Revelers celebrating the Los Angeles Lakers’ NBA Championship crowded the streets and remained mostly peaceful in Los Angeles (even if there was not much mask wearing). Meanwhile in Portland, a “day of rage” produced anohter round of vandalism, looting, and wanton destruction. From the Oregonian:
A group of protesters toppled statues of former presidents Theodore Roosevelt and Abraham Lincoln and shattered the entrance to the Oregon Historical Society in Portland’s South Park Blocks late Sunday before moving into other areas of downtown, smashing storefronts and engaging in other acts of destruction.
As is becoming increasingly common, the “protestors” discouraged filming or recording of their activities:
The organizers had signaled their aggressive stance for the night, calling for “direct action” and demanding that the video live-streamers and photographers who had become staples of such events stay away.
People in the crowd were repeatedly admonished not to film. Passersby who happened upon the group were ordered by demonstrators to stop filming or delete photographs, including an apartment resident who had lasers shined at his eyes and a liquid thrown in his face as he appeared to shoot video of the scene from his terrace.
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“I felt I was trapped inside an erupting volcano with a howling dog..”
Its probably better not to bother watching the news this morning. It’s all just a bit too depressing.. Nothing sums up the utter sadness of this crisis as sadly as much as the elderly couple with tears in their eyes, banned from hugging each other because regulations say they must remain isolated. Judge society by how it treats its weakest members. Our society has clearly lost the plot.
It begs the question: is our current system of government capable?
It’s an important question. Without political stability – markets and economies are doomed.
There is lots of noise re the US elections, the number of new virus cases (1 million around the globe), regulatory threats to the Tech sector, the rising risks of a second wave of Covid-recession and job losses, and increasing geopolitical tensions. It’s all big-picture stuff..
However, it’s at the individual level where things really start to happen. It’s a single pebble shifting that triggers a landslide. It’s the butterfly flapping its wing…. You know the story. Maybe the tipping point is a worker who just lost their job in a cinema because some exec decided to delay a film release. Or maybe it’s in the petty bureaucratic pain of trying to deal with a bank, or get an appointment to get your eyes tested. (I’m told the number of home workers suffering eye strain has gone through the roof.)
As we get more and more frustrated and annoyed, there is an increasing sense that nothing really works or makes much sense anymore. Our anger and sense of injustice is rising.
Whoever shouts loudest seems to get all the attention.
Things just ain’t working.. Nothing seems to make sense any more. We are losing faith in decision makers. Let me illustrate declining confidence with a true and very current story:
Let’s say the biggest crisis facing the planet isn’t Covid, but climate change. Let’s all agree on the need to cut carbon emissions and focus resources into renewable power. Excellent. No problem with that. To make renewable power you need to replace our fossil fuel economy and build new infrastructure; wind farms, solar arrays, nuclear power stations, etc – and build these things you need steel.
To make steel you need Metallurgical Coal. At the moment, Europe gets the bulk of its Met Coal by ship from Australia or the Americas by ship, creating millions of tonnes of CO2 carbon miles, while transport costs push up the cost of making steel.
There is a shovel-ready new UK coal mine ready to be dug. It will produce high quality metallurgical coal. It will be transported to European steel mills at a fraction of the cost and carbon miles of imported coal. The mine will create 500 new jobs in a depressed part of the UK. It’s a win-win-win; cutting CO2 emissions, cutting steel prices and creating jobs. The deal had the approval of local politicians, the electorate, local “Red Wall” MPs and passed every stage of approval.
But…
Coal is not popular. Most people aren’t aware there is a distinction between dirty polluting thermal coal, and the high-grade coal needed for steel. The project attracted the ire of Green campaigners and Extinction Rebellion. They said it will have a detrimental effect on climate change. How? It would have reduced CO2 emissions. It would have cut the cost of producing renewable power.
Green campaigners make a lot of noise – they shout loudest. Scared governments don’t like noise. Despite all the positive, environmentally logical and economic positives of the deal – Government has stepped with a “hold” order to review the decision again, creating delay. It creates uncertainty on funding the project – a critical aspect of any major investment project. (Let me declare an interest – it’s a deal I’ve been working on… and I won’t even mention the number of investment managers too scared to even discuss the deal at investment committees just because its coal. There is good and bad coal.)
That is the little picture – the effects of Government wobble at the “coal” face…
The big picture is even worse.
Confidence in democracy has underlain the Triumph of the West these last 75 years. But today it has become creaking and strained. Political stability is everything. Confidence in government and its ability to solve this or any other crisis is crumbling – and that will have profound social and market consequences.
If the Chinese were looking for a moment to challenge – then they could not pick a better time. Doubt, confusion and dissent has been sewn across the West… “The supreme art of war is to subdue the enemy without fighting…” as Sun Tzu famously emblazoned on his T-Shirt.
The Coronavirus has become the trigger for something much larger and repressed that’s been brewing over the last two decades. The degree to which society has become imbalanced by the distortions created in markets has not got enough column inches. Ultra- low interest rates and Quantitative Easing were supposed to unlock growth and jobs – but have ended up fuelling corporate greed and income inequality. Governments are dithering while electorates get angry.
Look at the news… and wonder how the world will cope with the 1 million new coronavirus cases announced since Friday.
Wonder about the intense, nasty polarisation in the US election, or coming up with whatever Wizard Wheeze Boris will unleash to isolate, depress the UK into economic suicide, or France’s idiot determining his electoral prospects depend on wrecking a Brexit deal to look tough in front of fishermen… etc
Wonder about the arrest of plotters planning to “arrest” a serving US state governor to put her on trial for treason. Wonder about the fact American’s are willing to lie to each other about whether the plotters were right or left wing… half-a-dozen US right wing sites say the plotters called “Trump a Tyrant” – therefore they can’t be Proud-boys and it must be a left-wing plot. Wonder about an elected US law-enforcement officer, the local sheriff, saying the plotters were legally in the right.
Wonder about the likelihood a second massive economic dip as the global economy shuffles into a new Covid ditch over the next few months. Wonder how we will cope with it. Our politicians look hopeless.
Here in the UK, the actions of politicians over the last 6 months have created a new 3 class society:
i) there are those of us furious and angry about the botched response and pragmatic enough to understand we had to save the NHS not because of the virus, but because it was unprepared because of bureaucratic failure,
ii) there are the terminally terrified who are totally invested in the fallacy Covid is set to decimate us, and
iii) an increasing number of skivers and fraudsters seeing government largesse as easy money – the guys who call into say the kids have got a sniffle so they are isolating for the next 2 weeks…
In such angry times, conspiracies quickly take hold.. What else is government holding back…? Think of how these little pebbles are not tumbling down the hill, heedless of common sense…
If you were worried about populism after the fury at bankers being bailed out in 2008 – then be very worried now.
