Closing Wrap - Friday 20.11
Headlines
  • Trump Accuses Pfizer And Moderna Of Working To Stop His Re-Election
  • Mnuchin Defends Fed Funding Decision, Says Lots Of Firepower Left
  • Georgia Secretary Of State To Certify Biden’s Win
  • Biden Unlikely To Quickly Unwind China Tariffs, Democrat Says
  • EU Could Pay Over $10 Bln For Pfizer And CureVac Vaccines
  • UK PM Johnson Plans Overhaul Of England’s Covid Rules After Lockdown
  • UK, EU On Course To Strike Trade Deal Despite Public Tensions
  • Amazon Bows To French Pressure To Push Back 'Black Friday' Sales
  • Boeing 737 Max Nearing Critical Approval From EU Regulators
  • J&J Ordered To Pay $120 Mln Damages In New York Baby Powder Case
Commentary
UK Retail Sales Buoyed By Early Christmas Shoppers, Stockpiling

London – Official numbers from the Office for National Statistics showed a sixth consecutive month of gains for UK retail sales in October, with evidence suggesting that households were already shopping ahead of the holiday season and the latest UK lockdown. On the month, headline retail sales volumes rose 1.2% in October, outstripping estimates of a -0.3% drop but short of the 1.4% September figure. Sales rose by 5.8% year-on-year, higher than the 4.1% expected and last month’s 4.6% print.   

 

Sales excluding auto fuels also surprised to the upside with a 1.3% rise on the month versus an expected flat reading. Annual activity increased 7.8% from a 5.9% forecast and 6.4% print previously.  

 

ONS’ Deputy National Statistician for Economic Statistics Jonathan Athow said, “Feedback from shops suggested some consumers may have brought forward their Christmas shopping, ahead of potential further restrictions. Online stores also saw strong sales, boosted by widespread offers.” 

(LiveSquawk - Continue Reading)

Treasury & Fed play Battleship in tainted Covid waters

Gregory Daco -- Chief US Economist

- Treasury Secretary Mnuchin’s decision to allow five of the Fed’s nine emergency facilities to expire at year end represents a risk for the economy.

- While the backstop measures have been little used so far, the deteriorating health and economic backdrop could shine a bright light on the Fed’s diminished recession-fighting arsenal and prompt an adverse market reaction.

 

Mnuchin announced that he would allow the primary and secondary market corporate credit facilities, the Municipal Liquidity Facility, the Main Street Lending Program and the Term Asset-Backed Securities Loan Facility to expire on December 31. He also requested the Fed return unused funds from the $454bn envelope – authorized via the CARES Act – used to backstop the emergency lending programs. While the Fed could use its Core Exchange Stabilization Fund to re-establish these facilities, we estimate its lending firepower would be ten times smaller.

 

While we believe the Fed will abide by the Treasury decision, it stated it would “prefer that the full suite of emergency facilities […] continue to serve their important role as a backstop for our still-strained and vulnerable economy,” highlighting a rare and poorly timed public quarrel between the two institutions. Continue Reading

JPMorgan Economists Warn Of U.S. Contraction Early Next Year

JPMorgan Chase & Co. analysts are forecasting a U.S. economic contraction next quarter as various states impose restrictions on businesses and activity amid a record surge in Covid-19 cases.

 

The world’s largest economy is expected to shrink at a 1% annualized pace in the January-to-March period, JPMorgan said in its 2021 U.S. outlook issued Friday. That would follow estimated growth of 2.8% in the fourth quarter and the reported 33.1% expansion in the third quarter, which came after a record contraction in the prior period.

 

“While the economy powered through the July wave, at that time the reopening of the economy provided a powerful tailwind to growth,” JPMorgan economists Michael Feroli, Jesse Edgerton and Daniel Silver wrote in the note. “The economy no longer has that tailwind; instead it now faces the headwind of increasing restrictions on activity.” (Bloomberg - Continue Reading)

US Oil-Crash Study To Avoid Blaming Traders As Probe Continues

A highly anticipated U.S. government report on the April 20 oil crash will stop short of blaming any specific traders or firms, and refrain from recommending structural changes for the crude market, said three people familiar with the matter.

 

The Commodity Futures Trading Commission review, which could be released as soon as next week, will chronicle the day’s unusual market dynamics and its trading flows, said the people. Yet it won’t draw a firm conclusion for what caused oil to plunge to -$37 a barrel -- the first time it ever traded at a negative price.

 

The document -- the product of a lengthy analysis by economists and market-oversight officials -- isn’t binding, so it won’t prevent a CFTC chief appointed by President-elect Joe Biden from pursuing tougher rules. Plus, a key factor that might influence future policy decisions wasn’t incorporated into the report: an ongoing investigation by the CFTC’s enforcement division into whether manipulative or reckless trading contributed to crude’s nosedive. (Bloomberg - Continue Reading)

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