Dec 24 Asian Macro Initial Thoughts Expect markets to work higher


24 Dec

Asian Futures Nikkei Futures opened higher but have eased back still expect a higher open,  HK ADR’s +40pts and Australia higher in early trades but easing back (both markets will have shortened trading today along with Singapore)

US Futures opened slightly higher Dow +48ots , S&P +0.1% and NDX +0.08%

DOW +0.4%, NDX -0.3%, S&P +0.07%, Russel 2K +0.9% market opened higher despite Trump’s tweet requesting Congress ‘amend’ the stimulus package and he vetoed the Defence Bill. NDX then traded sideways around flat and Dow  and S&P traded sideway’s but up small.  All markets sold down in the last few minutes of trading.  Initial claims and Durable Goods data was better than expected and there was hope of a Brexit deal. But Personal Income, Core Durable Goods, Michigan Final data and New Home Sales missed.Travel, Re-opening Energy, Financial and Cyclicals saw interest
Pfizer announced a second deal with the US Govt to supply a further 100m doses.
Banks JPMorgan Chase +2.8%, Citigroup +2.6% and Wells Fargo +4.8%, AMEX +2.1%
Work from home names: Facebook +0.4%, Apple -0.7%, Amazon -0.7%, Netflix -2.4%,  Disney +1.8%, Zoom Video -6.1%, Alphabet +0.5% and Microsoft -1.3%,
Tech NXP +0.3%, Nvidia -2%, Micron -0.7%, AMD -1.7%, Skyworks +0.9%
Re-opening stocks  Boeing +0.4%, Caterpillar +1.1%, Simon Property +1.5%, Kohl’s +4%, Nordstrom +5.4%, Gap +3.1%, United Airlines +2.7%, Carnival +5.7%, Wynn Resorts +2.4%, Chevron +1.6%, Exxon Mobil +1.3%,  
Lock down names Campbell Soup +0.7% General Mills +0.7%, JM Smucker +0.4%
DATA
MBA Mortgage Applications +0.8% vs +1.1% prior
30 yr Mortgage Rate 2.86% vs 2.85% prior
Durable Goods Orders Nov +0.9% MoM vs +1.8% Oct revised (F/cast +0.6%)
Durable Goods Orders Ex Transport Nov +0.4% MoM vs +1.9% Oct revised (F/cast +0.4%)
Durable Goods Orders Ex Defence Nov +0.7% MoM vs +0.8% Oct revised (F/cast +0.1%)
Personal Income Nov -1.1% Mom vs -0.6% Oct revised (F/cast -0.4%)
Personal Spending Nov -0.4% Mom vs -0.3% Oct revised (F/cast -0.4%)
Initial Claims 803k vs 892k prior revised (F/cast was 905k)
Initial Claims 4 week average 818.25k vs 814.25k prior revised (F/cast was 842k)
Continuing Claims 5.337m vs 5.507m prior (F/cast was 5.49m)
PCE Price Index Nov +1.1% YoY vs +1.2% Oct (F/cast was +1.3%)
PCE Price Index Nov 0% MoM vs 0% Oct (F/cast was +0.2%)
Core PCE Price Index Nov +1.4% YoY vs +1.4% Oct (F/cast was +1.5%)
Core PCE Price Index Nov 0% MoM vs 0% Oct (F/cast was +0.1%)
House Price Index Oct +10.2% YoY vs +9.1% Sept (F/cast was +9.5%)New Home Sales Nov -11% vs -2.1% Oct revised (F/cast was -1.4%)
Michigan Consumer Confidence Final Data
Consumer Expectation Dec 74.6 vs 70.5 Nov (F/cast was 74.7)
5 year Inflation Expectations Dec +2.5% vs +2.5% Nov (F/cast was +2.5%)
Consumer Sentiment Dec 80.7 vs 76.9 Nov (F/cast was 81.3)
Inflation Expectations Dec +2.5% vs +2.8% Nov (F/cast was +2.3%)
Current Conditions Dec 90 vs 87.0 Nov (F/cast was 91.8)
EIA Crude Oil Stocks Change 18 Dec -0.562m vs -3.135m prior (Consensus was -3.186m)
EIA Gasoline Stocks Change 18 Dec -1.125m vs +1.02m prior (Consensus was +1.21m)
EIA Gas Stocks Change 18 Dec -152Bcf vs -122Bcf prior (Consensus was -160Bcf)
Baker Hughes Total Oil Rig Count 348 vs 346 prior
USD slightly weaker vs Yen & Euro. Bitcoin -4% @ 22,814.13, VIX -3.8% @ 23.31, US T10 @ % 0.945%
OIL Brent +2.1%, WTI +2.2% as US inventories saw an increased inventory draw.
Gold +0.4%, Silver +0.7%, Copper +0.7%
AHEAD Market Closes Early; Stock market at 1pm, Bond Market at 2pm