We first started to worry about populism as dole queues lengthened, post GFC austerity bit, and cheap politicians looked for easy targets like immigration. We didn’t worry too much. The Greeks elected a left-wing government and got a bit shirty about being told what to do by Europe? Or the Spanish left started to complain about being walked all over.. And then it was Yellow Vests bringing Paris to a stand-still last year.
Or here in the UK the bright hopes of the smug Tory-Liberal alliance skidded into the brutal reality of Brexit. Or how the morally ambivalent Johnson had the choice of leading either the remain or leave factions. And in the US – they elected Donald Trump.
Don’t think it ends there. Levels of dissatisfaction with politics will continue to rise. If Biden wins he will face worse than a dozen Mid-West crackpot militiamen. (And I guarantee some US idiot will send me a threatening email describing these guys as patriots. I say to them FROAD.)
As I’ve blogged my way through the crisis I did try to look for positive angles – how shifts in new technologies will accelerate positive transitions, the possibilities of new approaches to fiscal policy to boost coordinated growth and why sovereign debt may not be the crisis we fear, although burgeoning corporate debt is wrecking the evolutionary mechanisms of capitalism. I’ve generally been hopeful that the days of corporate excess and soaring inequality since the botched regulatory and central bank response to the 2008 crisis could still result in a positive outcome towards a more inclusive “stakeholder” capitalism – benefiting us all.
Up until recently I thought growth and capitalism would triumph over the stupidity of populism. This morning I am not so sure..
via ZeroHedge News https://ift.tt/36VHcvW Tyler Durden
Futures Jumpe, Near Record High On “Stimulus, Earnings Optimism” Tyler Durden
Mon, 10/12/2020 – 08:06
As Mohamed El-Erian says, this is market that will just keep going up no matter what, and will goalseek whatever narrative it needs to “explain” the levitation catalyzed by $90 trillion in central bank liquidity. Today, that narrative is focusing on – what else – fresh optimism about fiscal stimulus despite there being virtually no hope of Congress reaching a deal before the elections, as well as “improving corporate earnings” with Q3 earnings season set to begin officially tomorrow when US banks start reporting.
All of that combined to push S&P futures 0.5% to fresh five week highs of 3,492 and less than 80 points away from the all time high of 3,568 hit on Sept 2, with the index rising in a straight line for 160 points from its Tuesday lows, while global stocks hit a five-week high led by China’s post-holiday surge as investors bet on a steady recovery for the world’s no. 2 economy, offsetting “worries” about rising COVID-19 cases in Europe and the United States. Oil fell, the dollar rose and Treasuries are closed for Columbus Day. House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin are expected to talk more this week about an economic stimulus plan.
European countries were considering adding fresh travel curbs due to rising coronavirus, a contrast to Asia-Pacific countries including Singapore, Australia and Japan, where a gradual easing of some international travel restrictions is under way. Still, global markets traded higher as investors hoped for coronavirus aid in the United States, with the Trump administration on Sunday calling on Congress to pass a stripped-down relief bill, which of course the Democrats have said they won’t consider. But… as El-Erian said, all about the narrative…
On the stimulus front, Nancy Pelosi and Steven Mnuchin were expected to (what else) talk more this week about an economic stimulus plan. Still, even if they manage to strike a deal, there’s almost no chance of getting legislation written and passed by Congress before the election. “There is not a denying of the fact that investors would appreciate easier accessibility to cash and cheaper cash as a result of even more stimulus,” said Jameel Ahmad, director of investment strategy at Naga Group AG in London, pointing out the obvious.
That painfully boring and repetitive narrative was enough to send Europe’s Stoxx 600 up 0.5%, with insurers and automakers rising the most among sectors. E-commerce retailer Allegro.eu SA shares jumped as much as 61% in its stock market debut, becoming the largest company on the Poland’s main exchange.
The MSCI index of global stocks was back to its early September highs, mainly driven by a 3% gain in Chinese blue chips. China returned from an eight-day Mid-Autumn festival with investors encouraged by a robust rebound in tourism and ebbing coronavirus cases. “China is playing a bit of catch-up still from Golden Week. I actually think as influential was the announcement about the upcoming Shenzhen reform speech by President Xi,” said Chris Bailey, European strategist at Raymond James.
Chinese President Xi will deliver a key speech in Shenzhen on Wednesday to mark the anniversary of the establishment of the country’s first special economic zone in the southern city 40 years ago, according to state media Xinhua. Chinese blue chips have gained 17% this year, compared with an almost 8% gain by the S&P 500, gaining on optimism that President Xi Jinping is planning to further open parts of the economy to foreign investment. Foreigners’ buying of Chinese government bonds hit its fastest pace in more than two years last month. Chinese assets were also boosted by rising chances of Joe Biden’s victory in the U.S. presidential election – an administration seen less likely to incline toward tariffs and trade disputes.
In currency markets, the yuan slumped 0.8% hitting the China-sensitive Australian dollar, on track for its worst single day drop since March after posting the biggest one-day surge since its 2005 de-pegging to the USD, after the People’s Bank of China scrapped a requirement for banks to hold a reserve of yuan forward contracts, removing a guard against depreciation (see more here).
The yuan is up more than 7% since late May and had shot higher on Friday as investors wagered that a Biden presidency would drive smoother relations with the Unites States. It last sat at 6.7437 per dollar in offshore trade.
“We continue to expect a stronger yuan on the back of our expectation of solid Chinese growth and favourable interest rate differentials between China and the U.S.,” Goldman Sachs’ analysts said in a note, with a 12-month yuan forecast at 6.50.
As the yuan dropped, the dollar gauge advanced as most currency pairs consolidated recent moves versus the greenback, while the Treasury market was closed for Columbus Day. The euro edged 0.2% lower to $1.1805 and the yen firmed to 105.48 per dollar. The kiwi dipped 0.1% with the softer yuan to sit at $0.6661. Most G-10 currencies traded in confined ranges versus the dollar; the Japanese yen led gains while the euro slipped but still held above 1.18 per dollar.
While cash Treasuries are are closed for Columbus Day, Treasury futures were slightly higher across long-end after a lack of weekend progress on a stimulus deal. The German curve bull flattened with long-end yields lower by 1.5bp. Treasury futures imply yields slightly lower across the long-end of the curve, although within a basis point of Friday close.
