Thu, Dec 09, 2021 @ 08:22 GMT

UK PM Johnson tested positive for coronavirus, in self-isolation

    UK Prime Minister Boris Johnson confirmed that he had tested positive for coronavirus, a day after he appeared at the weekly Q&A session in the House of Commons chamber.

    “Over the last 24 hours I have developed mild symptoms and tested positive for coronavirus,” Johnson said. “I am now self-isolating, but I will continue to lead the government’s response via video-conference as we fight this virus.”

    Earlier this week, Prince Charles, he 71-year-old heir to the British throne, tested positive for coronavirus. So far, he’s in good health and in self-isolation in Scotland, with mild symptoms. Total coronavirus infections in the UK now stands at 11,658, with 578 deaths.

    Abe steps down as Japanes PM on health issue

      Japanese Prime Minister Shinzo Abe confirmed in an announcement that the is resigning due to worsening health. He said in a news conference, “I am not confident of responding to the trust of the people while I am dealing with my illness and treatment and my health is not good,”

      “I cannot be prime minister if I cannot make the best decisions for the people. I have decided to step down from my post.” He added that he won’t comment on his potential successors.

      US initial jobless claims dropped to 576k lowest since March 2020

        US initial jobless claims dropped -193k to 576k in the week ending April 10, well below expectation of 700k. That’s also the lowest level since March 14, 2020. Four-week moving average of initial claims dropped -47k to 683k, lowest since March 14, 2020 too.

        Continuing claims rose 4k to 3731k in the week ending April 3. Four-week moving average of continuing claims dropped -98k to 3763k, lowest since March 28, 2020.

        Full release here.


        IMF lowers 2021 growth forecast slightly to 5.9%

          IMF lowered 2021 growth forecast slightly by -0.1% to 5.9% , reflecting “a downgrade for advanced economies—in part due to supply disruptions—and for low-income developing countries, largely due to worsening pandemic dynamics.”

          That’s “partially offset by stronger near-term prospects among some commodity-exporting emerging market and developing economies.”

          IMF also warned, “rapid spread of Delta and the threat of new variants have increased uncertainty about how quickly the pandemic can be overcome. Policy choices have become more difficult, with limited room to maneuver.”.

          Full release here.

          Swiss GDP grew 1.8% qoq in Q2, retail sales dropped -2.6% yoy in Jul

            Swiss GDP grew 1.8% qoq in Q2, slightly below expectation of 1.9% qoq. Total GDP was only -0.5% below the pre-crisis level seen in Q4 2019. Looking at some details, from production approach, manufacturing grew 0.9%, trade rose 4.8%, accommodation and food rose 48.9%, arts, entertainment and recreation rose 52.9%. From expenditure approach, private consumption rose 4.1%, government consumption rose 5.5%.

            Also from Swiss, real retail sales dropped -2.6% yoy in July, much worse than expectation of 0.2% yoy. CPI came in at 0.2% mom, 0.9% yoy in August, above expectation of 0.1% mom, 0.8% yoy.

            New Zealand BusinessNZ manufacturing rose to 54.3, recovery from a large hard hit

              New Zealand BusinessNZ Performance of Manufacturing Index rose from 51.6 to 54.3 in October. Looking at some details, production rose from 49.8 to 54.0. Employment dropped from 54.2 to 52.1. New orders dropped from 54.1 to 53.9. Finished stocks rose from 50.2 to 54.9. Deliveries rose from 47.9 to 59.9.

              BNZ Senior Economist, Doug Steel stated that “even though October’s reading is above average, we’d classify it more in the realm of some recovery from a large hit rather than an indication of outright strength.”

              Full release here.

              German Maas: Europe is united and ready to negotiate with US on aviation subsidies

                German Foreign Minister Heiko Maas said today that the EU is ready to negotiate with US to settle the aircraft subsidies disputes. Yet, EU is also ready to react to new US tariffs on European goods. He said “the European Union now will have to react and, after obtaining the approval of the World Trade Organisation, probably impose punitive tariffs as well.”

                Maas also tweeted, “Europe is united on this question. We remain ready to negotiate common rules for subsidies in the aviation industry. We can still prevent further damage.”

