Source:
http://creditbubblebulletin.blogspot.com/2020/11/weekly-commentary-well-thats-some-weird.html
"For the week, the NYSE Arca Oil Index surged 19.8%, with the Philadelphia Oil Services Index up 17.4%. The Nasdaq Bank Index advanced 13.6%. The Bloomberg REIT Index jumped 6.8%. The S&P600 Small Cap Index gained 7.5%. Meanwhile, Zoom was down 19%, Netflix down 6.2%, Facebook down 5.6%, Amazon down 5.5%, and Tesla was down 5.0%".
"Pfizer’s (and BioNtech’s) Monday announcement of 90% effectiveness for their Covid vaccine ... but it is a two-shot vaccine with what reportedly can induce strong post-shot reactions. With logistical challenges foe a vaccine requiring extreme cold storage (negative 100 Fahrenheit). There will be limits to its availability, but mainly I expect a majority of American’s initially to approach Covid vaccines with caution. "
"Friday’s reporting had a daily record 182,000 of new COVID-19 infections (worldometer), with the seven-day average now surpassing 132,000. Hospitalizations nationally posted new records on four straight days (having doubled in a month to almost 69,000). Daily cases are spiking higher in a growing number of states, with particularly troubling increases in Wisconsin, Illinois, Minnesota, Michigan, Ohio, Pennsylvania, Indiana, Iowa, Kansas, Nebraska, North Dakota, South Dakota, New Mexico, Colorado, Wyoming, Utah, and Massachusetts. A message from Ohio Governor Mike DeWine: “We are facing a monumental crisis in Ohio.”
"New COVID restrictions were imposed in New Jersey, Oregon, New Mexico, Idaho, Virginia, and elsewhere. The West Coast states issued a joint travel advisory, while California is warning of tougher measures to come. Northeast governors are planning a weekend “emergency summit meeting.” New York City will likely close schools Monday."
For the week ending
November 13, 2020:
GLOBAL STOCKS:
Dow Industrials
up 4.1% (up 3.3%)
Dow Utilities
up 2.3% (up 4.3%)
Dow Transports
up 4.1% (up 10.9%)
S&P 400 Midcaps
up 4.3% (up 2.4%)
Small cap Russell 2000
up 6.1% (up 4.5%)
Nasdaq100
down 1.3% (up 36.7%)
Biotechs
up 1.3% (up 9.6%)
With gold bullion down $62,
the HUI gold stock index fell 8.9%
(up 30.3%)
U.K.'s FTSE
up 6.9% (down 16.3%y-t-d)
Japan's Nikkei
up 4.4% (up 7.3%
France's CAC40
up 8.5% (down 10.0%)
German DAX
up 4.8% (down 1.3%)
Spain's IBEX 35
up 13.3% (down 18.5%)
Italy's FTSE MIB
up 6.2% (down 11.1%)
Brazil's Bovespa
up 3.8% (down 9.4%)
Mexico's Bolsa
up 5.9% (down 6.3%)
South Korea's Kospi
up 3.2% (up 13.5%).
India's Sensex
up 3.7% (up 5.3%)
China's Shanghai
little changed (up 8.5%)
Turkey's Istanbul National 100
up 8.3% (up 12.9%)
Russia's MICEX
up 4.5% (down 0.7%).
U.S. BONDS & MORTGAGES
Ten-year US Treasury bond yields
up eight bps to 0.90%
(down 102bps year over year)
Freddie Mac 30-year fixed mortgage rates
up six bps to 2.84%
(down 91bps y-o-y)
Fifteen-year rates
added two bps to 2.34%
(down 86bps)
Five-year hybrid ARM rates
were up 22 bps to 3.11%
(down 34bps)
Jumbo mortgage
30-year fixed rates
up nine bps to 3.07%
(down 105bps).
Federal Reserve Credit l
expanded 77.9%
over the oats year.
M2 money supply
expanded 23.7%
over the past year.
