Morning 10-6

 Powell Speaks to NABE (national Association of business economics) at 9:40 topic is U.S. Economic outlook. This is a forum that likely to be heavy on Policy talk A Q&A will also take place. ECBs chief Economist will speak later today at same event, a must listen as well.

 ECB’s Lagarde to WSJ warned that coronavirus containment measures pose a clear risk to the region’s economic recovery, she urged Govt to not end Fiscal support too soon … Euro sideways so far today

9 The number of U.S. states that have reported an increase in COVID-19 cases in the last week. On Saturday alone there were 49,000 new infections across four states, the highest number for a Saturday in seven weeks (Governing daily)

 Tropical Storm delta is Now Hurricane delta, it is expected to turn into a Major hurricane (Cat 3 or higher) by early Thursday morning landfall expected LA -Miss boarder Early Saturday morning

Markets:

 Bond market back to life Ultras down 1.5 handles 30s down 20+ ticks.30 yer yields settled above 200 D MA and are at highest I levels since early June a breakout to upside appears in progress. Watch out for Powell to make any mention about an Increase in Bond buying this could temper the bearish yield enthusiasm.10-year auction tomorrow 30s on Thursday, cannot Miss events. In Europe 30 year yields mixed Germany +.6 France unchanged. In Asia Australia’s 30 years bond yields +7.5 bps South korea +4 Japan +1.8

 Oil higher again today +2.6% after yesterday’s strong run to upside fueled by Stimulus hopes and positive China Import data (BBG), Nat Gas sideways to higher as LNG exports  for today still above 30 day average but yesterday’s numbers were revised lower=less demand

Mizuho says it much more succinctly then I can “Remember, it’s all the same trade…More Debt —> Currency Debasement —> Asset Price Inflation”

More Mizuho lots of call open interest at 350 in SPY; October 16th expiry shows 146k calls versus 63.5k puts), the biggest one-month advance in Consumer Confidence since April 2003 (19.6 points), cash on the sidelines, and Atlanta’s GDP Now index +34.6 percent for the third quarter. However, the WSJ reported yesterday that Biden’s plan to raise corporate taxes would reduce expected S&P 500 corporate earnings by 9.2%. It would result in much bigger profit drops for big tech companies and others in their orbit. And Bloomberg reports this morning threats of more regulation of Big Tech are becoming louder, with one new proposal to create “a Glass-Steagall law for tech platforms.” Mr./Ms. Market is telling us to shrug off the toothless threats of more taxes and regulations.

Spoos Little changed Nasdaq down a touch, European stocks higher Cac +.65% Mib +1% Dax +.5%. precious metals sideways as IS copper, Soybeans +1% and Corn little changed. Dollar index little changed But USD Lower vs peso and real but sideways vs Yuan.

News:

  • Just released “U.S.-CHINA AUG TRADE DEFICIT $29.78 BLN VS JULY DEFICIT $31.62 BLN even though overall trade deficit widened to the largest in 12 years
  • For the next presidential Debate, a virtual format is being discussed
  • EU Brexit trade negotiations deadline is next week
  • RBA leaves cash rate & 3Y bond target yield lunch at 0.25%; won’t increase cash rate until progress made on full employment & infula target is within 2-3% band; Board cons to consider how extra mon easing could support jobs; will maintain highly accommodative settings for as long as needed, wage & PX pressure remain subdued; -ITC markets

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