden
Wed, 10/07/2020 – 09:15
Summary:
Italy calls for masks worn outdoors
Brussels closes bars
Eli Lilly asks FDA for emergency approval for antiviral
Patriots Stephen Gilmore tests positive, along with 2 more Titans
* * *
In the face of growing evidence that wearing masks outdoors isn’t an effective strategy for combating the spread of COVID-19 (the CDC, at the behest of the WHO, has acknowledge that aerosol transmission is only a major risk factor in ‘poorly ventilated’ areas), Italy is following through with plans to impose mandatory mask requirements across the country, part of a wave of rollbacks sweeping across Europe as the long-feared fall “second wave” appears to crest.
Italy’s top public health officials imposed the mandatory mask order, the latest in a series of rollbacks in Italy aimed to try and tamp down a resurgence of the virus. Italy’s council of ministers also voted to extend a state of emergency first imposed in March through the end of January, according to ANSA.
Effective immediately, the council also approved a new requirement for Italians to wear masks outdoors whenever they’re near people who do not live together, ANSA added.
The measures arise as Italy’s leaders extend and reshape the country’s emergency measures to account for the resurgence.
But Italy wasn’t alone in adopting new measures on Wednesday. As an outbreak roars in Brussels, the de facto capital of the EU, the Belgian capital decided to reinstate its lockdown conditions, closing all bars immediately for the second time.
Restaurants serving meals at a table can remain open, but bars and drinking in public will be banned until at least Nov. 8. Belgium, which has a surprisingly high mortality rate (the highest in Europe, and second only to Peru globally), has seen an alarming spike not just in new cases but in hospital admissins, which many fear could lead to another surge in deaths.
As infection rates surge in the UK, Prime Minister Boris Johnson’s “localized lockdown” strategy has come under attack from opposition Labour MPs, including Keir Starmer, the party’s new leader. Roughly 25% of Britons are currently living under restrictive virus-related restrictions.
Poland and the Czech Republic both registered record numbers on Wednesday – Poland reported record deaths for the second straight day, while the Czech Republic reported its largest daily jump in new cases, with 4,457 new positive tests over the prior 24 hours – as the outbreak spreads in Central Europe.
Deaths in Iran have continued to surge, with the Islamic Republic reporting another 239 deaths with another 4,274 people in critical condition. With his country in the grip of a full-blown outbreak, Iranian President Hassan Rouhani begged the international community to loosen sanctions on Iran’s economy to help alleviate the country’s suffering.
Moving on to the US, the biggest COVID-19-related news out Wednesday morning concerns the NFL. After quarterback Cam Newton tested positive the other day, NFL Network reports that Patriots star cornerback Stephen Gilmore has tested positive as well.
Gilmore’s positive test is the first since the team traveled to Kansas City on Monday night to play the Chiefs, a game that had been originally scheduled for Sunday.
that another player has tested positive. Additionally, two more players on the Titans have been sickened, the latest in an outbreak that has sickened 20 players and personnel. The team’s game with the Bills on Sunday is now in jeopardy, which could create serious problems for the team’s schedule.
After last week’s outbreak in Tennessee, there were multiple new positive COVID tests by NFL players. Some of Sunday’s games may be postponed.
Titans in a tough spot, having just rescheduled last week’s game to their bye week. No more open weeks to slot into. https://t.co/hfQgKo4xZW
Finally, Eli Lilly shares rallied in premarket trade as the company asked the FDA for emergency authorization for its COVID-19 antibody drug, with the company telling regulators it could supply 1 million doses of the drug this year. The treatment is aimed at people with mild to moderate COVID-19. A new study shows that the drug combined with another antibody reduced viral load, symptoms and hospitalizations in patients. It’s similar to the Regeneron treatment taken by President Trump.
via ZeroHedge News https://ift.tt/3iEZNOU Tyler Durden
Rabobank: The Press Gave “Russiagate” Front-Page Coverage For Years… It Now Refuses To Cover An Actual FBI Agent’s Quotes Tyler Durden
Wed, 10/07/2020 – 08:58
By Michael Every of Rabobank
Stimulessness?
Trump may be short of breath but he is not short of moxie. For the nth day in a row, the headlines are all about him. This time because on Tuesday he tweeted (and not in ALL CAPS):
“Nancy Pelosi is asking for $2.4 Trillion Dollars to bailout poorly run, high crime, Democrat States, money that is in no way related to COVID-19. We made a very generous offer of $1.6 Trillion Dollars and, as usual, she is not negotiating in good faith. I am rejecting their request, and looking to the future of the Country. I have instructed my representatives to stop negotiating until after the election when, immediately after I win, we will pass a major Stimulus Bill that focuses on hardworking Americans and Small Business. I have asked McConnell not to delay, but to instead focus full time on approving my outstanding nominee to the United States Supreme Court, Amy Coney Barrett. Our Economy is doing very well. The Stock Market is at record levels, JOBS and unemployment also coming back in record numbers. We are leading the World in Economic Recovery and THE BEST IS YET TO COME!”
So stimulus is over until the election(?) And so are Trump’s odds of winning it, according to the vast majority of the punditry. I don’t read what The Street says given it doesn’t even understand economics, let alone politics (and geopolitics is just a word it drops in to try to look sophisticated, in the way politicians wield “GDP” as if it is Excalibur rather than a wooden spoon.) However, The Street is apparently muttering Street-ily about a Democrat sweep. That could well be true. However, four years ago almost to the day the ‘Access Hollywood’ tape dropped. The polls this time four years ago also showed Clinton up 10-12 points in swing states like Pennsylvania. We have a month (and more) of crazy days and nights ahead of us yet and nothing is certain.
Indeed, could Trump need to keep his Republican base united and be confident enough in what his internal polls show on how fired up it is in the states he needs to win 270 electoral college votes that he is now aiming to retake the House as well as holding the Senate? It’s a view at least: he is saying if you vote for Republicans down-ticket, you get more stimulus.
Underlining this is hardball rather than the end of negotiation, his Tweet has forced skeptical senators to seeing USD1.6 trillion as OK rather than something unthinkable. Trump then retweeted Powell saying there is a need for fiscal stimulus now and a low risk of overdoing it; that Pelosi was the one playing games with workers, not him; that he is willing to provide a USD25bn clean bailout just for airlines and USD135bn for small business paycheck protection; and that “If I am sent a Stand Alone Bill for Stimulus Checks ($1,200) they will go out to our great people IMMEDIATELY. I am ready to sign now. Are you listening Nancy?” Trump could perhaps even use Executive Orders again to get some kind of stimulus through. In short, this is a long way from over. Even more so if the effect of Trump’s anti-Covid steroids wears off soon.
