Market Talk – January 11, 2021

Posted Jan 11, 2021 by Martin Armstrong |

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ASIA:

A World Health Organization (WHO) team of international experts tasked with investigating the origins of the COVID-19 pandemic will arrive in China on January 14, Chinese authorities said on Monday. Lack of authorization from Beijing had delayed the arrival of the 10-strong team on a long-awaited mission to investigate early infections, in what China’s foreign ministry called a “misunderstanding.” A health expert affiliated with the WHO said expectations should be “very low” that the team will reach a conclusion from their trip to China.

Short-selling guru Carson Block has warned that Chinese shares are “uninvestable” following the disappearance of billionaire Alibaba founder Jack Ma Block, one of the world’s best-known active investors. He said Ma’s temporary disappearance is ‘just one of the reasons’ he is betting against Chinese firms. Shares in Alibaba have fallen by around 25 percent since October, when founder Ma made critical comments about China’s regulator and state-owned banks.

India’s fuel consumption in December rose for a fourth straight month as economic activity and transport demand continued to recover from a coronavirus-led hiatus, Reuters reported. Consumption of fuel, a proxy for oil demand, rose 4.1% to 18.6 million tonnes in December, the highest since January 2020, data from the Petroleum Planning and Analysis Cell (PPAC) of the Ministry of Petroleum & Natural Gas showed on Friday. India’s fuel consumption scales 11-month peak in December.

India’s central bank warned that an expected doubling of bad loans and soaring financial markets in the nation’s weakened economy threaten financial stability. The non-performing asset ratio is forecast to rise to 13.5% by the end of September from 7.5% a year ago, the Reserve Bank of India said in its semiannual Financial Stability Report published Monday. If the number holds through the fiscal year ending March 2022, it would be the worst since 1999.

The major Asian stock markets had a mixed day today:

NIKKEI 225 closed
Shanghai decreased 38.61 points or -1.08% to 3,531.50
Hang Seng increased 30.00 points or 0.11% to 27,908.22
ASX 200 decreased 60.70 points or -0.90% to 6,697.20
Kospi decreased 3.73 points or -0.12% to 3,148.45
SENSEX increased 486.81 points or 1.00% to 49,269.32
Nifty50 increased 137.50 points or 0.96% to 14,484.75

The major Asian currency markets had a mixed day today:

AUDUSD decreased 0.00609 or -0.78% to 0.77002
NZDUSD decreased 0.00684 or -0.95% to 0.71685
USDJPY increased 0.21 or 0.20% to 104.16
USDCNY increased 0.01347 or 0.21% to 6.47764

Precious Metals:

Gold decreased 3.92 USD/t oz. or -0.21% to 1,844.39
Silver decreased 0.40 USD/t. oz or -1.58% to 24.968

Some economic news from last night:

China:

CPI (MoM) (Dec) increased from -0.6% to 0.7%

CPI (YoY) (Dec) increased from -0.5% to 0.2%

PPI (YoY) (Dec) increased from -1.5% to -0.4%

Australia:

MI Inflation Gauge (MoM) increased from 0.3% to 0.5%

Retail Sales (MoM) (Nov) increased from 1.4% to 7.1%

Indonesia：

Consumer Confidence (Dec) increased from 92.0 to 96.5

EUROPE/EMEA:

UK Chancellor Rishi Sunak has warned that there are tough times ahead for the UK economy as it struggles through a third national lockdown. In an update to MPs on Monday, Rishi Sunak said: “We should expect the economy to get worse before it gets better.” Mr Sunak said restrictions placed on people and businesses were necessary to limit the spread of the coronavirus but that they would also have a “significant” economic impact. Last week the chancellor launched a £4.6bn support package for businesses and he has previously announced emergency help for the economy worth £280bn.

BBVA, the second-largest commercial bank in Spain with total assets worth $840 billion intends to launching cryptocurrency trading and custody services in the coming months. The bank is waiting for approval from the Swiss Financial Market Supervisory Authority (FINMA) that will allow the company to provide cryptocurrency-related services across Europe. Switzerland is a primary destination for cryptocurrency businesses as it offers friendly and straightforward regulatory environments for the industry.

The German government is being accused of acting outside a “legally binding” agreement that forbids European Union member states from negotiating their own bilateral COVID-19 vaccine supply deals directly with manufacturers. A source from the German Ministry of Health told Reuters the government signed two deals to secure 50 million additional COVID-19 vaccines – 20 million from the German biopharmaceutical company CureVac and another 30 million BioNTech/Pfizer jabs. The preliminary agreements were made on August 31 and September 8, respectively, while the EU was negotiating supply deals for the 27-member bloc with the two companies.