DAX +1.3%, CAC +1.1%, FTSE +0.7%  FTSE opened lower but worked back to flat in early trades. DAX and CAC opened higher and traded sideways/better. Sentiment initially weak in reaction to Trump’s tweet on the US Stimulus Bill but improved through the day as expectations of a Brexit Deal increased.  
France re-opened its border with the UK but required passengers arriving at the border to have a negative coronavirus test result.
Travel sector +VE with IAG +6.3%, Lufthansa +4.3%, Tui +2.6%, Carnival +3.9%.
Daimler +3.3% on news it will list its trucks business.
Hello Fresh -5.5% and Games Workshop -1.1%
DATA
German
Import Prices Nov +0.5% MoM vs +0.3% Oct (F/cast was +0.5%)
Import Prices Nov -3.8% YoY vs -3.9% Oct (F/cast was -3.9%)
France
PPI Nov +1.7% MoM vs +0.1% Oct (F/cat was +0.3%)
UK
Car Production Nov -1.4% YoY vs -18.2% Oct (F/cast was -27.1%)
AHEAD
EUROZONE No data
GERMANY Market Closed
FRANCE Half day trading
UK Half Day trading

JAPAN Nikkei futures opened +33pts but have eased but expect a higher open, Yen currently 103.52
Data due Foreign Stock and Bond Investment
Japan bans non Japanese from the UK, as Govt says new variant of the virus not detected in Japan. It will also require Japanese citizens to have a -VE covid test within 72 hours of departure and pledge to download a Govt tracing app.
Tokyo reported 748 new covid cases (up 185 from Tuesday) Nationwide the total was 3,248.
Government will lay out on Friday a “green” growth strategy that includes a goal to replace gasoline-powered vehicles with electric cars by around 2035, the Nikkei newspaper reported on Thursday. The strategy will include 14 targets for promoting a greener society and an estimate that renewable energy will contribute 50-60% of Japan’s total power in 2050, the paper said
Takami to be bought by L’Oreal with the acquisition to be completed in the next few weeks.
Toshiba AGM scandal  Reuters reports a Japanese government adviser (Hiromichi Mizuno, special adviser to the Ministry of Economy, Trade and Industry (METI),) told the Harvard University endowment fund that its vote at Toshiba Corp’s annual shareholders meeting could be subject to a regulatory probe should it vote against the firm’s management, four sources said. As a result, the U.S. university abstained from voting, three of the sources said. It later learnt there was no basis for any probe, two of them said.  This is increasingly likely to become an embarrassment to the government and the Toshiba CEO. -VE
Tokyo Gas said on Wednesday it would invest about 20 billion yen ($193 million) in British retail energy firm Octopus Energy and that they would form a joint venture in Japan to supply power to retail customers. +VE
Mitsubishi Motors Corp sees hybrid models in Southeast Asia as a key part of its electrification strategy to stay competitive in the region, Chief Executive Takao Kato told Reuters in an interview. While some Southeast Asian governments are trying to promote full battery electric vehicles (EVs) as a way to cut CO2 emissions, Kato said conventional gasoline-electric vehicles and plug-in electric hybrids were "probably a more realistic a choice for the region for now".
An apparent surge in unintended pregnancies since April as the coronavirus pandemic forces people to spend more time at home has prompted the health ministry to launch a nationwide study in order to come up with more effective policies to support women.
Yahoo Japan Corp said Wednesday it will delate hateful and defamatory comments from all of its online posting sites with the use of artificial intelligence, beefing up efforts to tackle cyberbullying after the suspected suicide of a reality show star.

