Overnight positivity in the markets.
The Nikkei gained 2.5%, buoyed by overall optimism & BOJ Governor Kuroda's comments to parliament that the nation was not heading toward deflation.
Brent crude is back at March levels, the NZD outperformed after the government sought advice from the RBNZ to help stabilise property prices.
Biden Wins Transition Access as Trump Promises to Cooperate
The General Services Administration acknowledged Joe Biden as the apparent winner of the presidential election on Monday, following weeks of inaction, and President Donald Trump called on his agencies to cooperate.
“I am recommending that Emily and her team do what needs to be done with regard to initial protocols, and have told my team to do the same,” Trump said of Emily Murphy, the General Services Administration chief. Still, he said he would continue to contest the outcome of the election.
The designation triggers a formal transition process, giving Biden and his team access to current agency officials, briefing books and other government resources, including some $6 million in funding.
Trump will continue to challenge the result regardless.
Biden to name Yellen to Treasury to lead U.S. from sharp economic downturn
President-elect Joe Biden is expected to nominate former Federal Reserve Chair Janet Yellen as U.S. Treasury secretary, breaking a 231-year gender barrier and putting a seasoned economist and labor market expert in charge of leading the country out of the steepest downturn since the Great Depression.
Yellen “will be a trusted, steady, and pragmatic hand on the helm as the U.S. navigates the economic recovery from the COVID-19 pandemic,” said Tim Adams, a former Treasury official who is president of the Institute of International Finance, which represents more than 450 global banking firms.
With Democrats having only a slim possibility of winning a U.S. Senate majority in two Georgia runoffs in January, Yellen faces tough negotiations with Republicans to try to push Biden’s agenda, includes raising taxes on the wealthy and investing trillions of dollars in infrastructure, education and fighting climate change.
Economists said Yellen would be effective in articulating the economic arguments for spending more in the near term to boost job growth and reduce the gap between rich and poor.
Investors see Yellen as a force for more fiscal action to combat the economic crisis unleashed by the COVID-19 pandemic, and as someone in a strong position to ensure the Treasury will continue to work closely with the Fed.
“Yellen should be a very strong advocate for more aggressive fiscal policy, and given her gravitas around Washington, it may make her the single most effective fiscal expansion advocate Biden could have picked,” said Tom Graff, head of fixed income at Brown Advisory in Baltimore.
U.S. states prepare second antitrust lawsuit against Google for December
A bipartisan group of U.S. states plans to file an antitrust lawsuit against Google as early as next month, according to two people briefed on the matter, potentially beating a more widely anticipated lawsuit from a different group of states led by Texas.
The pending legal actions follow an antitrust lawsuit filed by the U.S. Justice Department against Alphabet’s Google in October.
The bipartisan group -- made up of Colorado, Iowa, Nebraska, New York, North Carolina, Tennessee, and Utah -- is sometimes referred to as the Colorado/Nebraska group and has said it planned to combine its case with the federal government’s.
Google has broadly denied wrongdoing in response to the government’s lawsuit and other probes, and the company said that its search engine and other products are dominant because consumers prefer them.
NZ govt asks central bank to include taming red-hot housing in remit, NZ$ jumps
The New Zealand government has asked the central bank to consider factoring house price stability as part of its broad monetary remit, Finance Minister Grant Robertson said, boosting the local dollar on market bets of less stimulus over the next year.
As policymakers grappled with soaring house prices and the risk of a property bubble, Robertson said the government was reviewing housing policies, and had written to the Reserve Bank of New Zealand (RBNZ) asking what it could do to help slow a property boom.
The New Zealand dollar jumped to $0.6985, its highest since mid-2018, as the government move reinforced expectations the central bank will resist moving toward negative interest rates next year.
Robertson has proposed including stabilising house prices as a factor for consideration in the remit when formulating monetary policy.
“I am concerned that the recent rapid escalation in house prices, and forecasts for this to continue, are affecting the government’s ability to meet the economic objectives set out in the remit,” he said in the letter to RBNZ Governor Adrian Orr.
“I am also concerned about the potential that these price increases may present a financial stability risk to the economy, particularly when monetary policy returns to more normal settings.”