COMMODITIES:
Bloomberg Commodities Index
up 1.2% (down 8.9% y-t-d)
Spot Gold
down 3.2% to $1,889
(up 24.4%)
Spot silver
down 3.5% to $24.775
(up 38%)
WTI crude oil
up $2.99 to $40.13
(down 34%)
Gasoline
up 3.8%
(down 33%)
Natural Gas
up 3.7%
(up 37%)
Copper
up 1.0%
(up 14%)
Wheat
down 1.4%
(up 6%)
Corn
up 3.1%
(up 8%).
TOP 30
ECONOMIC NEWS:
(1)
November 9
– Associated Press
(Robert Burns and
Lolita C. Baldor):
“The Trump administration threw the presidential transition into tumult, with President Donald Trump blocking government officials from cooperating with President-elect Joe Biden’s team and Attorney General William Barr authorizing the Justice Department to probe unsubstantiated allegations of voter fraud. Some Republicans, including Senate Majority Leader Mitch McConnell, rallied behind Trump’s efforts to fight the election results. Few in the GOP acknowledged Biden’s victory or condemned Trump’s other concerning move on Monday: his firing of Defense Secretary Mark Esper. The Electoral College is slated to formally confirm Biden’s victory on Dec. 14, and the Democrat will be sworn into office in late January.”
COVID-19
(2)
November 10
– Wall Street Journal
(Emma Thomasson):
“Monday’s potential breakthrough in the race to develop a COVID-19 vaccine has left governments scrambling to meet the logistical challenge of distributing hundreds of millions of doses once it becomes available in coming months… But the vaccine must be shipped and centrally stored at minus 70 degrees Celsius, putting it out of reach for the moment of many poor countries in Asia and elsewhere which lack the necessary refrigeration equipment. Needing temperatures matching an Antarctic winter, it is likely to need centralized vaccination locations, Swiss health experts said…”
(3)
November 8
– Reuters
(Anurag Maan,
Shaina Ahluwalia and
Kavya B):
“Global coronavirus infections exceeded 50 million on Sunday, according to a Reuters tally, with a second wave of the virus in the past 30 days accounting for a quarter of the total.”
(4)
November 12
– Wall Street Journal
(Jennifer Levitz and
Talal Ansari):
“States are slapping new restrictions on daily life as the coronavirus rages in a resurgence that some officials say is the most widespread and intense since the pandemic hit in March. Governors in New York, Maryland, Minnesota, Iowa, Utah and other states have imposed measures as U.S. cases hit another high Wednesday, topping 100,000 for the ninth day in a row, while hospitalizations rose to a record 65,386… The U.S. death toll approached 242,000. ‘It’s on fire. We’ve got to slow it down,’ Ohio Gov. Mike DeWine said… ‘We’ve never seen anything like this. Our spring surge and summer surge were nowhere like this.’”
(6)
November 11
– Reuters
(Maria Caspani,
Peter Szekely and
Anurag Maan):
“New York Governor Andrew Cuomo… imposed a new round of restrictions aimed at curbing the spread of the coronavirus as the infection rate climbed and hospitalizations soared in the state that was the epicenter of the U.S. outbreak in its early stages. Cuomo ordered bars, restaurants and gyms in the state to shut down on-premises services at 10 p.m. nightly, and capped the number of people who could attend private parties at 10. ‘We’re seeing a national and global COVID surge, and New York is a ship on the COVID tide,’ the governor told reporters…”
(7)
November 11
– Wall Street Journal
(Melanie Evans):
“Hospitals across the nation face an even bigger capacity problem from the resurgent spread of Covid-19 than they did during the virus’s earlier surges this year, pandemic preparedness experts said… The number of hospitalized Covid-19 patients reached 65,368, according to the Covid Tracking Project, passing the record set Tuesday… Epidemiologists said the record is likely to be swiftly replaced by another as Covid-19 cases soar nationally. ‘We already know this is going to go far north,’ said Michael Osterholm, director of the Center for Infectious Disease Research and Policy at the University of Minnesota.”