                BoJ Kuroda: Impact of coronavirus could continue for the time being

                  At the post meeting press conference, BoJ Governor Haruhiko Kuroda said the coronavirus has already has an impact of Japan’s economy through “decline in inbound tourism, as well as on exports, output and consumption”. Also, “event cancellations and people staying home have led to a sharp slump in consumption.”. Hence, BoJ revised down economic assessment.

                  Additionally, “given the fact the epidemic is spreading with a lag among various countries, the impact of the virus could continue for the time being.” Nevertheless, he’s optimistic that “once the impact is mitigated demand could pick up”. Japan’s economy would resume a “moderate expansion trend” then.

                  He also emphasized that it was “necessary to take necessary action quickly, particularly ahead of the March fiscal year-end, to ensure corporate financing remains smooth and markets restore stability.”

                  Fed Brainard: Bar much higher for rate hike than tapering

                    Fed Governor Lael Brainard said “employment is still a bit short of the mark on what I consider to be substantial further progress.. But if progress continues as I hope, it may soon meet the mark,” for tapering asset purchases.

                    “The forward guidance on maximum employment and average inflation sets a much higher bar for the liftoff of the policy rate than for slowing the pace of asset purchases,” she added. “I would emphasize that no signal about the timing of liftoff should be taken from any decision to announce a slowing of asset purchases.”

                    Bundesbank: Few signs of sustainably recovery in exports and stabilization of industry

                      In its monthly report, Germany’s Bundesbank said “Germany’s economic output could have shrunk again slightly in the third quarter of 2019”. And, “the decisive factor here is the continued downturn in the export-oriented industry.”

                      Bundesbank doesn’t expect an outright recession. It still warned, “early indicators currently provide few signs of a sustainable recovery in exports and a stabilization of the industry.” “This raises the risk that the slowdown extends to a greater extent to more domestically oriented sectors.”

                      ECB Schnabel: Rising yields a natural development at a turning point

                        ECB Executive Board member Isabel Schnabel said, “rising yields are a natural development at a turning point in the recovery – investors become more optimistic, inflation expectations rise and, as a result, nominal yields go up.” “This is precisely what we would expect and what we want to see,” she said. Also, “financing conditions remain favorable.”

                        “We always have to be willing to reduce or increase asset purchases in line with our promise to keep euro area financing conditions favorable,” she added. “The recovery still depends on continued policy support. A premature withdrawal of either fiscal or monetary support would be a great mistake,”

                        “It’s likely that when the PEPP ends, we will not have reached our (inflation target),” Schnabel said. “In that case, we will continue to run a highly accommodative monetary policy also after the PEPP.”

                        Fed Rosengren: You don’t want too much exuberance in housing market

                          Boston Fed President Eric Rosengren said in an FT interview that “it’s very important for us to get back to our 2% inflation target but the goal is for that to be sustainable.” And for that to be sustainable, “we can’t have a boom and bust cycle in something like real estate.”

                          “You don’t want too much exuberance in the housing market,” he added. But “it’s worth paying close attention to what is happening in the housing market.”. While he’s not saying that there will be a bust, “such cycles have occurred multiple times, a source of financial stability concerns.

                          Fed Williams is carefully monitoring a nuance picture, ready to act as appropriate

                            New York Fed President John Williams said in a speech that “the economy is in a good place, but not without risk and uncertainty”. “Persistently low inflation” is a key area of his attention. In particular, he noted the “broader context is important”, with “ongoing disinflationary pressures from abroad”.

                            Meanwhile, beyond the “good” headline GDP figure, there are “more mixed signals coming from different sectors”. “Robust consumer spending is balanced by signs of slowing business investment. We’ve also seen a decline in exports and weakening manufacturing data, reflecting slowing global growth and uncertainty related to trade and geopolitical risks.”

                            Williams said he is carefully monitoring this “nuance picture” and “remain vigilant to act as appropriate”. And, Fed will maintain a “data-dependent approach that takes into account the risks and uncertainty that are weighing on the economy.”

                            NASDAQ completed HnS top, to lend strong support from 12074

                              NASDAQ closed down -2.11% or 274 pts to 12723.47 overnight. The strong break of 12983.05 neckline support confirmed the completion of head and should top reversal pattern as mentioned (ls: 13728.98, h: 14175.11, rs: 13601.33)  here. More downside is expected for now, for minimum target at 100% projection of 14175.11 to 13003.98 from 13601.33 at 12430.20 and below.