That remains true in Europe too, of course, where the ECB’s Lagarde and Lane are effectively arguing the EUR750bn that hasn’t even been cleared or spent yet now isn’t enough. Poor old Europe: always thinking it’s getting ahead of the curve and then finding every outfit it cobbles together is so last season. “Wait until geopolitics happens too,” he said Street-ily. So near and yet so far(?), PM BoJo was literally talking knobs and knockers at the online Tory conference, while promising all UK household electricity could be wind-powered by 2030. A lot of hot air there; or public spending. A similar dynamic in Australia, with the largest budget deficit since WW2 and not daring to try to balance it again until unemployment comes down. Yet due to low Aussie yields the public debt servicing ratio is projected to be lower in 2023 than it was in 2018. Meanwhile, as the ECB, BOE, and RBA all contemplate more rate cuts, one into negative territory, the Fed has underlined it will not be moving in that direction. Could someone kindly send a note on all the above to one Stephen Roach, or perhaps to his employers (either Yale, or China Postal Express and Logistics Co. Ltd, a subsidiary of a Chinese SOE, where he is a board member.)
The market certainly didn’t like the Trump stimulus news, of course, with US stocks closing down and 10-year Treasury yields dropping from an intraday high of 0.79% back to 0.73%. The US Dollar also went up. (Include that in the note to Roach.) As such let me, like a US secret service agent, strap on a hazmat suit and wade into the silliness of Streetiness: why did stocks and yields fall on that news, exactly?
If the prevailing view was already of a Democratic sweep in November with stimulus to follow, then surely the “ACB > stimulus” Tweet should have hammered home that meme and seen yields spike more in anticipation? Unless The Street is now seeing the House in play too for Trump….in which case the promise is again of stimulus after the election, so stocks and yields should still have gone up. Or is The Street guessing Trump will win the House and then not use stimulus? Such deep thoughts!
Might it be that The Street does not actually have much of a clue of what is really going on in the either the economy or the election, but just likes money flowing its way? And that Street journalists weave a jazz-hands narrative about it on a daily basis? (They are still saying “Stimulus is off!” this morning, for example.)
Which seems an appropriate segue to the other Trump spattering of tweets, on Russiagate, a scandal that keeps on giving. Naturally, the press who gave this front-page coverage over the past few years are now not covering quotes from one of the FBI agents involved stating the entire case was built on “supposition on supposition” and a “dumb theory”, while there “was no evidence of a crime”. Just as naturally, the press who didn’t cover the shocking allegations –and who can never be accused of supposition or dumb theories, honest– are now putting it on the front page. All very edifying, and polarising. Like I said, weeks and weeks of this to go yet, folks.
Tonight is the Vice-Presidential debate, for example, between two VPs whose Ps have big Qs over their health. Apparently they are both going to be in plexiglass chambers. Innovation of sorts. I am sure a TV exec somewhere is wondering if we could include a feature to drop them into a shark tank for giving wrong answers: ‘Three lies and down you go’. It would probably boost viewership. Then again, the more rotund of candidates might manage to improbably get stuck in the tube, once again bunging up the cosy market narrative.
And all of that is a distraction from a Congressional report urging that US big tech be broken up for abusing its monopoly and monopsony power. Want to see big moves in stocks and bond yields? Try looking at those kind of structural changes….if they ever happen.
via ZeroHedge News https://ift.tt/3ljztf6 Tyler Durden
World’s Top Oil Trader Is Now A Used Car Salesman Tyler Durden
Wed, 10/07/2020 – 08:37
Vitol Group, the world’s largest independent oil-trading firm, has been startled by the prospects of peak oil demand as it must diversify operations today to survive the decade. Vitol recently formed a new business venture called Vava Cars, aiming to become “the most trusted car transaction platform in the world,” the company states on its website.
Vitol is a top energy and commodities trading firm globally, with over five decades of operating in financial markets. In 2019, the trading firm bought and sold more than 8 million barrels of oil and petroleum products per day.
The company is getting into the used-car business with an exclusive launch of its second-hand vehicle transaction platform in Turkey and Pakistan. Further rollouts of the platform are expected in other countries in the coming months.
“Our revolutionary new service takes the hassle out of second-hand trading vehicles and allows consumers to sell and dealers to buy with confidence,” Vava wrote on its LinkedIn profile. “We are the future of used car selling and buying.”
Bloomberg said Vitol’s launch of the platform is a means to diversify its “core business of buying, blending and transporting oil and refined hydrocarbon products amid the transition to greener fuels.” The move also outlines the firm sees doom and gloom in energy markets as the peak oil demand could be sometime in this decade:
“While Vitol has said it doesn’t expect global oil demand to peak until at least 2030, it has already moved aggressively to diversify some of its business away from oil. The Rotterdam-based company has made investments in wind, solar, and battery storage while recently beefing up its power trading business. It’s invested in one company that converts plastic into diesel and another that uses coal to create hydrocarbon liquids. It’s also bankrolling a proposed carbon capture and hydrogen project in the U.K.,” said Bloomberg.
The launch of Vava has had perfect timing as used car prices in Turkey have been on a tear this year. Bloomberg explains soaring used car prices is because a shortage of new ones as people are using vehicles to hedge against rapid inflation as the value of the Lira plummets.
Used Car Prices In Turkey
Turkish Lira
Vitol’s access to low-cost capital will expand Vava to one day become the world’s largest used car salesman. As for what the trading firm gets into next, as peak oil demand could be ahead, is anyone’s guess…
via ZeroHedge News https://ift.tt/3d6h9TS Tyler Durden
A CNN analyst tweeted Tuesday that President Donald Trump is “a biological terrorist,” later doubling down and adding “I mean that literally”.
Asha Rangappa made the post after Trump triumphantly returned to the White House on Monday and ripped off his face mask in front of the press, much to their disdain.
“Trump’s own AG says that COVID meets the statutory definition of a ‘biological agent’ and that intentionally passing it to others can constitute an act of terrorism,” Rangappa whined on Twitter:
BTW, I mean that literally. Trump’s own AG says that COVID meets the statutory definition of a “biological agent” and that intentionally passing it to others can constitute an act of terrorism https://t.co/UcQwshbUS9
While Trump was outside and meters away from any other person, CNN in particular suffered a collective mental breakdown in reaction to the President’s actions.
CNN’s New Day co-host John Berman referred to Trump’s actions as a ‘Sunset Boulevard stunt’, and yelled at producers to “Take if off! Please, don’t even put it on the screen! Please take it off! Because that’s going to kill people!”