(8)
November 11
– CNBC
(Will Feuer,
Berkeley Lovelace Jr., and
Noah Higgins-Dunn):
“Ohio has had an ‘unprecedented spike’ in Covid-19 hospital admissions. ICU beds in Tulsa, Oklahoma, are full. North Dakota’s hospitals don’t have enough doctors and nurses. And hospital administrators in Iowa are warning that they are approaching their limits. The U.S. is heading for a ‘dark winter,’ a ‘Covid hell,’ the ‘darkest days of the pandemic.’ However you describe it, the next few months of the coronavirus pandemic will be unlike anything the nation has seen yet. Even as drug manufacturers make progress on a vaccine and treatments, epidemiologists, scientists and public health officials are warning that the United States has yet to see the most difficult days of the outbreak. Those are projected to come over the next three to four months.”
(9)
November 10
– Associated Press
(Lori Hinnant):
“In Italy lines of ambulances park outside hospitals awaiting beds, and in France the government coronavirus tracking app prominently displays the intensive care capacity taken up by COVID-19 patients: 92.5% and rising. In the ICU in Barcelona, there is no end in sight for the doctors and nurses who endured this once already. Intensive care is the last line of defense for severely ill coronavirus patients and Europe is running out — of beds and the doctors and nurses to staff them. In country after country, the intensive care burden of COVID-19 patients is nearing and sometimes surpassing levels seen at last spring’s peak. Health officials, many advocating a return to stricter lockdowns, warn that adding beds will do no good because there aren’t enough doctors and nurses trained to staff them.”
(10)
November 9
– Bloomberg
(Jason Gale):
“Eight months and more than 50 million documented cases into the pandemic, there’s still much we don’t understand about SARS-CoV-2. We do know that the majority of those infected with the novel coronavirus display no or mild symptoms. Worryingly, a not-insignificant portion of the 20 million people globally who’ve recovered suffer lingering effects, including lung, heart, and nervous system impairment… Meantime, post–Covid-19 clinics are opening to cater to an expanding population of so-called long haulers (survivors left with scarred lungs, chronic heart damage, post-viral fatigue, and other persistent, debilitating conditions), a sign that enduring disability will perhaps weigh on health systems and the labor force long after a vaccine becomes widely available. The phenomenon of what’s known as ‘long Covid’ isn’t unique; postviral syndromes occur after many infections, including with the common cold, influenza, and Epstein-Barr. What’s novel about SARS-CoV-2 is the broad spectrum of symptoms that are being reported and the duration of months, not weeks.”
OTHER NEWS:
(11)
November 11
– Bloomberg
(Paula Seligson):
“U.S. junk bond yields rode a rally in risk assets to a record low on Monday… The average yield for the Bloomberg Barclays U.S. corporate high yield index plummeted to 4.56%, sinking below the previous record of 4.83% set in June 2014. The 45 bps decline from Friday’s close was the steepest fall since April 9, when the Federal Reserve expanded its corporate bond purchases to include some junk debt.”
(12)
November 10
– Wall Street Journal
(Telis Demos):
“Senate Republicans, led by Mitch McConnell, have an opportunity to fill two key posts at the Federal Reserve before President-elect Joe Biden takes office. Should they do so, it could complicate any efforts to steer financial regulation in a considerably tighter direction in the near term. There are currently two open seats on the Federal Reserve Board of Governors. President Trump has nominated Judy Shelton and Christopher Waller for those positions, but neither has been confirmed by the Senate. Republicans could potentially confirm one or both while they still are assured a majority in the body, rather than risking it on Georgia’s still-undecided Senate races or having to consider whomever Mr. Biden would nominate.”
(13)
November 12
– Reuters
(Humeyra Pamuk,
Alexandra Alper and
Idrees Ali):
“The Trump administration… unveiled an executive order prohibiting U.S. investments in Chinese firms that Washington says are owned or controlled by the Chinese military, ramping up pressure on Beijing after the U.S. election. The order… could impact some of China’s biggest companies, including telecoms firms China Telecom Corp Ltd, China Mobile Ltd and surveillance equipment maker Hikvision.”
(15)
November 11
– Bloomberg
(David McLaughlin):
“Since Joe Biden left office almost four years ago, antitrust enforcement has gone from a backwater of Democratic policy making to a key tool for reshaping the U.S. economy. That trend is expected to continue -- and could even accelerate -- under a Joe Biden administration, according to antitrust experts and those who advised his campaign… Biden will take office as progressives have come to see antitrust enforcement as a means for tackling the power of dominant companies and improving economic outcomes for workers. There’s mounting evidence that many industries have grown more concentrated, contributing to such economic woes as income inequality, declining business investment and stagnant wages.”