                              Still, we’d maintain that cluster support at 12074.06 (61.8% retracement of 10822.57 to 14175.11 at 12103.24) is the key level. We’d expect strong support from there to contain down side and bring rebound (at least on first attempt). That could keep the pattern from 14174.11 as a correction to rise from 10822.57 only, and set the base for up trend resumption later.

                              However, sustained break of 12074.06 will argue that NASDAQ is already correcting the whole up trend from 6631.42. That would open up the case of deeper medium term correction through 10822.57 support.

                              Similarly, even though S&P 500 looks vulnerable for a deeper pull back, we’d expect strong support from 3588.11 to contain downside to bring rebound. But sustained break there would indicate the start of a deeper correction to the whole up trend from 2191.86.

                              ECB Knot expects more than 4% growth over the full year

                                ECB Governing Council member Klaas Knot said yesterday, “we can take comfort that the euro area in the coming months will take the exact same trajectory, services will also pick up, we expect more than 4% growth over the full year.” Further, he added, “I would argue that there is still significant upside risk actually, and that has to do with pent-up demand.”

                                “Traditionally we have been very conservative within the ECB, assuming in our baseline projections that the savings rate would just return to its pre-corona level, that there would be no pent-up demand taking place,” Knot said. “I personally think that’s a bit of an overly conservative assumption.”

                                Nevertheless, inflation is still too low and ECB would need to provide abundant support even if the PEPP purchases end in 2022. “The only thing we are talking about is rotation from emergency support to other forms of unconventional support,” he said, “we will still have the old asset purchase programme, we will still have the negative interest rates in place and most importantly, the targeted longer-term refinancing operations to the banks.”

                                New Zealand retail sales rose 2.5% qoq in Q1

                                  New Zealand retail sales rose 2.5% qoq in Q1, much better than expectation of -1.8% qoq. 10 of the 16 regions showed higher sales values. Ex-auto sales rose 3.2% qoq, also well above expectation of -1.0% qoq.

                                  Electrical and electronic goods had the largest increase, up 8.4 percent followed by recreational goods, up 16 percent in the March 2021 quarter.

                                  “Higher spending in the electrical industry coincides with falling prices for computers and phones during the first quarter of 2021,” retail business manager Sue Chapman said.

                                  Full release here.

                                  Germany DIHK: No quick recovery insight, the V is off the table

                                    Germany’s industry group DIHK said there is “no quick recovery in sight” for the economy. “Half of the companies expect a return to normality at the earliest next year. Only a third expect normalization this year,” says DIHK CEO Martin Wansleben said. “This shows that the way back for the economy will be long and hard.”

                                    According to a survey, four out of fives companies expect sales to decline for the year as a whole. Companies are “very concerned that their business will not get going again quickly, even though the shutdown in Germany and other partner countries has been eased.” “The V is off the table,” feared Wansleben.

                                    Full release here.

                                    UK Fox: Changes in EU’s Brexit position due to economic slowdown

                                      UK Trade Minister Liam Fox said today that EU is now more afraid of no-deal Brexit due to economic slowdown , including Germany and France. Fox said “there have been some changes in the positions in recent times, dictated by reality”.

                                      And, “We’ve seen, for example, the German economy weakening, we’ve seen the French economy weakening, and I think this (EU) view that ‘we can simply weather out any disturbance that would occur from a no deal’, I think there’s much less appetite for that.”

                                      Fed Clarida: Baseline outlook favorable but economy confronts some evident risks

                                        Fed Vice Chairman Richard Clarida reiterated that looking ahead, “monetary policy is not on a preset course”. FOMC will “proceed on a meeting-by-meeting basis to assess the economic outlook as well as the risks to the outlook.” Also, Fed will “act as appropriate to sustain growth and achieve dual mandate.

                                        Clarida also repeated that the economy is “in a good place” and the “baseline outlook is favorable”. But the economy “confronts some evident risks”. In particular, he noted, ” Business fixed investment has slowed notably since last year, exports are contracting on a year-over-year basis, and indicators of manufacturing activity are weakening. Global growth estimates continue to be marked down, and global disinflationary pressures cloud the outlook for U.S. inflation.”

                                        Clarida’s full speech here.