During the same broadcast, Dr. Peter Hotez declared that by the end of the year there could be either 270,000 American deaths or 400,000, and that President Trump “has sent a message to the American people, ‘let’s go for the 400,000 number.’”
Meanwhile, while frothing over how dangerous Trump’s activities are, CBS also appears to be suggesting that his diagnosis is completely fake:
CBS This Morning co-host Gayle King noted Tuesday “It’s so interesting that I’ve gotten calls from both Democrats and Republicans, Pete, who asked this question when the President first became ill, ‘Do you really think he was ill?’”
The left: “Trump and a bunch of his staffers got COVID because they didn’t wear masks. Shame on them!”
Twitter and every social media company have banned people who spread “conspiracy theories” about COVID, yet #TrumpCovidHoax is allowed to trend and nothing will happen to those pushing this demented lie.
Media now desperately scrambling to distract by accusing Trump of endangering others because all their “anonymous sources” on him being deathly ill proved to be total BS.
Leftist celebrities, who definitely do speak for everyone in America, continue to have frothing mental breakdowns over the fact that the President is not hiding in a bunker:
Idiot super spreader the best medical care in the world tells millions with virus, and the relatives of over 200,000 dead victims: dont be afraid of covid. Don’t let it dominate your life. https://t.co/r1niLAfxLK
Don’t be afraid of covid? Tell that to the 210,000 families who have lost loved ones. To the Black, Brown and Indigenous folks disproportionately affected. With tens of millions of jobs lost and the economy tanked. Many of us isolated for months. You’re the cruelest. #votehimouthttps://t.co/QhM47Pa3lx
“Don’t be afraid of Covid” America! With a helicopter at your disposal and access to treatments only a President can get, you too will get though this just fine in time to get back to your state of the art in-house medical facility with 24 hour care and the best doctors around! https://t.co/PKkhl3qZHu
“Don’t be afraid of Covid.“ How preposterous! 210,000 American people have lost their lives! Children have lost their parents. Mothers and fathers are gone! How dare he say such a stupid thing.
S&P Futures Rebound As Trump Tweetstorm Leaves Door Open For More Stimulus Talks Tyler Durden
Wed, 10/07/2020 – 07:58
It’s been a rollercoaster 24 hours for markets, which initially surged on Tuesday on fresh fiscal stimulus hopes, only to see said hope crushed by Trump at exactly 2:47pm, when the president tweeted that had had “instructed my representatives to stop negotiating until after the election when, immediately after I win, we will pass a major Stimulus Bill that focuses on hardworking Americans and Small Business.” The tweet unleashed a furious selling spree, which saw S&P futures drop as low as 3,330 overnight after closing 1.4% lower, more than 90 point from their pre-Trump tweet highs.
The tweets sparked the worst session for the S&P 500 and the Dow in two weeks, while airlines sank 3% as the move appeared to scuttle $25 billion in new bailout for the industry. All this happened just hours after Fed Chair Jerome Powell called for more help for businesses and households to keep a nascent economic recovery from faltering.
Trump said the biggest sticking point in the negotiations was the Democratic demand for aid to cash-strapped state and local governments, without which they will have to push through aggressive budget cuts: “I am rejecting their request, and looking to the future of our Country. I have instructed my representatives to stop negotiating until after the election when, immediately after I win, we will pass a major Stimulus Bill that focuses on hardworking Americans and Small Business,” Trump tweeted.
However, about six hours later, in a furious tweet (and retweet) storm which touched on everything from the fake Russian collusion probe, to the FDA, the president appeared to backtrack from completely abandoning negotiations, when president made separate appeals for lawmakers to approve additional funding for airlines to prevent thousands of job cuts, more aid to small businesses and direct government payments worth up to $1,200 for most individuals.
The House & Senate should IMMEDIATELY Approve 25 Billion Dollars for Airline Payroll Support, & 135 Billion Dollars for Paycheck Protection Program for Small Business. Both of these will be fully paid for with unused funds from the Cares Act. Have this money. I will sign now!
In the aftermath of the Trump tweetstorm which took algos lots of milliseconds to parse through, futures resumed levitating and regained much of the Tuesday drop as markets in Asia recovered some ground following, with Japan’s Topix down 0.1% on Wednesday afternoon and Hong Kong’s Hang Seng index actually rising 0.6%.
Trump’s apparent willingness to continue discussions helped push shares of Delta Air Lines, American Airlines Group, United Airlines and JetBlue higher between 2.4% and 6.9% in premarket trading. Amazon.com and Apple rose in premarket trading while Facebook was flat as investors seemed to take in stride a House panel’s proposal of stricter antitrust rules to curb the power of the four technology giants, including Google. Italian payments giant Nexi SpA slid after news of private-equity backers selling shares.
Still, odds of Democrats accepting a piecemeal deal instead of a bulk package are virtually nil. As the FT notes, “Trump’s subsequent statement that he was still interested in approving more federal aid on a piecemeal basis is unlikely to be greeted with enthusiasm among Democrats, who have long pushed for a comprehensive package. But it may leave a small sliver of hope that Mr Trump could yet compromise.”
Sure enough, according to Medley Global, Trump’s support for alternative stimulus measures are “removing the angst” from his earlier decision, allowing futures to push higher as investors digested the tweets; at the same time Treasuries resumed falling and the dollar was mixed, while oil reversed an earlier gain as the API report signaled U.S. crude stockpiles rose for the first time in four weeks. Gold gained.
Others, such as Axi Corp analyst Milan Cutkovic, quickly joined in attempting to spin the reversal of what until yesterday was the widely accepted narrative, as bullish: “(The halt in stimulus talks) is unlikely to be the catalyst for a significant sell-off as most market participants were not anticipating that a deal will be reached ahead of the election anyway.” He cautioned however that “should there be no stimulus package announced shortly after the election, investors could get increasingly nervous about the economic recovery losing momentum.”
European stocks erased initial gains to trade lower at mid-session on Wednesday, weighed down by declines among insurers and banking stocks. The Stoxx 600 Index was down 0.2% at 11:45 a.m. London time, with investors looking ahead to the release of the minutes from the U.S. Federal Reserve’s September meeting and continuing to digest President Donald Trump’s decision to halt stimulus talks.
Earlier in the session, Asian stocks gained, led by energy and IT, after rising in the last session. The Topix was little changed, with Olympic rising and Tokai Soft Co Ltd falling the most.