(16)
November 9
– Reuters
(Susan Cornwell):
“President-elect Joe Biden’s hopes of enacting major Democratic priorities like expanding healthcare access, fighting climate change and providing more coronavirus aid are going to hang on a pair of U.S. Senate races in Georgia in January. Democrats fell short of their goal of taking a Senate majority and actually lost seats in the House of Representatives, making Republicans well positioned to block major Biden legislative initiatives. That leaves Biden’s party with the daunting task of trying to unseat two incumbent Republican senators in the traditionally Republican-leaning state…”
(17)
November 9
– Reuters
(Howard Schneider,
Ann Saphir and
Jonnelle Marte):
“The United States may still face a wave of debt defaults and ‘significant declines’ in asset prices because of the coronavirus pandemic and recession, the Federal Reserve warned…, in a stark reminder the economy is far from out of the woods. ‘As many households continue to struggle, loan defaults may rise, leading to material losses’ for lenders, the Fed said in its latest biannual Financial Stability Report. Business debt ‘has risen sharply as businesses increased borrowing to weather the period of weak earnings. The general decline in revenues associated with the severe reduction in economic activity has weakened the ability of businesses to services these obligations.’”
(18)
November 12
– Bloomberg
(Erik Wasson,
Christopher Condon and
Laura Litvan):
“Judy Shelton’s nomination to the Federal Reserve Board of Governors gained new life as Majority Leader Mitch McConnell moved to set up a confirmation vote by the Senate after a year-long delay that raised doubts about whether she would go through. Shelton is one of two of President Donald Trump’s Fed nominees pending in the Senate. If she and Trump’s other pick, Christopher Waller, are confirmed, the outgoing president will have put five of seven members on the U.S. central bank’s board.”
(19)
November 12
– Bloomberg
(Vince Golle):
“The U.S. federal budget deficit more than doubled in October from a year earlier, reflecting a decline in revenue and increased spending tied to the government efforts to contain the economic damage from the coronavirus. The $284.1 billion shortfall in the first month of fiscal 2021 compared with a $134.5 billion gap in October 2019… Revenue decreased 3.2% and spending jumped 37.3% from a year ago. The figures extend a rapid deterioration in the government’s fiscal position this year after lawmakers scrambled to shore up an economy that ground to a halt… In fiscal 2020… the U.S. amassed a record $3.1 trillion budget shortfall.”
(20)
November 12
– CNBC
(Jeff Cox):
“First-time claims for unemployment insurance continued their decline last week, hitting another pandemic-era low in a sign that the labor market is gradually improving. …Jobless claims hit 709,000 for the week ended Nov. 7, down from 757,000 the week before… In addition to the decline in the weekly pace, continuing claims also again saw a significant decline, falling to 6.79 million, a 436,000 decrease from a week ago.”
(21)
November 11
– New York Times
(Ben Casselman):
“Two critical unemployment programs are set to expire at the end of the year, potentially leaving millions of Americans vulnerable to eviction and hunger and threatening to short-circuit an economic recovery that has already lost momentum. As many as 13 million people are receiving payments under the programs, which Congress created last spring to expand and extend the regular unemployment system during the coronavirus pandemic. Leaders of both major parties have expressed support for renewing the programs in some form, but Congress has been unable to reach a deal to do so. It remains unclear how the results of last week’s election will affect prospects for an agreement.”
