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Contents Click on the links below to get to the stuff you really really want. USA – Central bankers warn vaccine not enough; Case numbers surged; No sign of financial package; Stocks down, bond prices up (#USA) UK – Record infection rates; Investors taking profits; Banks and Rolls-Royce aero down, tech up (#UK) Continental Europe – French hospitalisation rates hit new high; Travel and leisure stocks down (#Europe) Elsewhere – Japanese exports down on virus news; Chinese exports down on Trump news (#Elsewhere) WTF – China congratulates Biden (#WTF) Links (#Useful) Numbers (#Numbers) Ts & Cs (#Ts+Cs)
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USA
Focus was firmly back on the virus yesterday, as case numbers surged fuelling concerns of further lockdown measures in the near term. Three of the world’s top central bankers warned that the vaccine would not be sufficient to nullify the difficulties in which the global economy finds itself.
More financial stimulus is necessary to tide industries and households over for the coming six months and more, while the vaccine is further tested, adjusted, approved, manufactured, transported, stored correctly, prioritised and administered.
Which brings us nicely along to that old chestnut, the next US stimulus package. The Trump administration is sulking in its bedroom, refusing to engage on anything other than the fact that it has to go out and get a job by 20 January. So there’s no prospect of any much-needed dosh being allocated before then. And that doesn’t bode well.
So down went stocks and up went bonds as investors moved money from higher- to lower-risk rated investments. The S&P 500 dropped by a full percentage point, while the rising demand for and prices of benchmark 10-year Treasuries (government bonds) sent their yields down from 0.98% on Wednesday to 0.87% this morning.
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UK
Infection rates have hit a record in the UK, despite the increased lockdown measures. This scotched the recent excitement over economic growth numbers and the vaccine news. At the same time, some investors were taking profits (i.e. selling after stock prices had risen), and that combo sent the FTSE 100 and FTSE 250 down by 0.7% and 0.2% respectively.
Rolls-Royce aircraft engineering continues to battle for its existence. Its share price has whip-sawed over recent weeks as folk try to determine if it will survive and, if it does, how long it will take to get back on an even keel. Banks’ share prices also fell yesterday as the prospects of economic growth and a return to what they would consider to be more helpful interest rates seemed a long way off.
Investors were moving back into the stocks that did well during the lockdown, namely technology and delivery stuff, while travel and leisure got a kicking again.
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Continental Europe
News that hospitalisation rates in France had set a new high provided a sobering jolt. The Euro Stoxx 50 and German DAX both sank by around 1.1% on the day. Banks and leisure stocks sank while Delivery Hero recovered some of its recent losses as folk realised that the lockdown wasn’t about to end just yet.
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Elsewhere
Share prices are down across most of the Asia Pacific region with Japan’s exports having a tough Friday due to ongoing global virus concerns. China’s exporters had a more specific problem: Trump targeted any company determined to be owned or controlled by the country’s army by signing an order banning US investments in them.
He has a point on this one. Billions of dollars-worth of goods and services are controlled by the top brass of the so-called People’s Liberation Army. But if Xi Jinping is smart (and by gum he is), he’ll use this to his advantage as a way in which to wean zombie companies off state support (many of which are PLA owned or controlled). That would provide a boost to properly run Chinese businesses who could do good things with the loans or grants that fly over their heads. But, Xi would have to be careful not to create a cabal of military folk who would want revenge against him. Still, he’s bumped off plenty of other rivals, so I doubt that he’ll mess up on this one. Fun and giggles, fun and giggles.
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WTF (What’s The Fact?)
China congratulates Biden
In a statement ripe with hypocrisy, Chinese Foreign Ministry Spokesman, Wang Wenbin, was wheeled out by Beijing to read “We respect the American people’s choice and extend congratulations to Mr. Biden and Ms. Harris.”
In other words, China wants Biden to stay out of Chinese affairs, be they in Hong Kong, the waters off Taiwan or Japan, or the mountainous border with India.
Quite what Trump will make of this could be entertaining because all of those subtleties will be lost on him. The only point he’ll spot is that China got its wang out.
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Links
Investopedia (www.investopedia.com/dictionary/) – Loads of free explanations of financial terms including some helpful videos. Not 100% accurate, but a good starting point Guffipedia (ig.ft.com/sites/guffipedia/) – Lucy Kellaway of the FT has collected some painful examples of corporate people disappearing up their own analogies Guardian (www.theguardian.com) – Free to access website with a couple of decent columnists (e.g. Nils Pratley and Larry Elliott) Times of India (timesofindia.indiatimes.com) – Why use five words when 37 will do? Daily Mail (www.theatlantic.com/magazine/archive/2016/07/the-war-on-stupid-people/485618) – Click it. I dare you.
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———————————————————— IMPORTANT This is my opinion. Yes I read a lot and share what I’ve read with you, but this content remains my opinion. It’s NOT advice. If you take my advice – don’t take my advice. Any decisions you make about investments, your hairstyle or whether or not to eat marzipan are entirely at your own behest. If you’re unable to recognise the devil’s ear wax when you see it, then you’re on your own.
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