In rates, Treasuries bear-steepen as stocks advanced ahead of today’s 10Y auction, reversing all of yesterday’s gains, and were near session lows after U.S. President Trump reversed Tuesday’s position against negotiating economic stimulus measures. Yields were higher by 4bp-5bp at long end, steepening 5s30s by ~2bp, 2s10s by nearly 4bp; 10-year, higher by 4bp at 0.775%, lags bunds and gilts by 2bp-3bp. Supply was also a factor as dealers prepare to underwrite 10- and 30-year re-openings Wednesday and Thursday. Euro-area bonds mostly slipped before Lagarde speaks.
In FX, the Bloomberg Dollar Spot Index inched lower as it erased an Asia session gain and the Treasury curve steepened, following yesterday’s flattening. Risk-sensitive currencies, led by Norway’s krone and the Australian dollar, advanced versus the dollar; the yen was the worst performer as it extended losses in European hours.
In commodities, WTI and Brent remained under pressure at/near session lows as markets balance supply and demand side developments. On the demand side, woes of the implications of the resurging cases persist, in turn prompting the EIA to downgrade its 2020 world oil demand growth forecast by 300k BPD to a decline of 8.62mln BPD Y/Y and cut 2021 world oil demand growth forecast by 280k BPD to an increase of 6.25mln BPD Y/Y, with the OPEC and IEA releases due next week. From a supply standpoint, Private Inventory data printed a larger than expected build (+1.0mln bbls vs. Exp. +0.3mln bbls) and markets await confirmation from the EIA which showed similar expectations for the headline figure. (+0.294mln bbls).
And now hold on to your hats because the political rollercoaster is not done yet, and all eyes later in the day will be on the only debate between Vice President Mike Pence and Democratic challenger Kamala Harris, which comes less than a week after Trump said he had contracted COVID-19.
We also get the FOMC’s minutes from their September meeting, and hear from the ECB’s Lagarde, Villeroy, and the Fed’s Rosengren, Bostic, Kashkari, Williams and Evans. Finally, the data highlights include August data on German industrial production, Italian retail sales and US consumer credit.
Market Snapshot
S&P 500 futures up 0.5% to 3,369.75
STOXX Europe 600 down 0.1% to 365.53
MXAP up 0.4% to 173.75
MXAPJ up 0.7% to 572.81
Nikkei down 0.05% to 23,422.82
Topix up 0.04% to 1,646.47
Hang Seng Index up 1.1% to 24,242.86
Shanghai Composite down 0.2% to 3,218.05
Sensex up 0.7% to 39,845.35
Australia S&P/ASX 200 up 1.3% to 6,036.38
Kospi up 0.9% to 2,386.94
Brent futures down 1.4% to $42.07/bbl
Gold spot up 0.7% to $1,891.79
U.S. Dollar Index little changed at 93.73
German 10Y yield fell 0.6 bps to -0.513%
Euro up 0.2% to $1.1759
Italian 10Y yield fell 3.1 bps to 0.573%
Spanish 10Y yield fell 1.4 bps to 0.222%
Top Overnight News from Bloomberg
The ECB is running down its stock of so-called commercial paper — short-term debt instruments issued by companies to meet immediate funding needs — while the Bank of England announced plans to discontinue purchases. It’s a dramatic turnaround from April when some of Europe’s biggest firms, including Iberdrola SA and Volkswagen AG, were urging the ECB to quicken short-term debt purchases to head-off crippling cash crunches
The French president is standing firm on his demand to keep the same access to British waters his country’s fishing industry enjoys today, according to officials familiar with the talks. That’s angering the British and creating tensions even among his allies within the EU
Spain’s growing list of risks is starting to make investors nervous. The nation’s debt is lagging a regional rally that has driven the rate on Italian bonds — long regarded as the pariah of Europe and among the highest yielding — close to a record low. That’s narrowed the gap between Spanish and Italian yields to the smallest in more than two years
The European Union looks set to launch a $118 billion foray into social bonds, a market that has already swelled four-fold this year to fund projects to help societies recover from the coronavirus
Norway’s government is on track to withdraw a record amount from its sovereign wealth fund this year, and to continue pumping historic amounts of stimulus in 2021, to fight the “severe setback” triggered by the Covid crisis
A quick look at global markets courtesy of NewsSquawk
Asian equities traded mixed as the region partially shrugged off the negative mood which initially rolled over from Wall St, where stock markets slumped in late trade after US President Trump announced that he is to walk away from COVID relief talks until after the election amid disparities regarding the value of the stimulus package. This resulted to losses of more than 1% for all major US indices and the large tech names were also pressured in extended trade after the House democrats antitrust committee report noted several tech giants enjoyed ‘monopoly power’ and recommended changes including structural separations and prohibiting dominant platforms from entering adjacent lines of business. Nonetheless, the tone in Asia gradually improved with ASX 200 (+1.3%) first to buck the trend as it reclaimed the 6000 level, led by strength in consumer stocks after the announcement of an expansionary budget which brought forward tax cuts and with sentiment also helped by increased calls for the RBA to loosen policy next month. Nikkei 225 (-0.1%) was weaker as exporters suffered from the ill effects of recent flows into the local currency but with the index off worst levels amid the slightly brightening picture, while the Hang Seng (+1.1%) reclaimed the 24000 level after shrugging off early indecision following tepid Hong Kong PMI data which showed an improvement although remained in contraction territory for a 31st consecutive month. Finally, 10yr JGBs eked minimal gains amid the lacklustre risk tone in Tokyo and following the tepid Rinban operation by the BoJ which were in the market for a reserved JPY 400bln of JGBs mostly concentrated in 3-5yr maturities.
Top Asian News
Vedanta Sinks Most Since March Amid Delisting Price Uncertainty
Yuan Looks Good for 2021 on China Recovery: FX Macro Ranking
Greentown China Soars to 7-Year High on Big September Sales Gain
Netflix Wins India Legal Battle Over Rogue Billionaires Series
European equities (Eurostoxx 50 -0.2%) trade with mild losses as US equity futures trimmed losses seen in the wake of President Trump’s decision to pull the plug on COVID stimulus talks until after the election. Note, after the initial announcement, Trump suggested he would be willing to back certain aspects of a broader stimulus package such as USD 25bln for airline payroll support and USD 135bln for the Paycheck Protection Program. This helped provide some reprieve for US futures, whilst markets also continue to assess the post-November election landscape with increased focus on the prospects of a Democratic “Blue Sweep” as recent polling data moves further in favour of former VP Biden. In recent months, the main inference from such an outcome has been centred around the likelihood of a less favourable tax environment for US corporates, however, given the inertia in Congress over the past few weeks, markets could take some solace in the likelihood of a more functional legislature that could pass a sizeable support package and help soothe the concerns raised by Fed Chair Powell yesterday. In Europe, the session hasn’t seen much in the way of out or underperformance across regional bourses as markets await the US entrance to market. From a sectoral standpoint, food & beverage names lead the way higher after Diageo (+1.4%) and Pernod Ricard (+2.6%) were both upgraded at Jefferies. To the downside, travel names such as Tui (-3.6%), easyJet (-4.8%) and IAG (-0.3%) have been hampered by reports in the Guardian noting that the UK decision on introducing COVID-19 testing for international arrivals – which is designed to reduce quarantine times – will not take place until November at the earliest. Individual movers include Tesco (+2.0%) after the Co.’s HY profits rose 28.7% relative to 2019, whilst Dialog Semiconductor (+0.6%) shares are firmer after raising Q3 revenue guidance and noting that improving trends are expected to continue into Q4.
