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Lawmakers reach compromise over GOP proposal to rein in Fed’s powers, clearing path for a stimulus package deal (nationthailand.com)

Lawmakers reach compromise over GOP proposal to rein in Fed’s powers, clearing path for a stimulus package deal

EconDec 20. 2020

By The Washington Post · Mike DeBonis, Jeff Stein, Rachel Siegel · NATIONAL, POLITICS, CONGRESS 

Senior lawmakers resolved a major standoff late Saturday night, clearing the way for Congress to pass a nearly $1 trillion economic relief package, after Democratic leaders and Sen. Patrick Toomey, R-Pa., struck a compromise over his proposal to rein in the lending powers of the Federal Reserve.

Toomey had created a major impasse last week by demanding new limits on the central bank’s emergency lending authority. His proposal, supported by Republican leadership, threatened the delicate negotiations over the relief package. But after hours of frenzied negotiations and meetings in the Capitol, a compromise between Toomey and Senate Minority Leader Chuck Schumer, D-N.Y., was brokered around 9:30 p.m., aides in both parties said.

The revised language bars the Federal Reserve from creating precise copies of the lending programs created through the $2 trillion Cares Act passed by Congress. It affirmatively shuts down as of Jan. 1 those programs, which were seeded with a $500 billion appropriation by Congress in March. As congressional negotiators have discussed for weeks, the $429 billion in unspent funds will be redirected to other programs in the new $900 billion bill.

Toomey made his original proposal to make sure that the emergency Federal Reserve facilities created by Congress would shut down at the end of the year. Democrats worried that Toomey’s initial proposal went too far in restricting the central bank’s ability to use its long-standing emergency lending authority to respond to future economic calamities.

Republicans believe the new language will still prevent the Fed from pursuing vast new lending programs on its own without permission – and new appropriations – from Congress. At the same time, it gives the incoming administration of President-elect Joe Biden the clear authority to pursue new tools in conjunction with the central bank to confront threats to the economic recovery from the pandemic. 

The compromise language was described by three congressional aides familiar with its drafting who were not authorized to comment publicly.

Leaving his office just before midnight Saturday, Schumer declared a deal “very close” and predicted a resolution on Sunday.

“If things continue on this path and nothing gets in the way, we’ll be able to vote tomorrow,” he said.

However, at 12:18 a.m. on Sunday, President Donald Trump tweeted that Congress needs to give “more money in direct payments.” The Washington Post reported last week that White House aides talked Trump out of issuing a public statement demanding stimulus checks as big as $2,000, telling the president such a move could derail negotiations on the broader relief package. His tweet early Sunday signals that the president may not have given up on his demand.

The breakthrough with Toomey came after two days of scrambling that sent tremors across Capitol Hill, as lawmakers realized that a deal badly desired by both sides could fall through at the last minute.

The intensifying dispute had threatened to stymie talks over the relief package that would provide hundreds of billions in emergency aid to the unemployed and small businesses; funding for vaccine distribution and health-care facilities; and another round of stimulus checks to millions of Americans.

The need for such a package has only grown as the virus rampages across the nation and several emergency programs protecting tens of millions of Americans are set to expire in days.

The holidays, looming Senate runoff elections in Georgia and the prospect of a partial government shutdown on Monday are adding to the pressure for negotiators to complete a deal this weekend.

House Speaker Nancy Pelosi, D-Calif., earlier on Saturday called the dispute over Toomey’s proposal “the big thing” holding up an agreement.

Congressional leaders had given themselves until midnight Sunday to close out talks. Trump on Friday night signed a two-day spending bill to keep the government open until midnight Sunday. If no deal is reach on the stimulus package, lawmakers would have to pass another temporary measure before Monday. Otherwise, parts of the federal government would shut down.

The compromise between Toomey and Democratic leaders came together over the course of six frantic hours Saturday afternoon. As senators headed to the floor for a nomination vote shortly before 3 p.m., the dispute was threatening to turn into a partisan inferno. 

Toomey had been arguing that the Fed’s programs, initially funded with a $500 billion congressional appropriation under the March relief bill, were of marginal utility earlier in the pandemic and no longer necessary.

Democrats had countered that the Toomey proposal represented an unusual political intervention into the independence of the Fed, limiting emergency lending powers it has possessed since 1932.

“It’s no surprise that Republicans are drawing a line in the sand over their ability to sabotage the economy, and tie the Biden administration’s hands,” Sen. Ron Wyden of Oregon, the ranking Democrat on the finance committee, said in a statement.