Robertson’s letter comes amid growing pressure to restrain the booming property market, and calls from the opposition party to “rein in” the central bank.
China Vows to Investigate Bond-Market Misconduct
China warned it would show zero tolerance for misconduct in the debt markets, after a series of defaults by state-backed groups unsettled investors.
The warning came from the Financial Stability and Development Committee, a body that groups together China’s central bank and other top financial regulators and that is chaired by Vice Premier Liu He, President Xi Jinping’s point person on economic and financial issues.
It followed a series of interventions by other actors, including the securities regulator, a stock exchange, and the industry body for the debt industry, as Chinese authorities moved to calm unease that has sent yields on riskier debt to their highest in nearly two years.
Beijing will “investigate and deal with fraudulent issuance, false information disclosure, malicious transfer of assets, misappropriation of issued funds and other illegal activities,” the committee said over the weekend after meeting.
The high-profile defaults include one by Yongcheng Coal & Electricity Holding Group Co., a mining company owned by the province of Henan, and another by Tsinghua Unigroup Co., a semiconductor company majority owned by one of China’s top universities.
A third involved Huachen Automotive Group Holdings Co., which is owned by another provincial government. It is the parent of Brilliance China Automotive Holdings Ltd. , the joint-venture partner of BMW AG in China.
Last week, an industry body that supervises the bond market said it would investigate banks and other intermediaries involved in Yongcheng’s debt financing.
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Elon Musk becomes world's second richest person
Amidst all of this positivity, safety nets are being removed.
Mnuchin chose not to renew some of the Federal Reserve's emergency programs, and pandemic unemployment benefits expire at the end of this year.
This FT report highlights the challenges of reshaping the labour market in Europe, and similar challenges will be faced elsewhere;
Europe staves off mass unemployment but needs to redeploy workers
The coronavirus pandemic is exacerbating the divide in Europe’s job market between skilled and unskilled workers, despite governments’ financial support preventing a repeat of the mass unemployment caused by the financial crisis a decade ago. The bloc’s labour market has been largely shielded from the fallout of the pandemic by generous government and central bank stimulus, including furlough schemes that subsidised the wages of about 50m people who were put on reduced hours.
But the overall improvement masks a considerable difference: in the first half of the year, there was a 7 per cent contraction in low skilled jobs in the eurozone, while the number of high skilled jobs grew 3 per cent, according to the European Central Bank.
Several companies have significant hiring plans in Europe — including logistics group DHL which is seeking to add 3,000 staff in the region, Volkswagen planning to recruit 2,000 people and Tesla looking to hire 12,000 workers for its new German factory.
At the same time, many companies are shedding staff. Airbus, the aerospace group, is cutting 15,000 workers. Danone, the maker of Evian bottled water and Activia yoghurts, this week announced 2,000 job cuts, while steelmaker Thyssenkrupp last week said it was cutting 5,000.
The pandemic has also hit airlines hard. Lufthansa put 80,000 of its 130,000 workers on furlough after receiving a €9bn state bailout. The 700 students at its pilot school in Bremen were recently told they would no longer have jobs when they graduate. And some industries face structural change.
While German carmakers are hiring staff to work on electric vehicles, they and their parts suppliers are also cutting tens of thousands of jobs involved in making internal combustion engines. IG Metall, the union, has estimated 300,000 jobs will be lost in Germany’s metal and electrical industries this year.
Economists are urging European governments to shift their focus from spending to prop up existing jobs to doing more to retrain and redeploy those in affected industries. “It is important to switch from just protecting the status quo jobs to preventing an overall rise in unemployment,” said Katharina Utermöhl, economist at Allianz.
“Giving companies hiring bonuses could incentivise them to create more jobs.” Neil Shearing, chief economist at Capital Economics, said: “It’s certainly the case that government support has helped to insulate the labour market from the worst effects of the pandemic.” But, he added “it’s too soon to say that governments have prevented a larger rise in unemployment”.
Looking ahead, German Ifo is the highlight of this morning's calendar. Thsi afternoon, U.S. redbook sales, consumer confidence and Richmond Fed manufacturing index.
Plenty of central bank speakers to enjoy as usual; the ECB's Lagarde & Lane, & Fed's Clarida among them.
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