In commodity markets, oil prices were back under pressure after the resolution of an oilworkers strike in Norway and the resumption of production after a storm in the Gulf of Mexico. Gold held steep Friday gains at $1,929 an ounce.
On the corporate front, earnings from JPMorgan Chase & Co., Citigroup Inc., Goldman Sachs Group Inc. and Johnson & Johnson are due this week.
Market Snapshot
S&P 500 futures up 0.5% to 3,489.75
STOXX Europe 600 up 0.6% to 372.41
MXAP up 0.6% to 176.47
MXAPJ up 1.1% to 586.14
Nikkei down 0.3% to 23,558.69
Topix down 0.2% to 1,643.35
Hang Seng Index up 2.2% to 24,649.68
Shanghai Composite up 2.6% to 3,358.47
Sensex up 0.2% to 40,603.40
Australia S&P/ASX 200 up 0.5% to 6,131.97
Kospi up 0.5% to 2,403.73
Brent futures down 1.4% to $42.25/bbl
Gold spot down 0.3% to $1,924.18
U.S. Dollar Index up 0.2% to 93.20
German 10Y yield fell 1.3 bps to -0.54%
Euro down 0.1% to $1.1813
Italian 10Y yield fell 3.5 bps to 0.521%
Spanish 10Y yield fell 2.8 bps to 0.148%
Top Overnight News from Bloomberg
The Bank of England is seeking information from U.K. financial institutions on their ability to implement negative interest rates without damaging their business
A push for a ECB green lending program to help the fight against climate change has run into skepticism amid some board members despite attracting the interest of President Christine Lagarde
Boris Johnson will step up efforts to contain the spread of coronavirus, outlining a tiered alert system that would see millions of Britons subject to more stringent curbs on their everyday lives
President Donald Trump and House Speaker Nancy Pelosi blamed each other for a lack of progress on a new plan to support the U.S. economy, while a senior White House aide said he expects talks to continue and a Fed official said fiscal help is sorely needed
A quick look at global markets courtesy of NewsSquawk
APAC equity markets kicked the week off mixed as the region initially failed to fully capitalise on Friday’s Wall Street gains, which were further fuelled by NEC Director Kudlow emphasising US President Trump’s desire for a stimulus package, albeit the weekend brought nothing to fruition on a broader deal and talks are set to continue today. However, sentiment somewhat picked up after the Chinese cash open, ASX 200 (+0.5%) was supported by mining names as executives attend the pandemic-delayed “Diggers and Dealers Mining Forum” where the resources sector presents and showcases projects in arguably the most important event for the sectors, whilst the index was also supported by Link Administration whose shares rose some 25% after a consortium presented a bid for the Co. with a sizeable premium. Nikkei 225 (-0.3%) was hampered by the JPY strength seen on Friday, whilst PPI and Core Machinery data was overall mixed. South Korea’s KOSPI (+0.3%) shrugged off North Korea’s new ICBM unveiling and focused on easing COVID-19 restrictions in the country, while chipmakers in Seoul saw a boost after month-to-date data showed semiconductor exports +11.2% YY. Hang Seng (+2.2%) and Shanghai Comp (+2.3%) were bolstered by the PBoC announcement that it will essentially eliminate the 20% RRR on FX forwards for financial institutions, with China A50 rising 4% at one point. Finally, 10yr JGB futures trade relatively flat as it tracks the broader price action across the fixed income futures complex.
Top Asian News
China’s Central Bank Sets Yuan Fixing Weaker Than Estimated
Top Glove Is Said to Weigh $1 Billion Hong Kong Listing
Year’s Biggest Bank Merger Sealed as Saudi Rivals Reach Deal
Evergrande’s Top Creditors Are Reducing Loan, Bond Exposure
European equities (Eurostoxx 50 +0.3%) trade with modest gains in what has been a relatively choppy morning thus far. From a macro standpoint, many of the same themes (US stimulus & Presidential Election) remain at forefront of investor focus, however, little in the way of incremental developments have been seen over the weekend. As is stands, President Trump is adamant that he wants to do a deal on stimulus, although, House Speaker Pelosi and Treasury Secretary Mnuchin remain at an impasse in talks. Even if the two were able to broker an agreement, opposition in the Senate remains a key sticking point and as such, the prospects of a pre-stimulus deal remains unlikely. On the election front, polling over the weekend continues to move further in Biden’s favour with his lead extending to 12ppts (prev. 10ppts) against President Trump, according to ABC News/Washington Post. Furthermore, beyond the national headline polling, a Baldwin Wallace University Great Lakes Poll, showed Biden leading Trump by 5-7ppts in swing states such as Michigan, Wisconsin, and Pennsylvania. As such, absent a tightening of the race, increased weight will likely be placed on the prospect of a “blue wave”. From a European perspective, it has been a somewhat uneventful session thus far with performance across indices relatively contained. The main outlier, to the upside is the AEX (+0.7%) amid gains in KPN (+7.3%) with the Co. subject to potential takeover interest from EQT. Elsewhere from a sectoral standpoint, travel & leisure names lag peers as COVID-19 cases across the region continue to climb, whilst energy names are also seen lower, in-fitting with price action in the complex. Daimler (+1.3%) are providing some reprieve to the auto sectors after being upgraded to buy from sell at Goldman Sachs and reiterated overweight at JP Morgan Chase. Stateside, traders will be cognizant of reports noting that EU leaders are said to be drawing up a “hit list” of up to 20 large-cap tech companies, which will likely include Facebook (FB) and Apple (AAPL). The Co.’s on the list will reportedly have to comply with more stringent regulations compared to smaller competitors, sources stated.
Top European News
Europe Braces for Tighter Virus Curbs Amid ‘Tipping Point’ Fears
ECB Doubters Rebuff Green Loan Proposal Despite Lagarde Interest
France Must Avoid General Lockdown by All Means, Castex Says
British Airways Chief Cruz Steps Down in Shakeup at Parent IAG
In FX, the Renminbi has retreated from multi-month peaks against the Dollar around 6.9000 in wake of the PBoC’s decision to slash the RRR on FX Forwards to zero from 20% with immediate effect before regaining some momentum from the latest midpoint fix that was significantly firmer, albeit below expectations at 6.1726 from 6.7796 vs 6.7052 forecast. However, the Lira has not derived any lasting traction from yet more drastic CBRT action to try and arrest its slide via a hike in the rate on reserves to 7% from 5% as Usd/Try trades near the top of a 7.9130-7.8570 band amidst the ongoing Turkish stand-off with Greece, its involvement in the Armenian-Azeri spat and looming test of Russian S-400 missile system.