As debate intensified on Capitol HIll, former Federal Reserve chair Ben Bernanke weighed in on the dispute in an unusual public statement on Saturday, saying that the central bank’s emergency lending authorities should be at minimum as robust as they were before passage of the Cares Act in March. Bernanke said it was “vital” that the central bank’s ability to “respond promptly to damaging disruptions in credit markets not be circumscribed.” The Fed did not release a public statement Saturday on the matter.

In the late afternoon on the Senate floor, lawmakers met to directly work out the dispute after days of sputtering staff-level talks. Toomey and Sen. Mark Warner, D-Va. – both senior members of the Senate Banking Committee – sat facing each other, flanked by nearly a dozen other senators. After about 10 minutes of sometimes animated discussion, Toomey and several other senators retreated to Schumer’s office.

After a half-hour meeting, Toomey emerged cautiously predicting a deal was possible. After a second meeting with Schumer later in the evening, the two senators traded draft legislation and finally agreed shortly before 9:30 pm, tentatively ending the standoff. 

Earlier in the evening Schumer had indicated in a call with Democratic senators that Toomey said he was willing to modify his proposal to reach a compromise and that talks would continue into the night, according to two people on the call spoke on the condition of anonymity. While Schumer said the Senate could vote as soon as Sunday on a final deal, others were cautious that the bill could be written and passed by Congress that quickly.

Lawmakers still have to resolve other issues. Those include eligibility for small-business relief; how to structure unemployment aid; and the criteria for sending out a $600-per-person stimulus check. Pelosi told House Democrats during a call on Saturday that lawmakers remained divided over the amount of money necessary for food assistance, according to a person who spoke on the condition of anonymity to share the speaker’s private remarks.

Many aides close to talks had expressed optimism that these issues could be addressed fairly quickly with the dispute over the Fed resolved. Sen. John Thune of South Dakota, the No. 2 ranking Republican, said earlier Saturday that the “probably more likely scenario” is that negotiations continue into Monday.

“But I think we’re in the homestretch; we’re on the glide path,” Thune said. “I think we’re going to get this done and help out the American people.”

Senate Majority Leader Mitch McConnell, R-Ky., has said lawmakers will not leave Washington for the holidays until a deal is done. 

After the compromise was reached between Toomey and Schumer, McConnell’s office released a statement. 

“Now that Democrats have agreed to a version of Sen. Toomey’s important language, we can begin closing out the rest of the package to deliver much-needed relief to families, workers, and businesses,” said Doug Andres, spokesman for McConnell.

Likely to run many hundreds of pages, the package is not only expected to carry a nearly $1 trillion virus relief deal but also $1.4 trillion in year-long appropriations for federal agencies; the extension of tens of billions of dollars in expiring tax breaks; a bipartisan energy bill; a long-delayed bipartisan solution to surprise medical billing; and dozens of other potential add-ons that lobbyists and congressional aides are hoping to include in this last legislative vehicle of the year.

Lawmakers will almost certainly be asked to vote on a broad piece of legislation with only hours to review it.

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Failure to quickly contain Covid-19 could hit economy hard, ex-dean warns (nationthailand.com)

Failure to quickly contain Covid-19 could hit economy hard, ex-dean warns 

EconDec 20. 2020Thai authorities place a razor wire fence around Mahachai Market where a largest cluster of Covid-19 infections originated in Samut Sakhon province.  

By The Nation

Many businesses and workers may go bankrupt if a new wave of virus infection cannot be contained quickly, an economist has warned.

The second wave of Covid-19 outbreak has so far been limited to some areas, but it is quickly spreading, Anusorn Tamajai, former dean at Rangsit University’s Faculty of Economics, warned. He suggested that the government compensate businesses and workers affected by lockdown restrictions put in place in Samut Sakhon province, west of Bangkok.

The new wave of infections poses challenges for both businesses and the government as they have limited financial resources to deal with it, he said.

New cases of infections in Thailand shot up to 689 on Sunday in six provinces, the highest number of cases on a single-day since the outbreak early this year.

The largest cluster originated from Samut Sakhon where nearly 700 people have tested positive for the virus over the weekend, and most of them are Myanmar nationals who work as labourers in Samut Sakhon in related fishing industries.

The provincial governor has ordered lockdown restrictions for 14 days, from December 19 to January 3. 

