Financial data and the top 20 economic news items for the week ending November 6, 2020

This is a highly edited version of Doug Noland's Credit Bubble Bulletin at
http://creditbubblebulletin.blogspot.com/2020/11/weekly-commentary-critical-juncture.html

"The Nasdaq100 (NDX) surged 9.4% this week. More than a third of NDX stocks posted double-digit gains for the week. Facebook jumped 11.5%, Tesla 10.8%, Microsoft 10.5%, Apple 9.2%, and Google 8.7%. Qualcomm surged 17.6% and Nvidia jumped 16.2%. Options trading – institutional and retail – has been booming, with the big tech stocks as favorite targets. This key aspect of the raging speculative Bubble this week worked to propel huge price spikes."

"Friday’s new COVID infections surpassed 125,000. Cases are surging in an increasing number of states. Hospitalizations are rising rapidly nationally, with an expanding number of communities facing healthcare crises. And, increasingly, state and local officials are under pressure to adopt measures to try to control the outbreak."


For the week ending
November 6, 2020

GLOBAL  STOCK  MARKETS:
S&P500 up 7.3% (up 8.6% y-t-d)
Dow Industrials up 6.9% (down 0.8%)
Dow Utilities up 3.3% (up 2.0%)
Dow Transports up 4.6% (up 6.5%)

S&P 400 Midcaps up 6.7% (down 1.7%)
Small cap Russell 2000 up 6.9% (down 1.5%)
Nasdaq100 up 9.4% (up 38.5%)
Biotechs up 5.1% (up 8.2%)

With gold bullion surging $73,
the HUI gold index was up 10.0%
   (up 43.0%)

U.K.'s FTSE up 6.0% (down 21.6% y-t-d)
Japan's Nikkei up 5.9% (up 2.8%)
France's CAC40 up 8.0% (down 17.0%)

German DAX up 8.0% (down 5.8%)
Spain's IBEX 35 up 6.5% (down 28.1%)
Italy's FTSE MIB up 9.7% (down 16.3%)

Brazil's Bovespa up 7.4% (down 12.7%)
Mexico's Bolsa up 4.2% (down 11.5%)

South Korea's Kospi up 6.6% (up 10.0%)
India's Sensex up 5.8% (up 1.5%)
China's Shanghai up 2.7% (up 8.6%)

Turkey's Istanbul National 100
     up 7.2% (up 4.2%)
Russia's MICEX up 7.6% (down 4.9%)


US  BONDS  and  MORTGAGES
Ten-year US Treasury bond yields
fell 5.5 bps to 0.82%
(down 110bps year over year)

Freddie Mac 30-year
fixed mortgage rates
down three bps to
a record low 2.78%
   (down 91bps y-o-y)

Fifteen-year rates unchanged
at an all-time low 2.32%
    (down 81bps)

Five-year hybrid ARM rates
added a basis point to 2.89%
   (down 50bps)

Jumbo mortgage
30-year fixed rates
down five bps
to a record low 2.98%
   (down 114bps)


Federal Reserve Credit
expanded 77.8%
over the past year.

M2 money supply
expanded 23.6%
over the past year.


COMMODITIES:
Bloomberg Commodities Index
up 1.4% (down 10.0% y-t-d)

Spot Gold up 3.9% to $1,951
   (up 28.5%)

Spot Silver up 8.5% to $25.662
   (up 43.2%)

WTI crude oil up $1.35 to $37.14
   (down 39%)

Gasoline up 5.1%
    (down 36%)

Natural Gas fell 13.9%
   (up 32%)

Copper up 3.5%
   (up 13%)

Wheat up 0.6%
   (up 8%)

Corn rallied 2.1%
    (up 5%)

 

COVID-19  NEWS:

(1)
November 5
– Bloomberg
(Cristin Flanagan):

“Surging U.S. Covid-19 cases have surpassed 100,000 per day and hospitalizations are also climbing. 

 If the trend continues, hospitals could reach capacity and trigger lockdowns before Thanksgiving, according to a Height policy analyst. ‘At the current growth rate, we expect the total number of currently hospitalized patients to hit 60,000—a breaking point in past surges —by Nov. 15,’ Hunter Hammond wrote. At that point, ‘restrictions will gradually intensify.’ With the Midwestern states pretty hard hit, policymakers have been taking ‘a light-touch’ to restrictions and social distancing; if ‘proportional, stepwise measures are not taken, states may be forced to lockdown again or face health system capacity issues.’”