USD – Notwithstanding the gains noted above, the Greenback spent much of the morning on the backfoot with the DXY initially struggling to keep its head above the 93.000 level within a tight partial-US holiday 93.168-012 range, close to last Friday’s 92.997 low ahead of US CPI data tomorrow, and with no material progress on the fiscal relief front. However, most recently the DXY has gained some traction and printed fresh session highs of 93.227.
CHF – The G10 laggard irrespective of Swiss sight deposits showing a decline in domestic balances and the latest SECO GDP updates revealing a marked upward revision to 2020 GDP, as the Franc pivots 0.9100.
CAD/GBP/NZD/EUR/AUD – All marginally softer relative to their US counterpart, or rather off recent highs with the Loonie hovering below 1.3100 in wake of last Friday’s stellar Canadian jobs report and with the nation observing Thanksgiving today, while Sterling has faded from 1.3050+ peaks amidst more zero and negative rate inferences from the BoE awaiting commentary from Haskel and Governor Bailey, but also monitoring the outcome of further UK-EU trade talks before this week’s Summit. Meanwhile, the Kiwi is straddling 0.6650, Euro holding around 1.1800 where the 50 DMA resides and Aussie retaining 0.7200+ status with support from decent option expiry interest at the strike (1 bn). Back to the Pound, but in the context of the Eur/Gbp cross that is meandering from 0.9076 to 0.9049, technical markers may be influential ahead of the aforementioned Brexit negotiations and Summit in Brussels as the 50 and 100 DMAs are in close proximity at 0.9060 and 0.9036 respectively.
JPY – The Yen has extended recovery gains from sub-106.00 through the 50 DMA (105.78) and away from 1.4 bn expiries at the round number firmer than anticipated Japanese machinery orders, but Usd/Jpy has not made a sustained break of 105.50 to expose last week’s circa 105.23 low.
SCANDI/EM – Softer crude prices are not hampering the Norwegian Crown and perhaps in recognition of the fact that the country’s labour union and oil firms reached a pay deal on Friday to end strike action. Eur/Nok is sub-10.8000 vs Eur/Sek either side of 10.4000 in the run up to Swedish CPI on Tuesday. Elsewhere, buoyant risk sentiment may offer EMs some underlying support, but the Real may miss out given a market holiday in Brazil and the Rand could get some independent impetus from SA manufacturing production.
In commodities, WTI and Brent front month futures have for the most part continued the overnight performance which saw the benchmarks under modest pressure as supply-side developments remain in focus; although, most recently crude prices have stabilised off lows a touch. WTI and Brent are softer by just shy of USD 1.0/bbl each and in proximity to session lows. Returning to those supply side factors; firstly, as Hurricane Delta has passed offshore production is being restored in the Gulf region with Shell sending units into the area to re-commence operations most recently. Secondly, El-Sharara which is Libya’s largest oil field has now restarted production according to sources, this will initially by at ~40k BPD vs. the fields 300k BPD theoretical capacity – at present, no timeline on when the field will return to full production. Finally, strike action is to conclude in Norway after unions came to a new wage agreement after 10-days of disruptions and amidst concerns that the Johan Sverdrup field, ~470k BPD, could have shut this week if the action continued/intensified. Aside from these factors easing supply constraints and thus hampering prices participants look towards both the IEA & OPEC monthly reports due later in the week and, as ever, on the COVID-19 implications for demand. Moving to metals, spot gold is softer this morning as sentiment overall remains cautiously positive but choppy and given the USD’s grinding upside in the latter half of the session. Elsewhere, reports note that Chinese state-owned energy providers/steel mills have received a verbal notice to stop imports of Australian coal with immediate effect; however, the Australian Gov’t has not been notified of any such formal action – a development to keep on the radar given the already strained relations between Australia & China at present.
US Event Calendar
No major earnings releases scheduled
DB’s Jim Reid concludes the overnight wrap
I have to say I had an astonishing round of golf over the weekend. I had 6 birdies, a hole in one but lost four balls in the water and ended up on one hole caught up in a windmill and on another in a pirate ship. Yes I played the first round of crazy golf with my kids. It was chaos. That was Saturday and yesterday evening we had to go down the local Covid test center as one of my twins had a very high temperature. We’ll likely know in the next 24 hours as to whether yet another self isolation stint beckons. That would mean even more chaos at home.
Chaos seems to rule in both politics and the virus planning at the moment. On the US election, we were originally scheduled to have the second presidential debate take place on Thursday, but President Trump last week rejected the Commission on Presidential Debate’s proposals for a virtual format. Biden is expected to take questions instead from voters and Trump is expected to have some kind of rally. More and more attention is focusing on the Senate race as Biden now has a double digit lead in the poll of polls (10.4pp according to fivethirtyeight.com). A Washington Post/ ABC News poll which was released yesterday showed Biden leading by 12 points. At the time of writing, FiveThirtyEight’s model puts the chances of a Biden Presidency at 86%, with Democratic control of the Senate at 69%. The latest on the stimulus bill is that both sides are still blaming each other for a lack of progress. It still feels like an agreement before elections is notably less likely than having one.
In terms of weekend news, the PBoC announced on Saturday they are lowering the reserve requirement for some forwards instruments starting from today. This seems to be on concerns around the recent rapidly rising Yuan which saw its biggest rise against the dollar for 15 years on Friday and to 17-month highs. In response, the onshore yuan is trading down -0.39% this morning to 6.7212 as the rule change would make it easier to bet against the currency. Meanwhile, equity markets in the region have also started the week on front foot with the Shanghai Comp (+2.27%) leading the gains partly on the back of news that Chinese President Xi could unveil plans to further open parts of the economy to foreign investment. The Hang Seng (+2.03%), Kospi (+0.30%) and Asx (+0.28%) are also trading higher while the Nikkei (-0.31%) is bucking the trend. Futures on the S&P 500 are trading up +0.14%.
In other weekend news, the ECB chief economist Philip Lane said in an interview with the WSJ that the ECB isn’t happy with the inflation outlook and will decide “meeting by meeting” whether more monetary stimulus will be needed. He said that “the current inflation level remains far away from our goal and we don’t think that is a satisfactory inflation outlook.” Meanwhile, the governing council member Ignazio Visco said in a separate interview with Il Corriere della Sera that monetary policy “must be expansive and remain so for a long time” while another member Peter Kazimir told the Hospodarske Noviny newspaper the ECB will do “everything” to lift inflation. So, seems like a concerted effort from the ECB but I suppose we’ve heard this before.