Anusorn said the government should undertake aggressive testing in key provinces which share a border with Myanmar, or have large numbers of foreign workers, such as Samut Sakhon, Samut Songkram, Samut Prakan, Nakhon Pathom, Ratchaburi, Ranong, Tak, Chiang Mai and Chian Rai. The government also has to ensure adequate medical supplies, he said. People have to wear masks, and public buses on risk routes have to be disinfected.

He said the government has to limit activities for New Year celebrations. He warned that if the government cannot contain the spread of the virus, it would damage the economy much more than when Thailand put the whole country in lockdown in March. Cases of infections may rise 4 to 5 times and it may take twice as long to contain the spread, he said.

He predicted that the Stock Exchange of Thailand Index would plunge sharply next week to below 1,438. The surge of virus cases will also limit the appreciation of the baht which had jumped to a seven-year high on Friday against the US dollar. The US move to place Thailand on a monitoring list of currency manipulators had strengthened the baht.

Gold and commodity prices are expected to rise.

Regarding the impact of the severe floods in the South, he said it would reduce the production of rubber sheets and palm oil by 0.8 to 1 million tonnes, accounting for 0.05 per cent of gross domestic product. 

The losses from the floods would not exceed Bt7 billion, he said.

The impact of floods is much smaller than the impact of the coronavirus outbreak, he said.

The Thai government has eased lockdown restrictions since May, allowing many businesses to reopen. However, the country is still effectively closed to foreign tourists.

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Lawmakers hit major roadblock over GOP plan to limit Federal Reserve, imperiling weekend deal for emergency relief package (nationthailand.com)

Lawmakers hit major roadblock over GOP plan to limit Federal Reserve, imperiling weekend deal for emergency relief package

EconDec 20. 2020Fed building/ file photo 

By The Washington Post · Mike DeBonis, Jeff Stein, Rachel Siegel, Seung Min Kim · NATIONAL, BUSINESS, POLITICS, CONGRESS, WHITEHOUSE 

WASHINGTON – Senior congressional lawmakers attempting to complete an emergency coronavirus relief package this weekend slammed into a major roadblock on Saturday over Republican demands to limit the authority of the Federal Reserve.

A late push from Sen. Patrick Toomey, R-Pa., to rein in the nation’s central bank had already divided lawmakers over the last several days. But the impasse appeared to grow significantly wider on Saturday, as congressional leadership and rank-and-file senators on both sides of the aisle dug in over the issue, imperiling prospects for a deal before Monday.

Toomey, a conservative lawmaker on the Senate’s banking committee, has demanded provisions be included in the covid relief package that would curb the ability of the Fed to restart emergency lending programs for localities and small businesses.

Senate Majority Leader Mitch McConnell, R-Ky., told Senate Republicans on a private call Saturday afternoon that the party should stick by Toomey’s plan, according to two people who requested anonymity to share details of the call.

But Senior Democrats have balked at agreeing to what they see as a nakedly political attempt to limit the economic tools available to the Biden administration. Throughout Friday and Saturday, a chorus of Senate Democrats emerged urging party leadership not to budge on the issue. Democrats have already agreed to drop aid to state and local governments from the relief package, and some lawmakers have hoped the central bank could serve as a backstop for assisting ailing municipalities.

The Toomey proposal would amount to one of the most significant intrusions into the central bank’s autonomy in years. Former Federal Reserve chair Ben Bernake weighed in on the dispute in an unusual public statement on Saturday, saying that the central bank’s emergency lending authorities should be at a minimum as robust as they were before passage of the Cares Act in March. Bernake said that it was “vital” that the central bank’s ability to “respond promptly to damaging disruptions in credit markets not be circumscribed.”

The intensifying dispute threatened to derail delicate negotiations for a nearly $1 trillion relief package that would provide hundreds of billions in emergency aid to the unemployed and small businesses; funding for vaccine distribution and health care facilities; and another round of stimulus checks to millions of Americans.

The need for such a package has only grown as the coronavirus rampages the nation and several emergency programs protecting tens of millions of Americans are set to expire in a matter of days.

House Speaker Nancy Pelosi, D-Calif., on Saturday called the dispute over Toomey’s proposal “the big thing” holding back an agreement.

Asked about the latest in negotiations, Sen. Richard Durbin, D-Ill., the No. 2 ranking Senate Democrat, said: “Toomey, Toomey, Toomey.”

The approaching Christmas holiday, a looming pair of Senate special elections in Georgia and the prospect of a partial government shutdown also are adding to the pressure for negotiators to finalize a deal this weekend.