SOUTH KOREA Expect markets to open higher but may see them easing into the close with markets closed on Friday.
No data due market will be closed Friday.
South Korea had 1,092 new coronavirus cases to midnight Tuesday, its second highest number. President Moon is faced growing public pressure over his COVID-19 vaccine procurement plans. Local media saying it is too relaxed and overly reliant on locally produced shots, which will take more time than overseas options.
Govt said Wednesday it has introduced mobile edge computing (MEC) technology at Incheon International Airport to operate an artificial intelligence (AI) system that screens potential COVID-19 patients in a move to step up preventative measures against the pandemic. Slight +VE
Retail sales +6.3% YoY in November  on the back of the nationwide consumption-boosting events aimed at overcoming the economic jitters from the COVID-19 pandemic, data showed Wednesday. Around 30% of the COVID-19 relief funds universally handed out by the government in May were spent to boost sluggish domestic consumption, with the rest used for debt payments or savings, a state-run think tank said Wednesday. +VE
Apple car; Industry watchers predict it is likely to be loaded with LFP (lithium iron phosphate) batteries made by China’s CATL, but local lithium-ion batteries manufacturers; LG Energy Solution and Samsung SDI, will benefit from the US firm’s entry into the field in the long term. +VE
Samsung Heavy Industries Co., the world's second-biggest shipbuilder by orders, said Wednesday it has won a 815 billion-won ($734 million) order to build four liquefied natural gas ships for an African customer. Since Monday, the company has won orders to build eight LNG carriers with a total value of 1.6 trillion won. So far this year it has won $5.5 billion worth of orders, which accounts for around 65 percent of its annual goal of $8.4 billion. Slight +VE
LG Electronics will set up a joint venture with the world’s third-largest auto part maker Magna International in a bid to raise the competitiveness of its vehicle component business, the company said Wednesday.  News was out during market hours Wednesday.
The growing number of small businesses, including restaurants and mom-and-pop stores closing down their operations amid the lingering coronavirus crisis, has seriously affected commercial real estate markets as well, a report said Wednesday. -VE
Residents of South Korea’s first smart community, to be built in the southern port city of Busan, will be selected Thursday in a 148:1 competition, the company behind the project said Wednesday. A draw will select 36 households who will experience the cutting-edge technologies incorporated in prototype smart residences at the Busan Eco Delta City. They will join eighteen households to be selected separately after interviews. The project will run for 5 years.

TAIWAN Expect market to open higher on the good Industrial Production data 
Data due after market Unemployment Rate and M2 Money Supply
After market Wednesday 
Retail Sales Nov +2.48% YoY vs +3.26% Oct (F/cast was +2.5%)
Industrial Production Nov +7.84% vs +6.44% Oct revised (F/cast was +5.5%)
The 10th consecutive month of annual growth, strong electronics exports continued to support the winning streak, especially with “a certain smartphone release” and demand for 5G and high-performance computing [HPC] devices all contributed to strong production,” Huang said. “IC foundries have their order books full as well.” “Looking ahead, we expect continued growth in industrial production due to sustained demand for 5G, HPC and AI [artificial intelligence] products, as well as preparations ahead of the Lunar New Year holiday,” +VE
Taiwan will impose more stringent regulations for flight crews, by the end of the week, to close loopholes in its prevention and control measures against coronavirus, the Central Epidemic Command Center (CECC) said Wednesday, after it reported a cluster infection the previous day, which was linked to a commercial airline pilot, CNA reports. It also reported that Taiwan's EVA Airways had decided to dismiss a pilot who failed to follow Taiwan's coronavirus control measures, as his misconduct had not only led to the country's first domestic case in 253 days but had damaged the carrier's image.
Tatung Co yesterday appointed Lu Ming-kuang, former chairman of Sino-American Silicon Products Inc, as its new chairman, following the surprise dismissal of outgoing chairman Lin Wen-yuan on Tuesday. The company also appointed Chung Yi-wen, a former executive at Hon Hai Precision Industry Co, as president. “Within two years, all our subsidiaries will be profitable, within five years, our revenues will stand at NT$100 billion (US$3.5 billion) a year, and by next year, we will be paying our shareholders a dividend,” Lu said of his plan to turn the beleaguered firm around. +VE if achieved
Ta-i Technology Co Ltd yesterday said that it plans to invest US$12 million to set up a new unit in Vietnam to provide services to customers with operations there. The investment is another indicator that the company has an upbeat outlook for next year. +VE
The Financial Supervisory Commission (FSC) has launched an insider trading probe, after Jih Sun Financial Holding Co’s shares spiked on the Taipei Exchange before Fubon Financial Holding Co announced its bid to acquire the firm.
The number of presale housing projects next year might shrink 10% to NT$1.48 trillion (US$51.83 billion), ending a four-year upward trend following a spate of unfavorable policies meant to keep property prices from rising, the General Chamber of Commerce  said yesterday. -VE.
Taiwan Star Telecom Corp yesterday said that it aims to offer more affordable and flexible rates than its rivals to increase its 5G penetration to 10% of its total customers next year, up from 5%.  Slight -VE as likely to sparks price war.

