Hey everyone, this holiday shortened week clearly closed with a great deal of bearish action on very low trading volume. Get my take below.
WEEKLY SOUND BITES:
US Indexes declined for the holiday-shortened week after Friday’s news about the emergence of a new, potentially more contagious, coronavirus variant in South Africa triggered a sharp sell-off in riskier assets such, from Equities, Commodities and Rates… Value stocks held up better than growth companies despite Friday’s selling pressure on stocks related to leisure and travel. “Sippy Cup” Joe also formally announced that the U.S. will release 50 million barrels of oil from the Strategic Petroleum Reserve to try to pressure gasoline prices…historically this has never worked.
Positive economic data—including the lowest level of weekly jobless claims since 1969—helped drive the increase in Treasury yields.
Jerome “Power Ranger Boom Boom” Powell was reappointed as Federal Reserve chair. He is viewed as somewhat less dovish than Lael Brainard who was appointed as Vice Chair. Comments from other members of the FOMC about the potential to accelerate the tapering of the Fed’s bond purchases contributed to the less dovish outlook for Fed monetary policy.
Shares also fell in Europe fell sharply on fears that the economic recovery might be derailed by the imposition of tight coronavirus restrictions and the spread of a new variant of the virus. Eurozone business activity unexpectedly accelerated in November, according to purchasing managers’ indexes (PMI). Even so, the average reading of the main output index in the past two months came in lower than in the third quarter, indicating that the economic recovery is slowing.
In Japan solid economic data shows positive results. Flash data showed the Japan Composite PMI rose to 52.5 in November—a 37-month high—from 50.7 in October, buoyed by loosening coronavirus restrictions and soaring vaccination rates. Similarly, the Japan Services PMI hit a 26-month high of 52.1 in November, up from 50.7 the previous month. And, rounding out the triumvirate of upbeat releases, Japan’s Manufacturing PMI rose to 54.2 in November, up from 53.2 in October. This was the 10th straight month of expansion in factory activity and the strongest pace since January 2018.
And in China, relations with the U.S. remained tense over the status of Taiwan and trade issues. Complicating relations we see that the U.S. Federal Communications Commission (FCC) asked a federal appeals court to reject China Telecom’s bid to continue providing services in the U.S., arguing that China Telecom’s ownership allows Beijing to access and possibly disrupt or misroute U.S. communications. The property sector remained under duress however, the Government indicated they will step up efforts to stabilize employment, financing, and other key areas.
Enjoy this Week’s Round-Up
Don’t Be A Rat Brain Trader – Be The Red Stripe Zebra !!
Trade Smart !
hpb