Congressional leaders had given themselves until Sunday midnight to close out talks. President Donald Trump Friday night signed a two-day spending bill to keep the government open until midnight Sunday. If no deal is reach on the stimulus package, lawmakers would have to pass another temporary measure before Monday, otherwise parts of the federal government would shut down.

In an ominous sign for the relief talks, rank-and-file senators in both parties signaled they would be unwilling to move forward if they did not get their way over the Toomey proposal.

Sen. Elizabeth Warren, D-Mass., on Saturday denounced the Toomey plan and said “Democrats should stay firm” to resist the changes. Sen. Angus King, I-Me., a moderate who caucuses with the Democrats, said such an idea would “cripple the next administration’s ability to deal with a recession.”

On the Republican side, Sen. Tom Cotton, R-Ark., tweeted that Democrats were seeking a “slush fund for their political cronies.” Cotton added that Toomey’s position “is in fact the position of the Republican Senate Conference.” Sen. John Neely Kennedy, R-La., a member of the Senate Banking Committee, told reporters Democrats were trying to use the central bank’s authorities “as a backdoor to do what they couldn’t do through the front door.”

Kennedy added of Republicans approach to the issue: “I think we ought to stand firm.”

Sens. Toomey, Cotton, and Mitt Romney, R-Utah, met in Senate Minority Leader Charles Schumer’s, D-N.Y., office Saturday afternoon to resolve the dispute. Toomey expressed optimism about the possibility of a compromise following the meeting. But Romney, who has sought a compromise, sounded more downbeat, telling reporters: “I can’t predict what the result is going to be. I don’t know whether they’re going to be able to bridge the divide or not.”

McConnell, the Senate majority leader, has said lawmakers will not leave Washington for the holidays until a deal is done. And on Friday night he expressed optimism that a deal would get done. But on Saturday, multiple lawmakers and aides on Capitol Hill who were not authorized to speak about the negotiations publicly, conceded that it was hard to imagine a swift resolution to the stalemate over the Federal Reserve.

Lawmakers have also yet to resolve several other lingering issues. Those include eligibility for small business relief; how to structure unemployment aid; and the criteria for sending out a $600 per person stimulus check. Pelosi also told House Democrats on a call on Saturday that lawmakers remained divided over the amount of money necessary for food assistance, according to a person who spoke on the condition of anonymity to share her private remarks.

However, many aides close to talks expressed optimism these issues could be addressed fairly quickly if the dispute over the Fed is resolved. Sen. John Thune, R-S.D., the No. 2 ranking Republican senator, said Saturday that the “probably more likely scenario” is that negotiations stretch into Monday.

“But I think we’re in the homestretch, we’re on the glide path,” Thune said. “I think we’re going to get this done and help out the American people.”

Still, Treasury Secretary Steven Mnuchin told Senate Republicans on a 1 p.m. call on Saturday that Toomey’s demands had not been resolved, a person familiar with the internal call said. McConnell also told Senate Republicans on the call that the GOP needed to support Toomey’s efforts.

“I think we need to stick with where we are,” McConnell said, according to two people familiar with the call.

Republicans say the Fed’s programs, initially funded with a $500 billion congressional appropriation under the March relief bill, were of marginal utility earlier in the pandemic and are no longer necessary in any case. Toomey gave a floor speech Saturday afternoon aggressively defending his efforts.

Romney appears to be the only Republican to break with Toomey so far. Romney told reporters on Saturday that elements of Toomey’s proposals could be resolved after the current relief package is passed.

Democrats have argued the Toomey proposal represents an unusual political intervention into the independence of the Federal Reserve, limiting emergency lending powers it has possessed since 1932. Senate Minority Leader Charles Schumer, D-N.Y., also said that Federal Reserve Chair Jerome Powell opposes the proposed changes.

The central bank declined to give a public response to the heated debate.

“It’s no surprise that Republicans are drawing a line in the sand over their ability to sabotage the economy, and tie the Biden administration’s hands,” Sen. Ron Wyden, D-Ore., the ranking Democrat on the finance committee, said in a statement.

Democrats have signaled they might be willing to accept language that restricts use of Treasury funds appropriated under the March aid bill, but not language that would restrict the Fed from doing similar lending using its own assets.

“I think we could go with one part and not the other,” House Majority Leader Steny Hoyer, D-Md., said Friday. “And that’s the deal I think we ought to make.”

Hoyer told House members Friday not to expect votes until 1 p.m. Sunday at the earliest – just 11 hours before the next shutdown deadline. House Democratic leaders have scheduled a noon videoconference Saturday to update members on the negotiations.