(2)
November 2
– Financial Times
(Clive Cookson):
“Coronavirus induces strong and long-lasting cellular immunity after infection, new research shows, suggesting people are unlikely to quickly catch the disease again and increasing the chances vaccines will be effective. ‘Our study is the first in the world to show robust cellular immunity remains at six months after infection in individuals who experienced either mild/moderate or asymptomatic Covid-19,’ said Professor Paul Moss of the University of Birmingham…. The findings… are an encouraging sign for the development of vaccines that aim to induce immunity without causing disease, the researchers said.”


(3)
November 4
– Associated Press
(Alexandra Olsen):
“Americans went to the polls Tuesday under the shadow of a resurging pandemic, with an alarming increase in cases nationwide and the number of people hospitalized with COVID-19 reaching record highs in a growing number of states. While daily infections were rising in all but three states, the surge was most pronounced in the Midwest and Southwest. Missouri, Oklahoma, Iowa, Indiana, Nebraska, North Dakota and New Mexico all reported record high hospitalizations this week. Nebraska’s largest hospitals started limiting elective surgeries and looked to bring in nurses from other states to cope with the surge. Hospital officials in Iowa and Missouri warned bed capacity could soon be overwhelmed.”


(4)
November 5
– Associated Press
(Lindsey Tanner):
“New confirmed cases of the coronavirus in the U.S. have climbed to an all-time high of more than 86,000 per day on average, in a glimpse of the worsening crisis that lies ahead for the winner of the presidential election. Cases and hospitalizations are setting records all around the country just as the holidays and winter approach, demonstrating the challenge that either President Donald Trump or former Vice President Joe Biden will face in the coming months. Daily new confirmed coronavirus cases in the U.S. have surged 45% over the past two weeks, to a record 7-day average of 86,352, according to data compiled by Johns Hopkins University. Deaths are also on the rise, up 15% to an average of 846 deaths every day.”


(5)
October 31
– Reuters
(Andrew MacAskill and
Guy Faulconbridge):
“Prime Minister Boris Johnson ordered England back into a national lockdown after the United Kingdom passed the milestone of one million COVID-19 cases and a second wave of infections threatened to overwhelm the health service.”


(6)
November 6
– Financial Times
(Richard Milne and
Clive Cookson):
“Denmark will gas to death and then burn up to 17m mink in the next few days as scientists debate the threat of a coronavirus strain that could be passed from humans to the animals and back again. Covid-19 is thought to have originated in bats and then jumped to humans in China late last year… Now Danish authorities are sounding the alarm, because a mutated version of the virus which was passed from humans to mink seems to have been transmitted back to several people in northern Denmark and the new strain could be more resistant to potential vaccines.”


OTHER  NEWS:
(7)
November 2
– Financial Times
(Jonathan Wheatley):
“Like the coronavirus crisis itself, the response of the world’s governments has been on a scale never seen before. The IMF estimates that fiscal spending and tax cuts worldwide add up to more than $11.7tn so far, on top of a monetary policy response in which trillions of dollars have been pumped into the global financial system by the US Federal Reserve and other central banks. Old policy prescriptions have been torn up. Once the guardian of austerity, the IMF has urged countries to spend as much as possible.”


(8)
November 6
– Bloomberg
(Katia Dmitrieva):
“The U.S. labor market strengthened in October, defying expectations for more subdued gains amid an intensifying pandemic and lack of additional fiscal relief. Nonfarm payrolls increased by 638,000 after an upwardly revised 672,000 gain the prior month… That compared with the 580,000 median estimate…, and reflected a decline of 147,000 in temporary Census workers. The unemployment rate fell by 1 percentage point to 6.9%... though the number of long-term jobless Americans surged and now makes up a third of those out of work.”


(9)
November 4
– CNBC (Jeff Cox):
“Private job creation showed a sharp deceleration in October as the U.S. economy struggled against a resurgent coronavirus pandemic, according to… ADP. Companies added 365,000 positions for the month, well below the 600,000 estimate from a Dow Jones economist survey. That was the lowest reported gain from ADP since July.”

(10)

November 3 

– Bloomberg 

(Eliza Ronalds-Hannon and 

John Gittelsohn): 

“The two U.S. mall owners that filed for bankruptcy on Sunday could be just the beginning. As retailers ranging from J.C. Penney Co. to Brooks Brothers Group Inc. go bust, their landlords are struggling, too. But rescuing malls will be unusually complicated because the properties have byzantine webs of financing that have only grown more elaborate with time. Interest groups ranging from lenders to shareholders to tenants to holders of complex mortgage bonds are wrangling over how to fix the situations, and for many large property owners, bankruptcy will be the only option, restructuring professionals said.”