Top European News
Billionaire Arnault Buys Influence Through Media Deals in France
It’s Spain, Not Italy, That European Investors Are Worried About
Norway Reveals Record Withdrawals From $1.1 Trillion Fund
Tesco’s New CEO Takes Over as Online Shopping Surges in U.K.
In FX, the broader Dollar and Index trade modestly softer in early European hours after US President Trump called off coronavirus stimulus talks until after the elections but is ready to sign a standalone bill for stimulus checks if he is sent one. Thus, DXY has waned off its best levels (93.900) as it drifts lower to test its 21 DMA (93.622) ahead of the 93.500 psychological mark, with the 55 DMA touted at 93.321. Looking ahead, FOMC Minutes could garner attention with regards to QE maturities after Fed’s Mester suggested that the Fed should have the scope to lengthen QE maturities, alongside any meat on the bones on AIT (full primer available on the newsquawk headline feed), albeit fiscal updates are likely to steal the limelight throughout the session. The calendar from a data-standpoint is light, but speakers on the docket include voters Williams (x2), Kashkari and 2021 voter Evans.
AUD, NZD, CAD – The non-US Dollars are posting varying degrees of gains, with the Aussie outperforming as it retraces some of yesterday’s post-RBA/budget losses, but remains sub-0.7150 against the Dollar, currently at the top of today’s 0.7097-7146 range. The Kiwi meanwhile benefits from the broader Dollar weakness as it re-eyes 0.6600 to the upside (vs. 0.6576 at worst) with the 50 and 21 DMAs seen at 0.6632 and 0.6640 respectively. The Loonie’s gains are hampered by the overnight crude decline, but nonetheless ekes mild gains against the Buck as USD/CAD decline from a high of 1.3340 and dipped below 1.300 to open the door to its 21 DMA at 1.3271 ahead of the 1.3250 psychological mark.
GBP, EUR, CHF – Modest gains seen across the European currencies as Sterling leads the gains with pertinent newsflow including reports that Chancellor Sunak is mulling new support for businesses impacted by COVID-19, whilst from a Brexit standpoint, EU member states are said to be taking an increasingly hard stance over concessions – with President Macron standing firm on the issue of fisheries. Cable has yielded the 1.2900 handle (vs. low 1.2864). EUR/USD retraces some of yesterday’s losses and resides north of 1.1750 at the time of writing (vs. low 1.1726) as it eyes its 55 DMA (1.1791) ahead of the 1.1800 figure. Levels to the downside include Monday’s low (1.1705) and Friday’s low (1.1694), with today’s OpEx comprising of EUR 750mln rolling off between 1.1740-50. CHF also stands as a beneficiary of the Dollar softness, with USD/CHF remaining below in a tight range 0.9200 (0.9161-84 range), with the 55 DMA seen around 0.9136.
JPY – The Yen bucks the trend and fails to benefit from the softer Dollar, with some pointing to technical play and after touted stops were triggered around 105.80, with more reported at 106.00+. USD/JPY resides at the top if the current 105.61-106.00 band, and with a notable USD 2.1bln in options scattered between 105.45-106.10 to keep in mind for today’s NY cut.
EM – EM FX see broad-based Dollar induced gains, with the exception of the Turkish Lira which succumbed to renewed pressure in early EU hours, potentially on heightened geopolitical risk after the Iranian President warned that the Azeri-Armenian conflict could lead to a regional war, whilst Turkey continues to support its ally Azerbaijan. USD/TRY notched a fresh record high ~7.8680 from a low of 7.7800.
In commodities, WTI and Brent front month futures remain under pressure with both benchmarks at/near session lows as markets balance supply and demand side developments. On the demand side, woes of the implications of the resurging cases persist, in turn prompting the EIA to downgrade its 2020 world oil demand growth forecast by 300k BPD to a decline of 8.62mln BPD Y/Y and cut 2021 world oil demand growth forecast by 280k BPD to an increase of 6.25mln BPD Y/Y, with the OPEC and IEA releases due next week. From a supply standpoint, Private Inventory data printed a larger than expected build (+1.0mln bbls vs. Exp. +0.3mln bbls) and markets await confirmation from the EIA which showed similar expectations for the headline figure. (+0.294mln bbls). Sticking with supply, Norway sees some 330k BPD of total production shuttered amid oil and gas strikes, with plans for an escalation on the 10th of October, albeit production at the 470k BPS Johan Sverdrup field is said to be unaffected despite some workers on strike. Over to the Gulf of Mexico, NHC noted that Hurricane Delta could become a Category 4 hurricane again by later Thursday, with weakening expected as it approaches the Gulf Coast. Note, the BSEE yesterday estimated that approximately 29.22% of the current oil production and approximately 8.59% of the natural gas production in the Gulf of Mexico has been shut-in, with the next update expected around 19:00BST/14:00ET. WTI resides sub-40/bbl with the current base at USD 39.63/bbl (vs. high 40.35/bbl), while its Brent counterpart yields the USD 42/bbl mark (vs. high 42.40/bbl), with the current low at USD 41.69/bbl. Elsewhere, spot gold remains below USD 1900/oz and has largely moved at the whim of the Buck in European trade, whilst spot silver outperforms but remains shy of the USD 24/oz mark. LME copper prices meanwhile have ease off best levels but remains in the green, whilst from a fundamental standpoint, some tout the increasing possibility of potential strikes at the Candelaria mine in Chile after the latest wage offer was rejected, whilst ING also cite the petering out of LME copper inventory builds.