Likely to run many hundreds of pages, the package is not only expected to carry the $900 billion covid relief deal but also $1.4 trillion in year-long appropriations for federal agencies; the extension of tens of billions of dollars in expiring tax breaks; a bipartisan energy bill; a long-delayed bipartisan solution to surprise medical billing; and dozens of other potential add-ons that a vast corps of lobbyists and congressional aides are hoping to include in this last legislative vehicle of 2020.

Lawmakers will almost certainly be asked to vote on a sweepingly broad piece of legislation with only hours to review it.

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Outcome of MPC meeting to influence SET, baht next week (nationthailand.com)

Outcome of MPC meeting to influence SET, baht next week

EconDec 19. 2020

By The Nation

Investors have been advised to keep an eye on the Monetary Policy Committee (MPC) meeting on December 23, as it would impact the Stock Exchange of Thailand (SET) Index and the baht next week.

The SET Index on Friday closed at 1,482.38, down 1.51 points or 0.10 per cent, with transactions amounting to Bt117.09 billion due to uncertainty over the US move to impose lockdown measures during the Christmas festival period.

Local institutions and foreign investors made net sales of Bt3.63 billion and Bt5.60 billion respectively, while proprietary trading and local individuals made net buys of Bt57.12 million and Bt9.18 billion respectively.

An analyst at Kasikorn Securities expected the SET next week to move between 1,465 and 1,500, advising investors to follow the MPC meeting, Thai exports in November, the Covid-19 situation, the US-China conflict and Brexit negotiations.

Among international factors, he advised following the US third-quarter gross domestic product (GDP), home sales, personal income and durable good orders, as well as China’s loan prime rate and Bank of Japan’s meeting.

The baht on Friday closed at 29.80 to the US dollar on Friday, strengthening from 30.03 at close on December 9, due to the US move to place Thailand on its monitoring list for currency manipulation and the Federal Reserve’s move to maintain bond purchases.

A strategist at Kasikornbank expected the baht next week to move between 29.60 and 30.00 to the dollar, advising investors to follow the MPC meeting, foreign funds flows, Thailand’s exports in November and the US economic stimulus package.

Among international factors, he advised investors to follow the US consumer confidence index, third-quarter GDP, home sales, personal income, durable good orders and inflation rate.

Gold on Friday closed at US$1,882.17 per ounce, while in Thailand it closed at Bt26,640 per baht weight amid the US-China conflict and the rollout of US economic stimulus package.

A strategist at YLG Bullion International advised investors to buy gold when its price drops and sell some of the precious metal when its price rises, with the support line between $1,853 and $1,866 per ounce.

“If the price rises over the resistance line at $1,899 per ounce, investors can wait to sell at the next resistance line,” he said.

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U.S. stocks fall with lawmaker at odds on aid bill (nationthailand.com)

U.S. stocks fall with lawmaker at odds on aid bill

EconDec 19. 2020

By Syndication Washington Post, Bloomberg · Kamaron Leach, Sarah Ponczek

U.S. stocks fell after Republican demands left Congress without a deal on a federal spending bill. Tesla Inc. edged higher in heavy trading ahead of its inclusion in the S&P 500.

The benchmark index halted a three-day winning streak, though ended well of session lows with a late rally in aflood of trading volume associated with the quarterly expiration of options and futures on stocks and indexes. Almost 200 million shares of Tesla traded hands, four times the 30-day average, as funds benchmarked to the S&P 500 adjusted ahead of the carmaker’s Monday debut.

Stocks spent the session lower as the likelihood that Congress would reach an aid deal ahead of the weekend dwindled. Crude topped $48 a barrel in New York. The dollar rose for the first time in five days. The 10-year Treasury yield moved back above 0.93%. Gold slipped. Copper topped $8,000 a ton for the first time in more than seven years on rising demand and supply bottlenecks.

Congress continues to wrangle over a legislation that would give people and businesses a lifeline to withstand the increasing economic toll caused by the pandemic. A bid by Republicans to constrain the Federal Reserve’s crisis lending programs is threatening to derail negotiations. The virus continued to rage across the country, forcing more jurisdictions to enact tighter restrictions.

“Markets have been pretty strong obviously in November and first part of December, so if we get a little bit of a selloff that shouldn’t surprise people a whole lot,” Keith Gangl, a portfolio manager at Gradient Investments, said in an interview. “It’s quadruple witching so it’s usually a little bit of different actions at the end of the day so we’ll see if that happens”

Here are the main moves in markets:

Stocks

–The S&P 500 Index fell 0.4% at 4 p.m. in New York.