(11)
October 30
– Financial Times
(Tom Mitchell and Sun Yu):
“For Chinese officials working on the country’s 14th five-year plan, the US looms large over the drafting process. One senior Chinese government official advising on the five-year plan’s manufacturing strategies said that regardless of whether Donald Trump is re-elected on November 3 or defeated by Joe Biden, ‘it is certain that industrial decoupling between the US and China will continue into next year’. ‘China is still lagging behind advanced economies in the mastery of key technologies and we are not going to catch up in the foreseeable future,’ the official added. ‘We need to keep savings rates at a reasonable level so we can keep investing in R&D.’”


(12)
November 1
– CNBC
(Yen Nee Lee):
“China’s factory activity expanded for the sixth straight month in October as business confidence grew to its strongest in years… The Caixin/Markit Purchasing Managers’ Index for Chinese manufacturing came in at 53.6 for October, better than the 53.0 forecast by analysts in a Reuters poll. The latest reading was the highest since January 2011…”

(13)

October 30

– Reuters (Gabriel Crossley): 

“Activity in China’s services sector accelerated in October…, as demand across the economy continues to recover from a coronavirus-induced slump. The official non-manufacturing Purchasing Managers’ Index (PMI) rose to 56.2 from 55.9 in September…”

(14)
October 30
– Bloomberg
(David Goodman and
Lucy Meakin):
“An official gauge of activity in China’s manufacturing industry fell slightly in October, while consumer spending helped to lift services output, suggesting the economic recovery remains on track. The manufacturing purchasing managers’ index in October eased to 51.4 from 51.5 in the previous month…”


(15)
November 5
– Bloomberg
(Jeanny Yu and
Emily Cadman):
“It’s the biggest busted trade in stock-market history. The collapse of Ant Group Co.’s initial public offering has triggered a dash to unwind billions of dollars in investor orders, side bets and margin loans. In Hong Kong, where nearly a fifth of the population, by one estimate, had signed up to buy Ant shares, shell-shocked retail investors are starting to count their losses… ‘I don’t know what to say. Speechless,’ said Chen Wu, a 35-year-old software developer, who borrowed money to buy Ant’s shares. ‘Yesterday, I was imagining a trip with my wife somewhere next year with the IPO proceeds. Now I’m calculating how much I will lose.’”

(16)

November 3  

– Financial Times (Kathrin Hille):

“For years, China’s race with the US for global tech supremacy has been a boon for its chip industry. Rapid advances in artificial intelligence, a growing domestic consumer technology market, supercomputer programmes and a rapid military build-up have all fuelled demand for semiconductors. This has intensified an urgency to make more of the chips domestically. Over the past decade, Beijing poured more than $100bn in subsidies into enterprises such as… Semiconductor Manufacturing International Corporation. As a result, SMIC and its peers built new fabrication capacity faster than chipmakers anywhere else in the world, and their revenues ballooned to Rmb756bn last year, up from Rmb144bn 10 years ago.”

(17)

November 4

– Financial Times

(Martin Arnold):

“Services companies in Italy and Spain suffered a fresh fall in activity last month as restrictions to contain the second wave of the coronavirus pandemic hit businesses, according to a widely watched business survey. The IHS Markit flash services purchasing managers’ index dropped in both countries, with companies reporting sharp declines in demand and activity as a result of the pandemic…”

(18)

November 6

– Bloomberg

(Yoshiaki Nohara):

“Japan’s households increased spending last quarter at the fastest pace in two decades, adding to evidence consumers helped fuel a recovery from the economy’s record collapse during the first wave of the pandemic. Spending increased 3.6% in the three months through September from the prior quarter…”

(19)

November 3

– Bloomberg:

“What started as a political spat between Beijing and Canberra has become a one-sided trade war that threatens serious disruption for an expanding number of Australian exporters. China won’t allow imports of a swathe of Australian commodities and foodstuffs from as early as this week… The curbs are a major escalation in Beijing’s pressure campaign following a two-year stand-off over issues from technology to the origins of coronavirus. China’s blacklist… includes coal, barley, copper, sugar, timber, wine and lobster. It doesn’t cover materials, like iron ore or natural gas, where import curbs could unduly damage China’s own economy.”

(20)

November 6

– Reuters

(Devjyot Ghoshal): 

“India’s top military commander said… a tense border standoff with Chinese forces in the western Himalayas could spark a larger conflict, even as senior commanders from both sides met near the frontline for their eighth round of talks. Chief of Defence Staff Bipin Rawat said the situation was tense at the Line of Actual Control, the de facto border, in eastern Ladakh, where thousands of Indian and Chinese troops are locked in a months-long confrontation. ‘We will not accept any shifting of the Line of Actual Control,’ Rawat said…”