US Event Calendar
7am: MBA Mortgage Applications, prior -4.8%
2pm: FOMC Meeting Minutes
3pm: Consumer Credit, est. $14.0b, prior $12.3b
Central Bank Speakers
2pm: FOMC Meeting Minutes
2pm: Fed’s Williams Moderates Henry Kissinger Discussion
2:40pm: Fed’s Kashkari, Bostic, Rosengren to Speak on Racism
3pm: Fed’s Williams Speaks on Flexible Average Inflation Targeting
4:30pm: Fed’s Evans Discusses the U.S. Economy and Monetary Policy
DB’s Jim Reid concludes the overnight wrap
President Trump once again took control of the headlines yesterday when he tweeted late in the US session that he had instructed White House negotiators to stop further US stimulus discussions with Congressional Democrats until after the election. He argued that Speaker Pelosi was not arguing in “good faith” and that he wants Congress to focus on the Supreme Court nomination of Judge Barrett instead. This came as a surprise after relatively positive headlines from Pelosi and Treasury Secretary Mnuchin earlier in the week, and also represented a reversal in tone given comments late Monday from White House Chief of Staff Meadows, who said “There are a lot of people that continue to hurt, are waiting on stimulus, and the President’s committed to getting a deal done…He wants to make sure we move expeditiously, but also in a fiscally responsible manner.”
The tweet also came just a few hours after Fed Chair Powell’s speech at the NABE’s annual meeting. While not much new information was proffered, Powell made one of his plainest cases for fiscal stimulus yet, saying “the risks of policy intervention are still asymmetric”, and that “the risks of overdoing it seems, for now, to be smaller” compared with the risks of offering too little support. If the current polling at both the national and state level holds, and former Vice President Biden were to win the election in November, fiscal stimulus may indeed come but will have to wait until Q1 of next year when a new government is seated. Even though many observers had attributed a low probability to an agreement prior to the election given the short timeframe and the negotiating distance between the two groups, the President’s comments rippled through markets late in the US session.
The S&P 500 dropped over 2.05% in the last hour and a half of trading after the tweet. By the close the S&P 500 was down -1.40%, with the NASDAQ down slightly more at -1.57%. The VIX volatility index rose +1.5pts to 29.5, the highest level since early September. The news also caused the US Dollar to rise 0.33% intraday to finish the day up +0.19%, just the second gain in the last seven sessions. Yesterday we said that markets were starting to look through the likely lack of short-term stimulus and were instead focusing on the prospect of more stimulus after the increased likelihood of a Democratic clean sweep. The late price action last night suggests otherwise but I would still say that further evidence that this election will result in a definitive result will offset any short term stimulus disappointment.
Overnight President Trump is slightly softening his stance as he called for support for airlines and the Paycheck Protection Program in a Tweet. On individual checks, he tweeted that ‘If I am sent a Stand Alone Bill for Stimulus Checks ($1,200), they will go out to our great people IMMEDIATELY. I am ready to sign right now. Are you listening Nancy?’. He also tweeted that he supports $25bn aid for airlines to support payroll and $135bn for the Paycheck Protection Program aimed at small businesses. This likely indicates that the President is still up for a skinny deal with the Democrats before the election. These tweets have helped S&P 500 futures rally over half a percent from the session lows to trade broadly flat at +0.05%.
Sticking with the US, the House panel draft report on sweeping reforms of the technology sector that we had mentioned yesterday has been proposed overnight. The House antitrust subcommittee recommends the most dramatic proposal to overhaul US competition law in decades, and could lead to the breakup of tech companies if approved by Congress. The findings target four of the biggest US tech companies – Amazon, Google, Facebook, and Apple – describing them as gatekeepers of the digital economy that can use their control over markets to pick winners and losers while also abusing power to snuff out competitive threats. As things stand the report has been largely shunned by the Republicans but could be a marker for the future if we indeed get a Democrats sweep in the election, as polls are leaning towards.
Asian markets are trading mixed this morning with the Nikkei (-0.22%) down while the Hang Seng (+0.46%) is up and India’s Nifty (+0.01%) is broadly flat. In Fx, the US dollar is up a further +0.17% after yesterday’s +0.18% advance. Meanwhile, European futures point to a weaker open after these markets missed the late US dip last night, with the Stoxx 50 -0.50%, FTSE 100 -0.16% and Dax -0.43% all down. Before this the STOXX 600 managed a +0.07% gain yesterday, led by recent laggards Banks (+3.37%) and Travel & Leisure (+2.95%), while pandemic winners like Health Care (-0.96%) and Technology (-0.81%) were the among the biggest decliners.
Back to the US election and though there had been speculation that the second presidential debate on October 15 might not be held depending on the timing of the President’s quarantine, Trump tweeted yesterday that “I am looking forward to the debate on the evening of Thursday, October 15th in Miami. It will be great!”
Speaking of debates, tonight the Vice Presidential debate take place at 21:00 ET between incumbent VP Mike Pence and California Senator Kamala Harris. There’ll be a number of Covid-related changes however, including plexiglass barriers between the candidates and the moderator, while the candidates will now be seated 12 feet apart rather than 7. Like the last debate it’ll be 90 minutes long, though broken down into 9 smaller segments of 10 minutes each. President Trump remains over +8pts behind former Vice President Biden in national polling averages, though recent polls have started to show Biden possibly increasing that lead, notably CNN (+15pt) and WSJ/NBC (+14pts). Pennsylvania, the state where Biden was born and the state that fivethrityeight.com’s model currently calculates has the best chance of being the tipping point of the electoral college, has Biden up by +6.5pts on average.
If you want more insight into the polls, don’t miss the latest DB speaker series invite “Who is going to win the 2020 US Presidential election?” – with US polling experts Amy Walter, National Editor, The Cook Political Report; G. Elliott Morris, data journalist for The Economist and Matthew Luzzetti, Chief DB US Economist. This is on Tuesday, 13 October 2020 at 3pm BST/4pm CET/10am ET, and is a live video call. Register here
On the coronavirus, there were further concerning signs out of Western Europe yesterday as cases continued to rise. Here in the UK a further 14,557cases were reported as cases have remained stubbornly above the 10k mark in recent days. This increase is now evident in hospital admissions too, and in England the numbers in hospital rose to 2,783 yesterday, which is their highest number since late June (though for context still well below the peak above 17k back in April). France reported 10,489 new cases yesterday with the 7 day rolling average rising back above 12,000 for the first time in 8 days. Cases in the Netherlands have risen over 25,000 over the past week, the highest of the pandemic. Elsewhere, Italy reported a further 2,677 cases, and the country’s health minister said that there was consideration over making the use of masks outdoors compulsory. Of the most severely hit first wave countries, Italy has certainly done the best relative job in minimising a second wave. In the US, there continues to be action in New York City to contain the outbreaks. Governor Cuomo has closed businesses and schools in some regions of the city and outlaying suburbs for 14 days, with different levels of restrictions based on distance from the “hotspots”. See the table below for the latest global case numbers. Meanwhile, in a widening out break at the White House, Stephen Miller, a senior adviser to the US President, became the latest White House staffer overnight to test positive for the coronavirus.