–The Stoxx Europe 600 Index dipped 0.4%.

–The MSCI Asia Pacific Index sank 0.4%.

–The MSCI Emerging Market Index declined 0.3%.

Currencies

–The Bloomberg Dollar Spot Index rose 0.3%.

–The euro dipped 0.2% to $1.2239.

–The British pound decreased 0.6% to $1.3509.

–The onshore yuan weakened 0.1% to 6.54 per dollar.

–The Japanese yen weakened 0.2% to 103.32 per dollar.

Bonds

–The yield on 10-year Treasuries rose one basis point to 0.94%.

–The yield on two-year Treasuries was flat at 0.121%.

–Germany’s 10-year yield declined less than one basis point to -0.57%.

–Japan’s 10-year yield decreased less than one basis point to 0.01%.

–Britain’s 10-year yield sank five basis points to 0.24%.

Commodities

–West Texas Intermediate crude gained 1.2% to $48.93 a barrel.

–Brent crude dipped 0.1% to $51.46 a barrel.

–Gold strengthened 0.1% to $1,886.61 an ounce.

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U.S. crude futures eyeing $50 as U.S. stimulus hopes strengthen (nationthailand.com)

U.S. crude futures eyeing $50 as U.S. stimulus hopes strengthen

EconDec 19. 2020A cyclist wearing a protective face mask rides past oil storage silos at an oil and gas storage facility in Belgrade, Serbia, on April 28, 2020. MUST CREDIT: Bloomberg photo by Oliver Bunic. 

By Syndication Washington Post, Bloomberg · Andres Guerra Luz, Alex Longley

Oil continued its rally as U.S. lawmakers work to settle disputes over another round of fiscal stimulus that could help support demand as markets await a wider vaccine roll-out.

Futures rose as much as 1.4% in New York on Friday, heading toward toward $50 a barrel for the first time since February. The rally signals a sharp reversal in the market that saw prices fall below zero just eight moths ago after the pandemic wiped out demand.

Prices have gained support this week on signs of progress on a U.S. virus relief package, with Senate Majority Leader Mitch McConnell saying he’s “even more optimistic now” that an agreement is near. Recent progress in rolling out a covid-19 vaccine has also raised optimism, with the U.S. this week beginning to administer shots and the country’s Food and Drug Administration working quickly toward authorizing Moderna Inc.’s vaccine.

“Expectations of a stimulus deal, a slumping U.S. dollar and optimism surrounding the vaccine deployment are fueling a fiery recovery in energy markets, despite fears of a post-holiday surge in Covid-19 cases,” Bart Melek, head of global commodity strategy at TD Securities said in a note.

Yet, there are signs the market’s rally is due for a pause. Brent’s nearest timespread slumped back into a bearish contango on Thursday, a market structure where nearby futures trade at a discount to later ones. That comes as premiums for real-world barrels are easing. Meanwhile, additional U.S. fiscal stimulus still faces obstacles as several sticking points on the aid package delay an agreement.

“Stimulus will be good for demand, but it’s probably mostly priced into the market already,” said Michael Lynch, president of Strategic Energy & Economic Research. “We have a pretty good sense of what the stimulus package is going to look like.”

West Texas Intermediate for January delivery rose 59 cents to $48.95 a barrel at 10:33 a.m. New York time. Brent for February settlement gained 56 cents to $52.06 a barrel.

The spreading virus and lockdowns are weighing on demand, but the hit is much smaller than earlier in the year and is likely only a speed bump to rebalancing the market, according to a Goldman note. This will leave the oil market range-bound and choppy in coming weeks as vaccine enthusiasm is followed by headlines on tighten pandemic restrictions, the bank said.

Recent price gains may be a bit premature, with the demand recovery remaining bumpy, according to a note from UBS Group. A material increase in oil demand is unlikely before the second quarter of 2021, the bank said.

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‘Super Saturday’ set for record as delays drive rush (nationthailand.com)

‘Super Saturday’ set for record as delays drive rush

EconDec 19. 2020

By Syndication Washington Post, Bloomberg · Jordyn Holman

Black Friday and Cyber Monday get all the hype, but with millions of procrastinators who waited too long to even trust expedited delivery, Saturday will be the real record breaker.

U.S. retail sales on the last Saturday before Christmas — dubbed “Super Saturday” in some retail circles — are expected to reach an all-time high of $36.1 billion this year, a 5.5% increase from 2019 levels, according to research firm Customer Growth Partners. That outpaces the $29.7 billion in sales from Black Friday, traditionally considered the kickoff for the holiday season, and dwarfs Cyber Monday’s sales of $15.1 billion.