On the virus, the UK reported over 100,000 cases last week which was higher than 68103 a week ago. As the virus continues to spread in the UK, further restrictions are expected to be announced today in areas with high cases. France also reported a total of 115604 cases last week compared to 80621 a week ago. Italy (29621 vs. 15459), the Netherlands (39059 vs 27673), Belgium (29308 vs 14820) and Germany (24736 vs. 15234) also reported higher cases this past week. Across the other side of Atlantic, the US also saw 340,894 new cases last week as against 311,428 a week ago. Meanwhile, in Asia, South Korea revised its social distancing alert to its lowest as the second wave has come more under control. See the table below for the latest case numbers. As ever the 7-day rolling number is the best one to follow.
In terms of the highlights for the week ahead, US earnings season kick offs, with a number of financials releasing this week. There will be some attention on the European Council summit on Thursday and Friday at an important point in the UK-EU negotiations. This meeting has previously been Prime Minister Johnson’s self-imposed deadline to reach agreement on a trade deal. It seems progress has been made and if this continues I would expect talks to continue beyond that self imposed UK deadline. Mr Johnson held weekend talks with Macron and Merkel so the right people are talking. The press (Bloomberg) are reporting that the French are digging in their heels over fishing rights and this is now the main issue.
In terms of the regular data and central bank calendar, this week is a fairly quiet one. On the data side, we’ll start to see some hard data from the US for September, with the release of the CPI (Tuesday), retail sales and industrial production figures (both Friday). China will also be releasing their trade balance for September (Tuesday), and we’ll also get the Euro Area’s industrial production for August (Wednesday). On the central bank side, the two G20 decisions expected next week will come from Bank Indonesia on Tuesday and the Bank of Korea on Wednesday, with the consensus expecting rates to stay on hold in both cases. Otherwise there’ll be a number of speakers, including Fed Vice Chairs Clarida and Quarles, and Bank of England Governor Bailey. We will also see the IMF/World Bank annual meetings taking place as well with the latest forecasts out tomorrow.
In terms of US earnings a number of financials will lead the way. As for the highlights, we’ll hear tomorrow from Johnson & Johnson, JPMorgan Chase, Citigroup and BlackRock. Then on Wednesday, we have UnitedHealth Group, Bank of America, ASML, Wells Fargo, Goldman Sachs and United Airlines. Thursday sees releases from Morgan Stanley and Walgreens Boots Alliance. And on Friday we’ll get earnings from Honeywell International and BNY Mellon. See DB earnings’ season preview here.
Staying with advertising, DB will be hosting another Global Macro Client Call with DB Heads of Trading & Research/Strategy on 15th October 2020 at 2:00pm CET. Click here to access registration details.
Elsewhere our corporate credit research team has recently published its latest quarterly list of trade ideas in the European leveraged finance space. A video in which analyst team summarises their trade recommendations can be accessed here.
In terms of recapping last week, US fiscal stimulus dominated market commentary as the President, his advisors, and Congressional leadership all seemed to be at odds on the likelihood of a follow on stimulus package being passed ahead of the election. Though the market was skittish to the various headlines, overall seemed to look through the November election and focus on the increasing probabilities of a Biden administration and the high probability that significant stimulus could come slightly further down the road. The S&P 500 rose +3.84% (+0.88% Friday) on the week, the largest weekly gain since the week ending on July 3. The index is now down just under 3% from all-time highs. The NASDAQ rose +4.56% (+1.39% Friday) for the tech-concentrated index’s third weekly gain in a row. The VIX volatility index fell -1.4pts to 25.0, the lowest level since late August. European equities rose as well with the Stoxx 600 ending the week +2.11% higher (+0.55% Friday), the fourth weekly gain out of the last five weeks. Rising risk sentiment kept equites churning higher even as newly confirmed Covid-19 cases hit new highs across Europe, with the IBEX (+2.91%), FTSE 100 (+1.94%), and CAC (+2.53%) all posting strong weekly equity performances.
The dollar dropped (-0.84%) for a second straight week as risk assets rose to their highest level in over a month. The drop in the dollar saw gold gain +1.61%, with the precious metal rising to $1930/oz and edging back closer to the all time high of $2063.54/oz seen on August 06. With risk assets rising and the dollar falling, oil prices rebounded from the previous week’s precipitous drop. Brent crude prices rose +9.12% to $42.85 and WTI prices rose +9.58% to $40.60. It was the largest move for oil prices since the start of June. Core sovereign bond yields rose as investors turned toward riskier assets last week. US 10yr Treasury yields rose +7.3bps (-1.2bps Friday) to finish at 0.774% and 10yr Gilt yields rose +3.4bps (-0.9bps Friday) to 0.28%, while 10yr Bund yields were up just +0.9bps (-0.4bps Friday) to -0.53%. 10yr BTPs continue to tighten with yields falling -6bps (-3.5bps on Friday). Elsewhere in fixed income, corporate credit spreads tightened on both sides of the Atlantic. US high yield cash spreads tightened -46bps, while IG spreads tightened -8bps. Here in Europe, HY cash spreads were -19bps tighter as IG spreads came in -5bps.
In terms of data released on Friday, UK GDP growth for August came in lower than expected at 2.1% (vs 4.6% expected), which was well below last month’s revised 6.4%. French industrial production was also below expectations at 1.3% (vs 1.7% expected). However in Italy, industrial production surprised to the upside coming in at +7.7% (vs 1.4 % expected) after last month’s reading was revised down to +7.0%. Lastly, August’s reading for wholesale inventories in the US rose 0.4%, just a tenth under expectations.
via ZeroHedge News https://ift.tt/33QcVNa Tyler Durden
Hundreds Of Bars To Close As BoJo Backs Tough New ‘Localized’ Lockdowns: Live Updates Tyler Durden
Mon, 10/12/2020 – 07:24
Summary:
UK adds new localized lockdowns; 100s of bars to close across northern England
Brussels pushes uniform travel restriction rules
China uncovers largest cluster in more than two months
the US and India see new cases decline
AstraZeneca antibody trial enters final stage
* * *
Despite this weekend’s unprecedented flip flop by the WHO, which, after months of urging compliance, turned around and urged world leaders to stop using lockdowns, UK Prime Minister Boris Johnson is reportedly planning to unveil tough new regional lockdown measures that will force hundreds of pubs in northwestern England to close for at least 4 weeks, beginning at 1700 local time on Wednesday.