CHINA Expect market to open flat 
No data due but Saturday we get Industrial Profits
Brazilian researchers said on Wednesday the COVID-19 vaccine developed by China’s Sinovac Biotech is more than 50% effective based on trial data, but again withheld full results for a third time at the company’s request, raising questions about transparency. -VE.  
State Media reports that signing up to receive coronavirus vaccines has begun. Hospitals, schools, police stations and enterprises in cities are mobilizing people to take the shot against the resurgence of the virus pandemic
China's state planner said it would launch a nationwide inspection on the repayment risks for enterprise bonds maturing in the near term and in 2021, Reuters reported. The notice by the NDRC comes on the heels of a spurt of high-profile bond defaults by state-owned companies. The NDRC, which oversees the issuance of so-called "enterprise bonds" by mostly state-owned firms, launches such inspections every year.Also that the PBOC will scale back support for the economy in 2021 and cool credit growth, but fears of derailing a recovery from a pandemic-induced slump and debt defaults are likely to prevent it from tightening any time soon, policy sources said. -VE
Shenzhen is aiming to double its economy and GDP per capita in 2035, mainland media reported. The city has proposed to build a capital of innovation, entrepreneurship, and creativity with global influence, to become a model for China to build a powerful, modern socialist country, and take the lead in realizing socialist modernization, according to the report.
European Union and China talks on an investment agreement have stalled at the last stretch because China is raising additional demands on nuclear energy, German magazine WirtschaftsWoche reported on Wednesday. That is in addition to the sticking point over International Labour Laws. SCMP reports that Premier Li had calls to the prime ministers of Spain and the Netherlands, according to Xinhua, seeking ‘an early conclusion’ to the deal
Unilever Plc said on Wednesday it had expanded its partnership with Burger King to supply its plant-based meat patties for Whopper burgers at restaurants in Latin America, China and the Caribbean.
China-Australia relations worsen as : 9,000 litres of beer and  8,000kg of beef stopped at Chinese ports.   Manufacturer and distributor Sydney Beer Co. had its shipment halted at the southeastern Chinese port city of Xiamen last month due to incorrect labelling.  Also Meramist, the Queensland abattoir suspended by Chinese customs two weeks ago, was stopped at Nanjing port over mismatched certifications. China’s use of these tactics is likely to continue to undermine its aim as being seen as a reliable trade partner. -VE