And unlike much of that earlier shopping, the vast majority — more than 70% — of Saturday’s transactions will take place in person. That expected rush into stores and curbside pick-up lines could give a much-needed boost to retailers who get better margins on in-store purchases.

For ailing retailers, like department stores and clothing chains, a bigger-than-expected final weekend could help in the recovery from the coronavirus pandemic that has sapped demand for apparel and accessories.

Super Saturday is always a big shopping day, overtaking Black Friday as the largest spending day of the season several years ago in the U.S. But a backlog in shipping — carriers like FedEx and UPS earlier this month temporarily restricted some packages it took from big retailers — and the giant snowstorm hitting the Northeast U.S. this week added another layer to delivery concerns. This means, with just a week until Christmas, consumers may have no other choice than returning to the stores that they’ve largely spurned this year.

Stores “actually have the product, so there’s no worry about last-minute shipping or disappointment on Christmas Day,” said Brian Field, senior director of global retail consulting at Sensormatic Solutions. “You could see more retail traffic than we have been seeing.”

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German businesses are optimistic about recovery in 2021 (nationthailand.com)

German businesses are optimistic about recovery in 2021

EconDec 19. 2020Shoppers in Mannheim, Germany. on Nov. 11, 2020. MUST CREDIT: Bloomberg photo by Peter Juelich. 

By Syndication Washington Post, Bloomberg · Carolynn Look

German businesses are hopeful that Europe’s largest economy will pick up in the first half of next year.

A gauge measuring expectations for the next six months rose to 92.8 in December from 91.8 the previous month, according to the Ifo institute. Companies were also more optimistic about the current situation, a sign that tough new coronavirus restrictions only affect certain sectors.

“Overall the German economy is showing resilience,” Ifo President Clemens Fuest said. Sentiment in manufacturing rose markedly, and confidence in the services sector recovered “somewhat.”

The survey was conducted Dec. 1-17, with a majority of responses received in the first two weeks of the month — before the country’s hard lockdown was officially announced.

Germany’s non-essential shops have been shut since Dec. 16 in an attempt to regain control over spiraling infections, adding to restrictions already in place for restaurants, bars and most recreational institutions. The curbs are in place until Jan. 10, though Chancellor Angela Merkel has already hinted they’re likely to be extended.

“The affected companies and people in the affected sectors have very big problems, and certainly some of them will have to give up,” Fuest said in a Bloomberg Radio interview. Yet the fallout will be limited and “will not completely drag down the economy.”

The nation had fared better than many of its neighbors so far, due to its relatively larger reliance on industry, which has been able to adjust to the pandemic. Economists have recently slashed forecasts for the fourth quarter though, predicting another slump.

Bundesbank President Jens Weidmann warned on Wednesday that the German economy may experience greater strains in the short term than his institution had anticipated in its latest projections. However, he said it’s plausible to assume that medical advancements will allow for a phasing out of restrictions from spring 2021 so a recovery can take hold.

Fuest said German companies indicated they expect the curbs to be lifted by July.

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Copper tops $8,000 as Goldman points to commodities super-cycle (nationthailand.com)

Copper tops $8,000 as Goldman points to commodities super-cycle

EconDec 19. 2020A worker wearing a protective face mask checks newly made copper cathode sheets at the Uralelectromed Copper Refinery in Verkhnyaya Pyshma, Russia, on July 30, 2020. MUST CREDIT: Bloomberg photo by Andrey Rudakov. 

By Syndication Washington Post, Bloomberg

Copper topped $8,000 a ton for the first time in more than seven years, with Goldman Sachs and BlackRock pointing to the start of a new long-term bull market as supply lags an expected demand boom.

The market is witnessing the sharpest rally in more than a decade, with China’s appetite for commodities and supply snags early on in the covid-19 pandemic lifting copper about 80% from its March lows.

Expectations for a deficit, the weaker dollar, and its role in green technology have also fueled gains. Some banks and investors are now drawing comparisons to the spike in the early 2000s, when a jump in Chinese orders ushered in the last super-cycle for commodities.

“You have all the tell-tale signs of a super-cycle,” Jeff Currie, head of commodities research at Goldman Sachs, told Bloomberg TV. He cited metals hitting multiyear highs, the weaker dollar, crude oil reaching $50, and rising global liquidity.