BoJo expects to expand restrictions by signaling that six boroughs in Liverpool, with a population of 1.6 million people, could be the first to be placed on the highest level of new restrictions. In adition to pubs, gyms, casinos, bookmakers and social clubs will be shut for at least a month, but perhaps for up to 6 months, as BoJo outlined HMG’s post-lockdown COVID-19 policy during a press briefing where he also threatened massive fines for social distancing scofflaws.
Locals leaders aren’t exactly thrilled with the government’s plans. Manchester faces similar restrictions to Liverpool, but was resisting on Sunday night as council leaders threatened legal action unless the Government increased its financial aid. Liverpool council chiefs were also demanding more money. Joe Anderson, the Mayor of Liverpool, accused the government of giving support “on the cheap”, arguing that the measures would be more generous if they affected London, according to the Telegraph.
BoJo is expected to use a briefing from the Commons to lay out the UK’s new three-tier “local COVID alert levels”, dividing hte country into medium, high, and very high-risk categories.
As public health officials focus on ramping up testing and contact tracing, the Army logistics corps has been called up to help with COVID-19 testing and contact tracing in the region through mobile centers staffed by soldiers, and HMG has provided additional money to pay for officials to help enforce the new rules.
Those in the “high risk” tier will continue with pub curfews until 10pm but will be expected to introduce restrictions barring households from mixing indoors, dubbed the “GOBI” approach – Good Outside, Bad Indoors – by officials. The restrictions in the medium tier remain the “rule of six” and 10pm curfews.
Elsewhere in Europe, countries are adopting more travel restrictions, prompting Brussels to propose a common criteria and threshold for deciding on the restrictions which would help EU citizens better understand the rules and how they differ between member states, according to WSJ.
Brussels wants EU members to use a common criteria when deciding whether to open or close their borders. The criteria include the cumulative number of new infections per 100,000 people in a 14-day period and the percentage of positive tests in a seven-day period.
Europe’s attempt to save its tourism season was partly successful, but the cost has been a surge in infections across Italy, France, the UK and Spain, which are logging as many new COVID-19 cases and hospitalizations – sometimes more – as they did during the first wave back in the spring. Since peaking in mid-August, air travel around the Continent has dropped sharply as numbers have rebounded.
Here’s some more news from overnight and Monday morning.
The recent spike in Covid-19 infections in Germany shouldn’t be compared to the spring’s level as testing is now more readily available, the Munich-based ifo institute said on Monday (Source: Bloomberg).
The Czech Republic plans to further tighten social-distancing rules to stem the European Union’s worst coronavirus surge — without repeating the economic paralysis from this spring. The government will on Monday decide on more steps to limit human contacts after it already banned cultural and sports events, closed some schools and ordered bars and restaurants to close at 8 p.m (Source: Bloomberg).
AstraZeneca said its antibody medicine, similar to products from Regeneron and Eli Lilly, is advancing into its final stage of clinical tests, and will be administered to more than 6,000 people starting in the next few weeks. The drug will be evaluated for its ability to prevent infections for up to a year in some people and as a preemptive medicine once patients have been exposed to the virus in others. Other trials will test its potential as a treatment once patients develop symptoms (Source: Bloomberg).
Belgium’s 14-day average rate rose to 387 cases per 100,000 inhabitants from 349 the previous day. That makes it currently the second-hardest hit country in Europe, behind the Czech Republic. In the capital, where bars were recently shuttered, the 14-day incidence rate surged to 758 per 100,000. More than 10% of tests performed in the past week came back positive, the highest positivity rate since late April (Source: Bloomberg).
India reported 66,732 new cases on Monday, bringing total infections to 7.12 million, while the daily rate of cases appears to be slowing, India is expected to surpass the US as the world’s worst hit country as soon as early next month. India’s death toll rose to 109,150 (Source: Bloomberg).
The US reported just 44,614 new cases on Sunday, snapping a four-day streak of 50k+ new cases.
China reported a new cluster of cases in the eastern port city of Qingdao, snapping a 2-month streak without local transmission, underscoring the risk of resurgence in countries that have achieved near-eradication of the pathogen. The city in Shandong province said on Sunday that it found three asymptomatic cases linked to a hospital which treats COVID-19 patients coming from abroad.
Expanded testing of hospital patients and staff then found another nine infections. Half of the 12 cases in the cluster were “asymptomatic”. The city will likely assume a “warlike” posture as mass testing and shutdowns are imposed until the outbreak has been definitively stamped out (Source: Bloomberg).
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Economics Nobel Awarded To Robert Wilson, Paul Milgrom For ‘Improvements To Auction Theory’ Tyler Durden
Mon, 10/12/2020 – 06:24
Concluding this year’s list of Nobel awards, the 2020 Svirges Riksbank Prize in Economics – with its enhanced $1.1 million prize – has been bestowed upon Paul R. Milgrom and Robert B. Wilson for their work in improving auction theory leading to the creation of new auction formats that can be used to sell goods and services – like, for example, access to radio frequencies – that can be difficult to sell in a traditional market.
BREAKING NEWS:
The 2020 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel has been awarded to Paul R. Milgrom and Robert B. Wilson “for improvements to auction theory and inventions of new auction formats.”#NobelPrizepic.twitter.com/tBAblj1xf8
Given that the economics award wasn’t one of the original Nobel prizes willed by Alfred Nobel, the Swedish inventor of dynamite, Twitter was abuzz with memes joking that the award wasn’t a “real Nobel”.
Notably, after two women shared the 2020 award for chemistry, this year’s award for economics was once again awarded to two white men, a fact that we’re sure websites like Quartz will elucidate in their coverage.
Annual prizes for achievements in physics, chemistry, medicine, peace and literature were established in the will of Alfred Nobel, the Swedish inventor of dynamite, who died in 1896. The prize in economic sciences was added by Sweden’s central bank in 1968.
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They say if you don’t vote you can’t complain. They’re wrong. Complaining is prior to voting. It is deeper and more powerful than voting. It is the original act of politics. Before there was democracy, there was sitting around the campfire complaining about the way the headman allocated the shares of mastodon meat. Bellyaching about the boss is more than a political right. It is a human right.
And so, in Reason‘s 2020 election issue, we are here to complain. The candidates from the major parties are subpar. They display troubling authoritarian tendencies. Their records in office—one long, one short—are underwhelming and frequently self-contradictory. Their actions consistently fail to match their rhetoric. If they agree on one thing, it is that they have the right, and perhaps even the obligation, to tell you what to do in the bedroom and in the boardroom, in the streets and in the sheets. If they agree on a second thing, it is the necessity of spending ever-larger sums of taxed and borrowed money in pursuit of ever-vaguer goals. They helm parties that are similarly compromised and hypocritical.