HONG KONG  ADR’s +40pts at  26,384 with E Commerce and Petrochems +VE but Chinese Financials remain weak.  Half day trading today and market closed Friday; re-opens Monday.
No data due 
SHORT SELLING Wednesday 12% vs 14.2% Tuesday
Top Shorts  Bud Apac (1876) 45%, Hang Lung Property (101) 44%, HK & China Gas (3) 43%, Hang Seng Bank (11) 37%, Hengan (1044) 34%, Country Garden (2007) 32%, MTRC (66) 30%, Henderson Land (12) 30%, Wharf REIC (1997) 29%, CKI (1038) 28%, BoC HK (2388) 28%, Anta (2020) 26%, Sands China (1928) 25%, Sinopec (386) 25%, AIA (2018) 25%.
WATCH
WHARF wins tender for the site, Rural Building Lot No. 1211 at Nos. 2, 4, 6 and 8 Mansfield Road, the Peak. Novel Bliss Limited (parent company: Wharf), on a 50-year land grant at a premium of $12 billion, above the upper end of consensus $10.9 billion.  The floor price per sq.ft. is $46,271.8, breaking the record high of $42,100 as set by the land at Mount Kellett Road in 2006. Slight +VE for HK Developers although the land  value is a special location.
Carrie Lam’s press conference announced a number of new measures Increased the quarantine period to no more that 28 days from the current 14; for those coming from the UK it will now be 21 days Said Citizens Have Right to Know Vaccine Types and a choice which vaccine they have (reversing her earlier declaration although she said she had been misunderstood).The administration will set up a Security Fund to economically support citizens with a severe covid vaccine reaction.  This is interesting as the HK administration has previously said it would use Chinese vaccines, whose trial data has not been released publicly.  No other country has suggested the need for a fund to support those that have a severe reaction to the vaccine.
ExCo Enacts New Rule to Empower FHB on Emergency Vaccine Use, Effective for 12 Mths
Strikes Deal with AstraZeneca to Buy 7.5M Vaccine Shots and has inked deals for 22.5 vaccine does so far and is seeking a fourth supplier.
Vaccination Does Not Mean Immediate Border Clearance; To Unroll E-vaccination Card
Jimmy Lai granted bail for HK$10m cash and HK$300,000 in sureties by the High Court so he can spend Christmas with his family pending trial.  The High Court also turned down the application by the prosecution to appeal the bail decision to the Court of Final Appeal later in the day.  An interesting stand by the courts against the National Security Bill prosecution.
HKMA says The aggregate pre-tax operating profit of retail banks fell by 26.1% in the first three quarters of 2020, from last year, due to a drop in net interest income and a surge in loan impairment charges. The highly uncertain pandemic and economic outlook could continue to weigh on bank loan quality and profitability in the coming months, the HKMA said.  Retail bank net interest margin narrowed to 1.24% in the first three quarters of 2020 from 1.64% in the same period of 2019.
The Ministry of Industry and Information Technology announced that yesterday (22nd), it had granted the ten-year permits for using 5G mid-band and low-band spectrum to CHINA TELECOM (00728.HK), CHINA MOBILE (00941.HK) and CHINA UNICOM (00762.HK)
TENCENT (00700.HK)'s Weishi will concentrate on developing micro-series in the coming year, planning to invest RMB1 billion of funds and 10 billion of data traffic in supporting the buildout.
SING TAO (01105.HK)  is mounting provisional no-pay leave arrangements on employees, according to an internal letter from executives.  The arrangement will be effective for three months starting from 1 January 2021, under which each staff member shall be furloughed four days per month.
GANFENG LITHIUM (01772.HK) clarified that there have been price hikes on some lithium metals products only.  Rumor had it that GANFENGLITHIUM had raised prices of all lithium metals goods by 10% since 22 December.
Hong Kong reported a poor population as high as 1.491 million in 2019, up 85,000 yearly, with the poverty rate up to 21.4%, local media learnt from inside sources.
Centa-Salesman Index (CSI) last stood at 47.54 this week, down 1.61 pts weekly.CSI softened to 50 without plunging, following the 4th local Covid wave in late November, said Centaline Property. The index showed a narrowing weekly slide during the five weeks post-outbreak.
Ant Group in response to Chinese media's quotation of netizens that their Huabei quota was brought down to below RMB2,000 or RMB3,000, said that it is adjusting relevant quota of some young users to encourage rational spending habits.
Goldin Financial (0530) has suspended trading in its shares  The company will hold a board meeting on December 31 to consider and approve the audited final results for the year ended June 30, according to its announcement at noon yesterday.

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