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Tradingview Weekly Market Wrap 30 November 2020

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US stocks surged to new highs, Global debt is growing, India suffers first recession in decades, Brexit saga is still in the air, gold goes down, Trump insists Biden must ‘prove’ he won 80 Million votes, whereas seasonally adjusted initial claims increased 30,000 to 778,000, in the week ending November 21.

It was a relatively calm week for the markets mainly due to the US Thanksgiving bank holiday. Even though, on a geopolitical level, the party is just beginning. Biden has not yet taken office, and in many parts of the world is once again going crazy. In particular, a top Iranian nuclear scientist was killed by a remote-controlled machine gun. One American official — along with two other intelligence officials — said that Israel was behind the attack on the scientist. Iran’s Supreme Leader Ayatollah Seyyed Ali Khamenei has already vowed revenge…

In case Biden actually becomes a president, this situation could greatly complicate his plans to restore the 2015 nuclear agreement between Tehran and six other nations, which curtailed Iran’s nuclear activities. As we know, concerns about possible war push the investment community to purchase defensive assets – in particular, USD and gold, as well as oil. It is worth mentioning that the Strait of Hormuz (located between Oman and Iran, connects the Persian Gulf with the Gulf of Oman and the Arabian Sea) is the world’s most important oil chokepoint. In 2018, its daily oil flow averaged 21 million barrels per day (b/d), or the equivalent of about 21% of global petroleum liquids consumption.

For now, gold went below $1,800 on optimism for a quick vaccine-fuelled economic recovery. Curiously, Gold’s decreased has come despite weakness in the U.S. dollar. Even though, the discrepancy between gold and real interest rates suggests gold will bounce back from a correction.

Talking about Brexit, the tone of official comments is getting worse again. The cat and mouse game continues… This time France’s foreign minister accused Britain on Wednesday of “dragging its feet” in last-ditch Brexit negotiations and said Paris would not yield on the issue of fisheries, one of three key issues blocking a deal.

Another important news was Biden’s plan to nominate Janet Yellen for Treasury secretary. It is crucial because she favors larger rather than smaller fiscal stimulus. In the past, Yellen has defended massive government stimulus programs.

Finally, the FOMC minutes were published. Three topics were highlighted: Covid-19 still affects the economy, more stimulus is needed, whereas immediate adjustments to the pace and composition of asset purchases were not necessary. Besides that, few participants noted that it was important to extend 13-3 programs beyond year-end.

 

Chart of the week

 

Weekly market performance

Macroeconomic Data & Events

In the upcoming week, we will turn our attention to PMI surveys that will shed light on the pace of economic recovery worldwide, Q3 GDP print from Italy and Canada, flash inflation from the ECB, the Reserve Bank of Australia meeting, along with Brexit and an OPEC+ meeting. In the latter case, OPEC leaders to decide on quotas in 2021 amid a climate of rising tensions and speculation as to whether current supply cuts will be rolled over. In the US, we will get the monthly employment report. In China, manufacturing and non-manufacturing PMIs will be released. Finally, the OECD will update its forecasts on the world economy.

November 30: China NBS PMI (Nov), Spain, Italy and Germany inflation (Prelim, Nov), UK mortgage lending and approval (Oct), US Chicago PMI, Dallas Fed manufacturing index (Nov), US pending home sales (Oct), Japan jobless rate (Oct).

December 1: Caixin/China manufacturing PMI (Nov), Japan manufacturing PMI (Final, Nov), RBA monetary policy meeting, Germany unemployment rate and change (Nov), Italy and Canada GDP (Final, Q3), Euro area inflation (Flash, Nov), US ISM manufacturing PMI (Nov), OPEC and non-OPEC Ministerial Meeting.

December 2: US Fed Chair Powell’s testimony for House of Rep, Japan consumer confidence (Nov), Germany retail sales (Oct), Spain unemployment change (Nov), BoE FPC meeting, Euro area jobless rate (Oct), Brazil industrial output (Oct), US ADP job report (Nov), Fed Beige Book, Euro area ECB non-monetary policy meeting.

December 3: Caixin/China services PMI (Nov), Brazil GDP (Q3), US jobless claims.

December 4: PMI for Asia, Europe, Global (Nov), India monetary policy decision, Construction PMI for Eurozone, Germany, France, Italy, and UK (Nov), US nonfarm payrolls, jobless rate, earnings (Nov), US exports, imports, trade balance, factory orders (Oct).

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