Even if, by some miracle, you fully agreed with a set of principles and plans as articulated by one of the candidates in a particular campaign speech or policy paper, you could not reasonably have a shred of confidence that those principles would be carried through into consistent governance—something President Donald Trump and former Vice President Joe Biden have repeatedly demonstrated.
The fact that many voters in 2020 believe they must nonetheless actively support one of these two deeply flawed characters is a testament to the brokenness of the system that produced them. The fact that those voters feel like they only have two choices in the first place is a criminal failing in a country with such blooming, buzzing diversity in our commercial, social, and cultural lives.
Every presidential election of my lifetime so far has been “the most important election of my lifetime.” If you squint, that might even be true this time around. The executive grows more powerful with each passing term, and there’s no denying that 2020 has asked a lot of the occupant of the Oval Office. But it doesn’t follow logically that, because an election is important, you must hold your nose and go out of your way to vote for the candidate you merely hate the least.
Replacing your toilet is an important choice, and you’d be absolutely furious if your plumber told you that, despite the existence of numerous makes and models, due to the way the toilet selection system works you must pick right now between one that leaks and another that has a broken seat. The more fundamental something is, the angrier and more vocal you should be at being asked to choose between bad options. You do not have a moral obligation to talk yourself into the idea that a damp bathroom floor is OK, no matter what people are saying in your social media feeds or on your family phone calls.
We understand that many of our readers will be voting for one of the two major-party candidates, and may even feel some connection or loyalty to that candidate or the party he represents. We understand that those readers may find the notion of giving equal airtime to the failures of each candidate an abhorrent exercise in false equivalency and whataboutism. We disagree. We think the records of these two candidates are troubling enough that both deserve to be laid out in the weeks before the election. Reason is not here to attack your tribe or shame you for the way you choose to vote (or not vote). But we hope you agree that it would be preferable to live in a world where the stakes of any given election are lower and where there are more electorally viable tribes.
Here are a few things we are not saying in this issue of Reason:
We are not saying the outcome of this election doesn’t matter. Elections matter. The next four years will be different in important ways for many, many people depending on who is president. Different wars will be waged. Different taxes will be levied. Different laws will be passed. Different judges will be appointed. Different bureaucracies will be empowered. Different research will be funded. Elections matter. That’s why we’re so disappointed at the low quality of the available options.
We are not telling you how to vote. As we do every four years, we will ask Reason staffers to share who they’re voting for in the presidential contest and post the results online in October. We do this because we think it’s important for people who subscribe to our magazine and read our website and watch our videos and listen to our podcasts to know where our writers and editors and producers are coming from. More publications should consider this form of disclosure, especially those who claim to primarily be purveyors of fact and not opinion or analysis. But telling you how we vote is a very different thing from telling you how you should vote.
We are not telling you whether to vote third-party. In this issue, we tackled the candidacies of the two people who could plausibly win the presidency. We know Libertarian Party nominee Jo Jorgensen exists. We have covered her campaign and will continue to do so. But the vast majority of the country views this as a choice between Joe Biden and Donald Trump. There are many structural reasons that it’s hard for Jorgensen (or Kanye West or the Green Party’s Howie Hawkins, for that matter) to get purchase in American politics, from the difficulty of ballot access in the 50 states to collusion between the two parties that keeps Libertarians and others off the debate stage. Those barriers should be removed, but acknowledging that they exist is not an attack on third parties.
Changing the American political system is hard and depends on many variables outside of your control. Reason can and will come back to the technical questions of reforms that might mean American voters someday have more and better choices. But as a chaser to the rap sheets of the major-party candidates, we wanted to offer you something more immediately useful in this issue: a case for changing your relationship to politics instead. Philosopher Christopher Freiman argues that simply choosing not to engage as much with politics would be better not only for you but for society as a whole. Freiman describes the ways in which our partisan identities are swallowing the rest of our identities, a doubly bad sign when partisan identities are increasingly built around cults of personality and the personalities are neither principled nor predictable.
At the beginning of 2021, barring one last wildcard from 2020, one of the major-party candidates will be inaugurated as president. They can’t both lose. Your choices at the ballot box are limited and limiting. But the world outside of politics—even in the constrained circumstances of 2020—remains varied, interesting, and worthy of your attention.
So complain about your choices, think about ways to get better ones next time, recognize that you owe nothing to the two men at the top of the tickets or the parties that put them there, and then seriously consider turning it all off and doing something pleasant and useful instead.
from Latest – Reason.com https://ift.tt/33SrL5X
via IFTTT
They say if you don’t vote you can’t complain. They’re wrong. Complaining is prior to voting. It is deeper and more powerful than voting. It is the original act of politics. Before there was democracy, there was sitting around the campfire complaining about the way the headman allocated the shares of mastodon meat. Bellyaching about the boss is more than a political right. It is a human right.
And so, in Reason‘s 2020 election issue, we are here to complain. The candidates from the major parties are subpar. They display troubling authoritarian tendencies. Their records in office—one long, one short—are underwhelming and frequently self-contradictory. Their actions consistently fail to match their rhetoric. If they agree on one thing, it is that they have the right, and perhaps even the obligation, to tell you what to do in the bedroom and in the boardroom, in the streets and in the sheets. If they agree on a second thing, it is the necessity of spending ever-larger sums of taxed and borrowed money in pursuit of ever-vaguer goals. They helm parties that are similarly compromised and hypocritical.
Even if, by some miracle, you fully agreed with a set of principles and plans as articulated by one of the candidates in a particular campaign speech or policy paper, you could not reasonably have a shred of confidence that those principles would be carried through into consistent governance—something President Donald Trump and former Vice President Joe Biden have repeatedly demonstrated.
The fact that many voters in 2020 believe they must nonetheless actively support one of these two deeply flawed characters is a testament to the brokenness of the system that produced them. The fact that those voters feel like they only have two choices in the first place is a criminal failing in a country with such blooming, buzzing diversity in our commercial, social, and cultural lives.
Every presidential election of my lifetime so far has been “the most important election of my lifetime.” If you squint, that might even be true this time around. The executive grows more powerful with each passing term, and there’s no denying that 2020 has asked a lot of the occupant of the Oval Office. But it doesn’t follow logically that, because an election is important, you must hold your nose and go out of your way to vote for the candidate you merely hate the least.