On the vaccine front the US Food and Drug Administration notified coronavirus vaccine developers yesterday that it would want at least two months of safety data before the agency would authorize it for emergency use. This requirement would likely push any availability of a US vaccine well past the Nov. 3 elections. Overnight, President Trump has accused the FDA of carrying out a “political hit job” against him by setting new vaccine review guidelines.
Over in the fixed income sphere, there was a further narrowing in sovereign bond spreads between core and periphery in Europe, and by the session’s close, the spread of Italian 10yr yields over bunds had fallen a further -3.4bps to reach its tightest closing level in over 2 years, at 1.28%. Italian BTPs have performed strongly lately, and the country’s 5-year yields actually fell -2.9bps to an all-time low yesterday of 0.163%. Bunds were unchanged. US 10yr Treasury yields fell -4.6bps lower, mostly after Trump’s tweet but are back up +1.3bps this morning.
Sterling had another volatile session yesterday as a number of further headlines on Brexit came through. The initial selloff was sparked by a Bloomberg report which said that the EU was not planning to make any concessions before next week’s summit of EU leaders – which a month ago Prime Minister Johnson had previously set as the deadline for reaching an agreement. According to the report, the EU was prepared to let the talks continue into November or December and call Johnson’s bluff on whether to break off talks and leave without a deal or stay at the negotiating table beyond his self-imposed deadline. Sterling recovered later on however on some more positive Reuters headlines, which said that the talks last week on Brexit were “one of the most positive so far”, and that the two sides were close to an agreement on reciprocal social security rights.
In terms of yesterday’s data, the US trade balance for August showed the country’s trade deficit widened to its largest since 2006, with a $67.1bn deficit. Other data showed that the number of job openings fell in August to 6.493m, which is the first decline since April. Finally in Europe, German factory orders rose by a stronger-than-expected +4.5% in August (vs. +2.8% expected), and the country’s construction PMI fell deeper into contractionary territory with a 45.5 reading.
To the day ahead now, and the highlight will likely be the Vice-Presidential Debate in the US later on. Otherwise, we’ll get the FOMC’s minutes from their September meeting, and hear from the ECB’s Lagarde, Villeroy, and the Fed’s Rosengren, Bostic, Kashkari, Williams and Evans. Finally, the data highlights include August data on German industrial production, Italian retail sales and US consumer credit.
via ZeroHedge News https://ift.tt/3nogL7X Tyler Durden
Menacing Hurricane Delta Makes Landfall On Yucatan; Re-Intensification Likely Over Gulf Of Mexico Tyler Durden
Wed, 10/07/2020 – 07:39
Update (0707 ET): The National Hurricane Center reports Hurricane Delta has made landfall near Puerto Morelos, a Mexican port town on the Caribbean coast of the Yucatan Peninsula, as a Category 2 storm.
* * *
The National Hurricane Center’s 5 a.m. tropical advisory update shows Hurricane Delta was located about 35-miles east-northeast of Cozumel, Mexico, with maximum sustained winds of 115 mph, making it a Category 3 storm. Delta was downgraded in the overnight hours from Category 4 to 3.
Delta is moving northwest at 17 mph, expected to make landfall over the northeastern portion of the Yucatan peninsula Wednesday morning. The storm will then traverse the southern Gulf of Mexico and curl towards the US Gulf Coast by late week.
This morning, menacing Delta is unleashing havoc on Mexico’s Yucatan Peninsula, where an abundance of hotels and resorts reside in the Tulum and Cozumel areas. More than 40,000 tourists have hunkered down in emergency shelters ahead of landfall as authorities prepare for landfall. Delta is one of the strongest hurricanes to hit the resort area in years. The storm’s arrival is some of the worst timing, comes as Mexico attempts to revive its collapsed tourism industry following the virus pandemic shutdowns.
Early this week, we noted that Delta rapidly intensified from sustained winds of 40 mph Monday to a Category 4 on Tuesday with winds around 130 mph. Suppose the storm strengthens again, back to a Category 4, between Thursday and Friday, then it could make US landfall as a major hurricane.
Current predictions for a potential US landfall show the storm could strike the Louisiana coast late Friday or early Saturday morning.
Louisiana Gov. John Bel Edwards said Tuesday, “this storm will affect Louisiana and everyone needs to prepare accordingly.”
The oil and gas industry, with offshore production platforms along US Gulf Coast states, is taking no risk ahead of the storm’s potential US landfall later this week or early weekend, has started shutting down rigs and withdrawing workers.
“Oil producers had evacuated 57 production facilities in the U.S. Gulf of Mexico by Tuesday and halted 540,000 barrels per day of oil and 232 million cubic feet per day of natural gas production. The region accounts for about 17% of U.S. oil output.” Reuters notes.
Meteorologist Philip Klotzbach notes the super active 2020 Atlantic hurricane season has already tied a century-old record:
“The 2020 Atlantic hurricane season is currently tied with the 1916 Atlantic hurricane season,” Klotzbach tweeted, “for most continental US named storm landfalls in a season on record (9 landfalls).”
With a little more than a month and a half left in hurricane season, more storm activity could be ahead, given La Nina conditions.
via ZeroHedge News https://ift.tt/3iFUCyp Tyler Durden
BLM Co-Founder Claims Joe Biden Is Part Of “Violent White Supremacist” System Tyler Durden
Wed, 10/07/2020 – 07:14
Vice President Joe Biden would like America’s youth to believe that he has bent over backwards to ‘really listen’ to the demands of young progressives/cryptomarxists, including the activists in “Black Lives Matter”. Unfortunately for him, the transparent pandering hasn’t been all that convincing.
Even after Biden and his fellow Democrats tacitly indulged the worst excesses of these so-called “activists” – anarchic rioting and violence in cities big and small across American – it seems the former VEEP, who played second fiddle to America’s first black president for 8 years, has failed to win the BLM crowd over.
The latest evidence of this an be found in an ABC News interview with several young activists who are ‘still out in the streets’ peacefully protesting tell the press that they might consider voting for a third-party candidate instead of Biden.
While ABC also interviewed some young activists and organizers, one of the most prominent voices was Dr. Melina Abdulla, one of the co-founders of the original Black Lives Matter chapters. She still serves as the leader of the group’s Los Angeles chapter.
In the interview, Dr Abdulla lamented the fact that she is being forced to choose between two old white men who both represent America’s history of ‘violent racism’.
“People are feeling dismayed that the choices are between, you know, a violent white supremacist and another person who represents that same system,” she said,
Biden infamously said nothing about the violence unfolding in America’s streets until he realized that it was hurting him politically.
