Dec 25 Asian Wrap and On-line FT thoughts Hope you're having a Happy Christmas.

25 Dec

Happy Christmas a rather strange affair this year with social lockdowns but I wish you and those dear to you all the best, enjoy and appreciate those around you.

Nikkei 225 opened higher with optimism from the US and the Brexit deal. Pre market data was mixed and local sentiment remains concerned about the rising number of covid cases, Thursday was a new high. Market initially sold down to 26,655 and then traded sideways around yesterday’s closing level into lunch. Data out at lunchtime was mixed again and market opened lower at 26,658 and traded sideways until about 2pm when it worked higher into the green at 26,682 but then sold down to close -12pts (flat) @ 26,656
Topix Opened higher initially traded sideways in choppy trading before selling down to the day low 1,775, but then a small bounce into lunch. PM opened flat but worked higher to close just off the pm high: +4pts (+0.2%) @ 1,778 Data
Pre Market
Unemployment Nov 2.9% vs 3.1% Oct (F/cast was 3.2%)
Jobs/Applications ratio Nov 1.06 vs 1.04 Oct (F/cast was 1.05)
Tokyo CPI Dec -1.3% YoY vs -0.7% Nov (F/cast -0.7%)
Retail Sales Nov +0.7% YoY vs +6.4% Oct (F/cast was +2%)
Retail Sales Nov -2% YoY vs +0.5% Oct (F/cast was -2.6%)
Housing Starts Nov -3.7% YoY vs -8.3% Oct (F/cast was -4%)
Construction orders Nov -4.7% vs -0.1% Oct (F/cast was +2%).
On Monday we get Industrial Production and BoJ Summary of Options
Market Closed
Market opened higher after the good Unemployment data and with good interest in tech. It rallied initial to 14,375 and then effectively traded sideways until late morning seeing resistance as it approached 14,400. Market then sold back down the opening level and traded sideways/slightly higher to close +51pts (+0.4%) @ 14,331
CSI 300 opened lower (4,986) and traded sideways for the first hour before rallying to 5,027 level and then trades sideways into lunch. PM saw the market open higher and trade slightly higher to close at the day +42pts (+0.8%) @ 5,042. Volumes were lighter than normal by around 5%
Sentiment remains cautious over the EU/China deal as Commerce ministry says the parties should meet half way. Which is at odds with the statement from the foreign ministry. There remain concerns over the probe into Alibaba and the implications for other Ecommerce companies. I also think a lot of it is to do with the personal data Alibaba, Tencent and others have built up which the government and PBoC want access to.
Energy curbs also -VE for sentiment.
In general Chinese manufacturing is recovering well but factories in the South and East as facing labour shortages and rising wages as post covid many workers from other areas are reluctant to travel; something that is unlikely to change short term. It also underlines the importance of changes being made to the hukou system to allow workers to receive benefits when laid off
Shanghai Comp +33pts (+1%) @ 3,397
Shenzhen Comp +18pts (+0.8%) @ 2,274
ChiNext Comp +23pts (+0.8%) @ 3,041
Data due Sunday Industrial Profits YTD (F/cast +1.1%)
Market Close re-opens on Monday. Press reports 60 new covid cases EUROPE 
Markets Closed most re-open Monday but UK closed
US Markets Closed re-opens Monday

FT On line
UK and EU agree historic Brexit trade deal New agreement in place now come s th difficult task of rebuilding trading relationships.  PM Johnson was upbeat but EU’s Ms von de Leyen was more somber.  Many will now be looking see if any other EU members want to consider leaving the union.For those wanting to know how the deal works in more detail read Brexit trade deal explained: the key parts of the landmark agreement

Republicans block push for $2,000 pandemic relief cheques. Future of Covid aid package in doubt after Democrats back Trump’s call for higher payments to Americans.  Read also Donald Trump wreaks havoc during waning days of officeWhich outlines how Trump his disrupting legislative works issues a string of controversial pardons and generally behaving like petulant child throwing all the toys out of the pram and breaking things!  It notes he tweeted a warning to Iran.  Such actions I think will have China concerned about more potential sanctions in the final days.

Central banks are starting to put more value on anecdotal evidence. Looks at how the BoE uses a network of 9,000 ‘real economy’ participants (business leaders) to meet with regularly and discuss trends and sentiment.  With 700 being in almost monthly contact.   It does strike me that they maybe ought to include ordinary people too as the grassroots is as important as the business leaders.
A study has found that the anecdotal data gathered plays an important part in the shaping of BoE policy. The process is two way with business leaders gaining insight from the BoE staff about what is happening in the Bank. It is what economist Robert Shiller, called “narrative economics”, in the sense that the economic stories that we tell ourselves and others impacts real behaviour. Such is not usually recognised in the financial economic models which the article says ‘assume economic actors have a consistent mental map about the passage of time and their forecasting (and risk-taking) abilities. In most macroeconomic models, in other words, “unstable systems are treated as atypical”, the researchers argue.’ But some like the late Frank Knight think that instability is important in order to understand the uncertainty that is engulfing many consumers and companies in the face of Covid-19. Anecdotes can reach problems models cannot solve.'
The Feb is moving the same way with its ‘Fed Listens’ initiative, although some way behind the UK. But it is seeking to use language that the ordinary man in the street can understand to remove what used to be termed constructive ambiguity.
More needs to be done and maybe more prominence to the anecdotal evidence. It makes the point in conclusion 'After all, at a time when investor exuberance continues its divergence from the pain being seen in the real economy, there is a greater need than ever for central bankers to understand what is happening outside any ivory tower. The BoE’s “intelligence” agents should proudly come out of the shadows; particularly as we struggle to prepare for a post-pandemic world.’

Old US shopping mall finds secret to survival as Covid rips through retail. Whilst many are failing some are surviving and growing.  Looks at the Cross County Centre in Yonkers.  It’s current advantages (like being open air) were once seen as weaknesses but the crucial element is Community links giving it the advantage over other rivals.  Also, reading the article, an important part has been the hands on face to face meeting with tenants to explain and understand the reality of the situation.  
Other centres it references have gone in a different and more expensive direction becoming more of an entertainment centre; like the American Dream which cost $3b and included an amusement park, a water park, a helipad, a zoo and a 16-storey ski slope in its list of attractions. The bottom line seems to be that there is scope for both but in limited numbers. Cross County is a community based centre but you can’t really have more than one of those in each location!
So retail stores and retail mall operators are probably going to have to switch their focus from quantity to quality. It’s a huge subject but I do think the out of or edge of town malls have scope to be on-line operators distribution centres and a few can also be remote office hubs but only a limited number. In the past a lot of Mall operators seem to have worked on the basis of build and they will come. That era I think is over. The US election phrase for both parties was about 'building back better’ that applies to retail too.

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