(22)
November 13
– Wall Street Journal
(Alexander Osipovich and
Dave Michaels):
“Startups in buzzy sectors such as cannabis, electric vehicles, online gambling and space travel are going public using a structure that offers outsize potential rewards to backers while bypassing some safeguards of a traditional initial public offering. Special-purpose acquisition companies, or SPACs, are publicly traded shell companies formed to pursue deals. After such a firm merges with a target company, that company gets the SPAC’s spot on a stock exchange, enabling it to sell shares to the public—including to mom-and-pop investors who have rushed into the market… SPACs—also called blank-check companies—have announced 71 deals with target companies this year, making 2020 the busiest year so far for the process… In at least 15 of those deals, the targets had no revenue last year…”
(23)
November 7
– Wall Street Journal
(Logan Moore):
“America’s retired workers are getting squeezed on their health care. Cities and states can’t afford to keep the same medical benefits they promised government retirees. For all 50 states combined, revenue declines for 2020 and 2021 could reach 13% cumulatively, according to Moody’s Analytics projections… ‘With Covid, revenue coming into governments is diminished, making it even more difficult for cities and states to fund retiree health care,’ said Marianne Steger, director of public sector and labor strategy for Willis Towers Watson…
(24)
Kevin Yao):
“China exports grew at the fastest pace in 19 months in October, while imports also rose… Exports in October rose 11.4% from a year earlier, beating analysts’ expectations of a 9.3% increase and quickening from a solid 9.9% increase in September… Imports rose 4.7% year-on-year in October, slower than September’s 13.2% growth, and underperforming expectations…”
(25)
November 11
– Bloomberg
(Alexandre Tanzi and
Ben Steverman):
“Before Covid-19 hit, New York City was home to many of the richest people in the world, an elite group of 30,000 families earning at least $1 million a year. Gotham’s future will be decided by how many of these super-wealthy people remain after the pandemic is over. The top 1% of New Yorkers reported a combined $133.3 billion in income in 2018… They paid $4.9 billion in local income taxes, making up 42.5% of total income tax collected by the city. Those numbers show how the decisions of a tiny number of millionaires and billionaires could have huge fiscal consequences for a city of more than 8 million people.”
(26)
November 10
– Wall Street Journal
(Esther Fung):
“Mall landlords are starting to seek bankruptcy protection or shutting down, the latest signs that the pandemic is deepening a crisis that began before Covid-19. CBL & Associates Properties Inc. and Pennsylvania Real Estate Investment Trust, two midsized publicly listed mall owners, said last week they were filing for chapter 11 bankruptcy protection after their earlier debt-restructuring efforts failed… While retailers like Neiman Marcus Group Inc., Brooks Brothers and J.C. Penney Co. have filed for bankruptcy in recent months, it’s rare for real estate investment trusts that own malls or shopping centers to do so.”
(27)
November 10
– Bloomberg
(Zheping Huang and
Coco Liu):
“Xi Jinping’s Communist Party stepped up efforts to rein in some of China’s most powerful companies, jolting investors and dealing a blow to the country’s richest entrepreneurs. Beijing… unveiled regulations to root out monopolistic practices in the internet industry, seeking to curtail the growing influence of corporations like Alibaba Group Holding Ltd. and Tencent Holdings Ltd. The rules, which sent both stocks tumbling over two frenetic days and sparked a wider selloff in Chinese equities, landed about a week after new restrictions on the finance sector triggered the sho
(28)
November 12
– Dow Jones
(Jing Yang and
Lingling Wei):
“Chinese President Xi Jinping personally made the decision to halt the initial public offering of Ant Group, which would have been the world's biggest, after controlling shareholder Jack Ma infuriated government leaders, according to Chinese officials with knowledge of the matter. The rebuke was the culmination of years of tense relations between China's most celebrated entrepreneur and a government uneasy about his influence and the rapid growth of the digital-payments behemoth he controlled.”
(29)
November 9
– Wall Street Journal
(Dan Strumpf):
“By most measures, China is no longer just leading the U.S. when it comes to 5G. It is running away with the game. China has more 5G subscribers than the U.S., not just in total but per capita. It has more 5G smartphones for sale, and at lower prices, and it has more-widespread 5G coverage. Connections in China are, on average, faster than in the U.S., too.”
(30)
November 12
– Bloomberg
(Iain Marlow and
Natalie Lung):
“President Xi Jinping effectively neutered the most democratic institution under China’s rule, sending a message to Joe Biden that no amount of pressure will prompt him to tolerate dissent against the Communist Party. China’s top legislative body… passed a resolution allowing for the disqualification of any Hong Kong lawmakers who aren’t deemed sufficiently loyal. Chief Executive Carrie Lam’s government immediately banished four legislators, prompting the remaining 15 in the 70-seat Legislative Council to resign en masse.”
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