The major Europe stock markets had a negative day:

CAC 40 decreased 44.45 points or -0.78% to 5,662.43
FTSE 100 decreased 74.78 points or -1.09% to 6,798.48
DAX 30 decreased 112.87 points or -0.80% to 13,936.66

The major Europe currency markets had a mixed day today:

EURUSD decreased 0.00653 or -0.53% to 1.21547
GBPUSD decreased 0.00432 or -0.32% to 1.35184
USDCHF increased 0.00468or 0.53% to 0.89008

Some economic news from Europe today:

Norway:

Core CPI YTD (Dec) increased from 2.9% to 3.0%

Core Inflation (MoM) (Dec) increased from -0.4% to -0.1%

CPI (YoY) (Dec) increased from 0.7% to 1.4%

CPI (MoM) (Dec) increased from -0.7% to 0.4%

PPI (YoY) (Dec) decreased from -3.4% to -5.7%

Spain:

Spanish Industrial Production (YoY) (Nov) decreased from -1.6% to -3.8%

Euro Zone:

Sentix Investor Confidence (Jan) increased from -2.7 to 1.3

US/AMERICAS:

Secretary of State Mike Pompeo lifted provisions between the US and Taiwan over the weekend in a decision likely to anger China. “The United States government took these actions unilaterally, in an attempt to appease the Communist regime in Beijing,” Pompeo stated before announcing he was lifting all self-imposed restrictions. Hsiao Bi-khim, Taiwan’s de facto ambassador of Taiwan, stated that the decision will remove decades of discrimination against the country.

A third round of Paycheck Protection Program (PPP) stimulus went out to some small businesses this Monday. The coronavirus aid package will allocate $284 billion in new funds to businesses. After receiving criticism for providing aid to larger corporations, small lenders will receive priority assets with some larger businesses receiving assets later in the week. Companies must show a 25% loss to their revenues to qualify for funding. The US government has already allocated $525 billion and over 5 million loans, according to Reuters, and lawmakers believe the latest funding will be sufficient to cushion the blow by the coronavirus lockdowns.

Despite the Trump administration only having eight days remaining, House Democrats introduced a new article of impeachment against President Donald Trump. The House Democrats blame Trump for inciting the failed coup on the Capitol last week. Furthermore, they are urging Vice President Pence to invoke Amendment 25 to remove Trump from the presidency under claims he is no longer fit to lead.

According to an alarming survey by Bankrate.com, only 39% of Americans have $1,000 in liquid emergency expenses. Last year, the same survey reported that 41% of US citizens could afford an unexpected $1,000 bill. If the expense occurred, 38% of respondents said that they would need to borrow funds, 18% would charge it to a credit card, 12% would rely on financial gifts from family and/or friends, and 8% would take out a loan. Naturally, those earning more have the ability to cover an unexpected expense, with 58% of households earning over $75,000 per year stating they have the liquidity.

US Market Closings:

Dow declined 89.28 points or -0.29% to 31,008.69
S&P 500 declined 25.07 points or -0.66% to 3,799.61
Nasdaq declined 165.54 points or -1.25% to 13,036.43
Russell 2000 declined 0.65 of a point or -0.03% to 2,091.01

Canada Market Closings:

TSX Composite advanced 107.62 points or -0.6% to 17,934.45
TSX 60 declined 5.92 points or -0.55% to 1,067

Brazil Market Closing:

Bovespa declined 1,821.5 points or -1.46% to 123,255.13

ENERGY:

The oil markets had a mixed day today:

Crude Oil decreased 0.06 USD/BBL or -0.11% to 52.1800
Brent decreased 0.42 USD/BBL or -0.75% to 55.5700
Natural gas increased 0.086 USD/MMBtu or 3.19% to 2.7860
Gasoline decreased 0.023 USD/GAL or -1.49 % to 1.5193
Heating oil decreased 0.0109 USD/GAL or -0.69% to 1.5686

Top commodity gainers: Natural Gas (3.19%), Canola (1.16%), Sugar (0.90%) and Coal (2.41%)
Top commodity losers: Copper (-3.58%), Bitumen (-3.43%), Platinum (-2.98%), and Lumber (-3.41%)

The above data was collected around 16:25 EST on Monday.

BONDS:

Japan 0.04%(+0bp), US 2’s 0.15%(+0.012%), US 10’s 1.14%(+3bps); US 30’s 1.88%(+0.019%), Bunds -0.53% (+2bp), France -0.32% (-1bp), Italy 0.54% (+4bp), Turkey 12.81% (+9bp), Greece 0.65% (+5bp), Portugal -0.02% (+1bp); Spain 0.07% (+2bp) and UK Gilts 0.31% (+2bp).