Replacing your toilet is an important choice, and you’d be absolutely furious if your plumber told you that, despite the existence of numerous makes and models, due to the way the toilet selection system works you must pick right now between one that leaks and another that has a broken seat. The more fundamental something is, the angrier and more vocal you should be at being asked to choose between bad options. You do not have a moral obligation to talk yourself into the idea that a damp bathroom floor is OK, no matter what people are saying in your social media feeds or on your family phone calls.
We understand that many of our readers will be voting for one of the two major-party candidates, and may even feel some connection or loyalty to that candidate or the party he represents. We understand that those readers may find the notion of giving equal airtime to the failures of each candidate an abhorrent exercise in false equivalency and whataboutism. We disagree. We think the records of these two candidates are troubling enough that both deserve to be laid out in the weeks before the election. Reason is not here to attack your tribe or shame you for the way you choose to vote (or not vote). But we hope you agree that it would be preferable to live in a world where the stakes of any given election are lower and where there are more electorally viable tribes.
Here are a few things we are not saying in this issue of Reason:
We are not saying the outcome of this election doesn’t matter. Elections matter. The next four years will be different in important ways for many, many people depending on who is president. Different wars will be waged. Different taxes will be levied. Different laws will be passed. Different judges will be appointed. Different bureaucracies will be empowered. Different research will be funded. Elections matter. That’s why we’re so disappointed at the low quality of the available options.
We are not telling you how to vote. As we do every four years, we will ask Reason staffers to share who they’re voting for in the presidential contest and post the results online in October. We do this because we think it’s important for people who subscribe to our magazine and read our website and watch our videos and listen to our podcasts to know where our writers and editors and producers are coming from. More publications should consider this form of disclosure, especially those who claim to primarily be purveyors of fact and not opinion or analysis. But telling you how we vote is a very different thing from telling you how you should vote.
We are not telling you whether to vote third-party. In this issue, we tackled the candidacies of the two people who could plausibly win the presidency. We know Libertarian Party nominee Jo Jorgensen exists. We have covered her campaign and will continue to do so. But the vast majority of the country views this as a choice between Joe Biden and Donald Trump. There are many structural reasons that it’s hard for Jorgensen (or Kanye West or the Green Party’s Howie Hawkins, for that matter) to get purchase in American politics, from the difficulty of ballot access in the 50 states to collusion between the two parties that keeps Libertarians and others off the debate stage. Those barriers should be removed, but acknowledging that they exist is not an attack on third parties.
Changing the American political system is hard and depends on many variables outside of your control. Reason can and will come back to the technical questions of reforms that might mean American voters someday have more and better choices. But as a chaser to the rap sheets of the major-party candidates, we wanted to offer you something more immediately useful in this issue: a case for changing your relationship to politics instead. Philosopher Christopher Freiman argues that simply choosing not to engage as much with politics would be better not only for you but for society as a whole. Freiman describes the ways in which our partisan identities are swallowing the rest of our identities, a doubly bad sign when partisan identities are increasingly built around cults of personality and the personalities are neither principled nor predictable.
At the beginning of 2021, barring one last wildcard from 2020, one of the major-party candidates will be inaugurated as president. They can’t both lose. Your choices at the ballot box are limited and limiting. But the world outside of politics—even in the constrained circumstances of 2020—remains varied, interesting, and worthy of your attention.
So complain about your choices, think about ways to get better ones next time, recognize that you owe nothing to the two men at the top of the tickets or the parties that put them there, and then seriously consider turning it all off and doing something pleasant and useful instead.
from Latest – Reason.com https://ift.tt/33SrL5X
via IFTTT
A Q4 GDP Contraction Will Soon Become The Base Case In Europe Tyler Durden
Mon, 10/12/2020 – 05:00
Submitted by Christophe Barraud
As I expected, most of European countries kept implementing restrictive measures over the past few weeks. Unfortunately, the worst is probably coming with potential local lockdowns (as we saw in Madrid) in a context where latest statistics confirm that the Covid-19 is spreading quickly.
In France, earlier this week, the Local reported “the metropole areas of Lille, Lyon, Grenoble and Saint-Etienne have joined Paris and its suburbs and the Aix-Marseille area on maximum alert.” It added “the new designations will take place from Saturday morning and will see the closure of all bars in those areas, although restaurants can remain open under strict new conditions.” In addition, two other areas, namely Toulouse and Montpellier, were described as “worrying” by Health minister Olivier Véran, in his weekly briefing on Thursday evening. The ministry reported more than 20,000 new infections on Friday (highest since methodology changed in May and tests increased significantly) but most importantly, new cases for people aged above 69, a good leading indicator to forecast hospitalizations, kept increasing sharply.
In Spain, Bloomberg highlighted that “the Madrid region extended travel restrictions Saturday to four communities that hadn’t been covered by the national government’s state of emergency for the capital the day before. The order forbids inhabitants of those zones to leave except for essential activities such as traveling to work, school or visiting a doctor.” Authories moved quickly ahead of a holiday weekend, with Spaniards celebrating their national day on Monday.
In Germany, AP noted Chancellor Angela Merkel on Friday held talks with the mayors of Germany’s 11 biggest cities. Merkel said she and the mayors “have agreed on measures to slow the spread of the virus by ensuring that social distancing and hygiene rules are respected and contact tracing can continue — despite the growing number of infections Germany is now experiencing.”
Elsewhere, Bloomberg (citing Dutch news agency ANP) underlined “the Netherlands reported 6,504 cases, a daily record and rising above 6,000 for the first time“. In this context, the Dutch government is meeting Sunday to discuss stricter measures to combat the spreading of the virus. Yet, the Daily Mail already flagged that “government warned it would be forced to impose tighter restrictions by the end of the weekend if infections did not start to drop.”
Wear a mask, or face lockdown: Dutch PM gives ultimatum as Holland records 6,500 Covid cases https://t.co/qYiPfZcRJi
In the U.K., ministers are mulling new restrictions in areas of northern England where the coronavirus is spreading fastest. BBC reported that Prime Minister Boris Johnson is likely to announce a three-tier local lockdown system as soon as Monday.
As a result, I expect several EU countries to experience a GDP contraction in 4Q especially those who already faced a contraction in the services sector in September, such as France and Spain. The deterioration seen in Markit PMIs is also coherent with high frequency data that I’m looking for in the hospitality sector, which confirmed a downturn since mid-August. Therefore, I think that the Bloomberg consensus for 4Q GDP looks very optimistic for several European countries including France (+1.5%) and Spain (+2.6%) and will probably turn negative before year-end.
via ZeroHedge News https://ift.tt/36StBFL Tyler Durden