The surge in prices has been a boon for miners, with shares in copper-focused producers including Antofagasta and Freeport-McMoRan vaulting to multiyear highs recently. In addition, production costs have been falling, setting the stage for a blowout year for profitability.

Copper rose as much as 1.4% to $8,028 a ton, the highest price since 2013, and was at $7,999.50 by 12:50 p.m. on the London Metal Exchange. Most other metals also gained, with nickel rising 0.4%. Singapore iron ore futures pushed above $160 a ton, hitting the highest level since trading began in 2013.

Goldman pointed to the start of a positive feedback loop between commodities, the dollar and emerging-market growth that has driven past structural bull markets. At the center is strong, synchronized, policy-driven demand focused on wealth redistribution and renewables and, with commodity supply-side spending outside of renewables still at very low levels, this demand growth should keep markets tight for the foreseeable future, it said in a Dec. 17 note.

BlackRock expects copper to hit new all-time highs in the upswing of the cycle, Evy Hambro, the firm’s global head of thematic investing, told Bloomberg TV on Thursday.

China’s relative success at containing the pandemic and optimism about global economic growth next year as vaccines are rolled out is fueling gains across industrial commodities from iron ore to oil. It’s been a remarkable turnaround for copper, which fell more than 50% from a record high in 2011, trading below $5,000 a ton during a slump in 2015-16 and again earlier this year.

Copper also benefits from more specific factors that make it attractive to long-term investors. While many expect oil prices to rebound in the short term as the world begins returning to normal, there’s more doubt about its long-term outlook as the energy transition gathers pace. Copper, on the other hand, is likely to benefit from the shift because of its use in electrical wiring.

In the near term, copper is getting a boost from tight supplies and strong demand. Top consumer China churned out a record volume last month, pointing to resilient consumption as the country emerges from the pandemic. Among signs of tightness, stockpiles tracked by top exchanges including the LME have slumped to a six-year low.

There’s also a brighter outlook for consumption outside China. U.S. lawmakers are pressing to finalize a spending deal, and the Federal Reserve this week strengthened its commitment to supporting the world’s largest economy.

Still, copper’s surge may be at risk of cooling. Citigroup warned earlier this month that the metal was “too hot to handle” following a recent rally, and that prices may retrace if gains aren’t supported by the physical market.

“Investors are probably already currently pricing in the broader, deeper and strong 2021 economic recovery,” Fitch Solutions said in a note. “This increases the risk that prices could struggle to hold such gains later in 2021.”

On the technical side, LME copper’s 14-day relative-strength index was at 77 on Friday and has largely remained in overbought territory for three weeks, even as prices continued to rise.

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SET dips 0.1% after week of rises (nationthailand.com)

SET dips 0.1% after week of rises

EconDec 18. 2020

By The Nation

The Stock Exchange of Thailand (SET) Index closed at 1,482.38 on Friday, down 1.51 points or 0.1 per cent. Total transactions amounted to Bt117.09 billion with an index high of 1,489.78 and a low of 1,475.01.

In the morning session, an analyst at Krungsri Securities expected the day’s index to fluctuate between 1,475 and 1,495 points amid hope of a US $900-billion stimulus package and foreign fund inflows in line with the baht’s appreciation.

“However, investors should beware of volatility due to the FTSE rebalance and the SET’s tight valuation,” he said.

The 10 stocks with the highest trade value today were PTT, BANPU, CPALL, KBANK, CPF, AOT, SCC, ADVANC, BBL and BAM.

As of 4.30pm, the price of oil rose by US$0.04 or 0.08 per cent to $48.40 per barrel, while gold dropped by $5.20 or 0.28 per cent, to $1,885.20 per ounce.

Other Asian indices were mixed:

Japan’s Nikkei Index closed at 26,763.39, down 43.28 points or 0.16 per cent.

China’s Shang Hai SE Composite Index closed at 3,394.90, down 9.98 points or 0.29 per cent, while Shenzhen SE Component Index closed at 13,854.12, down 35.75 points or 0.26 per cent.

Hong Kong’s Hang Seng Index closed at 26,498.60, down 179.78 points or 0.67 per cent.

South Korea’s KOSPI Index closed at 2,772.18, up 1.75 points or 0.063 per cent.

Taiwan’s TAIEX Index closed at 14,249.96, down 8.97 points or 0.063 per cent.

Singapore’s Straits Times Index closed at 2,852.18, down 5.84 points or 0.20 per cent.

Vietnam’s Ho Chi Minh Stock Index closed at 1,067.46, up 15.69 points or 1.49 per cent.