Another activist attacked Biden for being out of touch with the American proletariat.
“I think sometimes, Joe Biden and Trump, and our party, on both sides, are blinded by the struggles that the lower end of Americans are feeling today,” said South Carolina-based activist Lawrence Nathaniel of the group “I Can’t Breathe” before adding that he has been weighing the idea of casting his vote for a third-party candidate.
The report is merely the latest piece of evidence that Biden’s campaign has failed to garner enthusiastic support from leftists who supported his erstwhile primary rival, Bernie Sanders.
It just goes to show: trying to pander to the proponents of identity politics is merely a drain on political capital.
Watch the video below:
via ZeroHedge News https://ift.tt/3d7D6lq Tyler Durden
Last night, President Donald Trump transmitted an epic tweet-storm seemingly targeted toward all officials within the executive branch; and the intelligence apparatus writ large:
One important note of caution: there is a big difference between “authorized” and “ordered”. On May 23rd, 2019, President Trump authorized AG Bill Barr to declassify all documents and despite much optimism nothing happened {Go DEEP}. However, President Trump references that lack of inaction in the next series of tweets:
Presumably “people” who “acted very slowly” would pertain to AG Bill Barr, FBI Director Chris Wray, CIA Director Gina Haspel, State Dept Secretary Mike Pompeo and former ODNI Dan Coats. President Trump asks those agencies now to “Act!!!”
President Trump also expressed the same frustration many of us feel about how these agencies and institutions have operated only to protect their own interests. He even re-tweeted the meme of Bill Barr to drive home the point.
So I had to constantly fight off all of this Scum, achieve more than any other President in First Term, and then they talk Chaos. They created crimes against me and this administration! https://t.co/jlITzFMH2E
Whether anything comes of this latest, seemingly stronger, emphasis and request from President trump is an unknown. However, again, this is an authorization for release of documents and not a direct order.
There are likely legal reasons for this approach, and no doubt there are advisors around the office of the president who would want him to take a more cautious approach.
Several people are pointing toward an announcement of a press conference by the DOJ Wednesday morning and attempting to connect the tweet-storm to the presser. However, my gut tells me they are two distinctly different topics.
But we can keep our fingers crossed.
Whatever the case may be, we will receive the answer later this morning.
Video from the UK shows a worker at a crematorium scolding mourners during a funeral because they moved their chairs to be closer to each other during the service.
Under draconian covid rules, funerals services are limited to 30 people, and they must all wear masks and sit 2 metres apart from each other.
The Daily Mail reports that Craig Bicknell, attending his father’s funeral last week, was chided during the ceremony for attempting to comfort his mother.
Video footage shows Mr Bicknell and his brother moving their chairs and putting their arms around their distraught mother, prompting a member of staff to come pacing over waving his arms and warning the family to “move the chairs back,” saying “you were told”.
Watch:
Writing on Facebook Mr Bicknell pointed out the idiocy of the action.
“I can sit in a restaurant, I can sit in a pub, I can live at her house, I can travel in a limousine to the crematorium with 6. But when I want to give my mum a cuddle at dads funeral, a man flies out mid service shouting stop the service and makes us split… A devastating day made even worse.”
It is this kind of lunacy that is causing people’s patience to wear extremely thin when it comes to everything covid.
“It scared my daughter and shocked everyone in the room,” Mr Bicknell continued, adding “This is not how funerals should be and with the guidelines in place for pubs, bars, public transport etc, how this can carry on at funerals is beyond belief.”
The video has since gone viral, with people on social media voicing their disgust.
“Although I do not know them, my condolences to the family involved. I am absolutely f***ing incensed,” one person wrote.
“The way in which the service was interrupted and the manner in which they were spoken to are beyond forgiveness. I think I would have got up and walked out in disgust,” another added.
“It is shocking, you should not separate family members who live together when attending a funeral. In fact it’s more than shocking, it is down right cruel!” another commenter contributed.
Another person highlighted that this is not an isolated incident, and that it is deeply affecting people’s mental health.
“We went through this in April and I was unable to console my own children with the loss of their beautiful nanna my amazing mum. The effect on us mentally is indescribable the pain is long felt. As a family we feel we have not been able to honour my darling mum,” the commenter urged.
While these kinds of ridiculous restrictions do nothing to protect anyone’s health, they are adept at breaking the human spirit.
via ZeroHedge News https://ift.tt/3nrCaNp Tyler Durden
WTO Warns 2021 “Could Slow Sharply” After Better-Than-Expected Rebound So Far Tyler Durden
Wed, 10/07/2020 – 04:15
The World Trade Organization’s latest global trade report shows signs of a rebound from the virus-induced downturn earlier this year, but the 2021 recovery still remains highly uncertain.
WTO upgraded its forecast for global trade in goods, which was published in a report Tuesday on its website. The upgraded does not mean world trade is out of the woods yet because the level was still at levels last seen during the dark days of the global financial crisis a decade ago.
The report now estimates a 9.2% drop in the volume of world merchandise trade for 2020, followed by a “weaker recovery” scenario of 7.2% in 2021.
“These estimates are subject to an unusually high degree of uncertainty since they depend on the evolution of the pandemic and government responses to it,” WTO wrote in the report.
WTO’s April forecast estimated merchandise trade would plunge between 13 and 32% this year, the collapse in trade was described by WTO Director-General Roberto Azevedo as “ugly” in April, before rebounding 21 and 24% in 2021.
Strong trade performance in June and July “brought some signs of optimism for overall trade growth in 2020,” the report said.
WTO warned the pace of economic activity “could slow sharply once pent up demand is exhausted, and business inventories have been replenished. More negative outcomes are possible if there is a resurgence of COVID‑19 in the fourth quarter.”
WTO published a chart pack to visualize how the COVID-19 induced slump broke world trade.
World merchandise trade plateaued in 2018, began sliding in 2019, then the virus-induced global recession created a shock. It wasn’t until global central banks and governments pumped trillions of dollars into financial markets to save the global economy from imploding. However, it’s the rule of diminishing returns; the next round of stimulus won’t be as powerful to lift global economic activity as slowdown fears emerge due to a resurgence of the virus.
World merchandise trade plunges in 2020 with an uncertain recovery in 2021.
Here are the optimistic and pessimistic scenarios of world merchandise trade.
Declining merchandise exports and imports by region.
World services trade activity index in freefall.
Automobiles, travel goods, footwear, clothing, and iron and steel were some of the goods experiencing the worst declines.
While outlooks continually change, the World Bank recently said a full global recovery could take upwards of five years.
via ZeroHedge News https://ift.tt/36MzhRo Tyler Durden
