Happy New Year!

 Happy new year!  Onward and upwards for 2021

…..More than six in 10 Americans are hopeful about 2021, managing editor David Nather writes from a new Axios/SurveyMonkey poll.

63% of respondents to the poll (Dec. 14-20; 3,561 U.S. adults) said they are more hopeful than fearful about what 2021 holds in store for the world, while 36% said they’re more fearful.

  • That is a jump in optimism compared to the same poll heading into 2019, when just 51% said they were hopeful and 48% said they were fearful.
  • The only group that was not optimistic about 2021 was Republicans: 41% said they were more hopeful, while 58% said they were more fearful.

Between the lines: Americans were even more optimistic about the year ahead for them personally — mostly driven by the hopes of young adults, people of color and Democrats. (AXIOS)

Some facts in no order of importance.

The BSE Sensex index (INDIA) ended the last trading day of the year at an all-time high of 47,751, booking a 15.8% yearly gain in 2020. Trading economics (TE)

London’s FTSE 100 closed 1.5% lower at 6,460 on the final trading day of the year and the last day of the post-Brexit transition period, bringing the annual loss to 14% and suffering its worst year since 2008 (TE)

It has been a year since China reported the first cases of coronavirus to the World Health Organization. Meanwhile, more than 82 million cases have been identified, of which 19.7 million in the US, 10.2 million in India, 7.6 million in Brazil and over 3 million in Russia. At least 1.8 million deaths have been attributed to the pandemic, including 342 thousand in the US, 193 thousand in Brazil, 148 thousand in India and 124 thousand in Mexico. (TE)

Brent crude traded above $51 per barrel on the last trading day of 2020 but was on course for a 20% yearly loss as strict coronavirus lockdowns throughout the year sent oil prices to negative territory for the first time on record. (TA)

The Shanghai Composite added 1.7% to 3,473 on the last trading day of 2020, its highest level since February 2018. The index also gained 14% for the year as investors pushed risk assets including stocks to sky-high valuations on expectations that widespread vaccine distribution in 2021 will reignite economic growth (TA)

YTD % changes in USD

Dow +6.5, SPX +15.5, NDX +43, Russell +18, stoxx +4. Dax +13, NKy +22.China CSi 300 +35, South Korea Kospi +39 Losers Hang Seng -2.9, CAC unchanged, Spain -15, Austria -12

Commodities:

 Winners YTD; Lumber +115% LME copper +27%, Iron ore 65%. Nickel 19%, Spot Silver 48%, Spot Gold 24%, Spot platinum 11%, palladium 23%Steel 18% Corn 23%, Soybeans 39%, Soymeal +44% Soy oil +24%Sugar +13,wheat +13%,Nat Gas +14%  and UK Nat Gas +86%!,Rubber +57% palm oil(Malaysia) +30%

 Losers: YTD CL -21%, gasoil -31%, gasoline -17% heating oil -27%, Live cattle -10% Coffee -1.6%, feeder -5%, Hogs -5% Livestock not a group faring well this year compared to almost all other commodities

Semis

Volkswagen overnight said “they were adjusting output due to bottlenecks in Semi industry” and saying that Chip shortage threatens car production BBG So supply issues along with an increase in Demand obviously could raise prices for the end users. News also Overnight that US will sanction or blacklist dozens of Chinese including the country’s top Chip maker SMIC. Taiwan Semiconductor reported to be ending volume discounts for its Chips and increase prices in 2021. Higher input costs for everything from TVs,smart phones and gaming consoles. but no Inflation I guess

1-week till Xmas edition

 Still no deal on Stimulus or Spending bill. Due to lack of progress on the latter Govt may shut down for a day or two, members of Congress will work through weekend. Moderna vaccine may be rolled out next week. So far 1.1 million have received vaccine -BBG

News:

  • VP pence received vaccine on TV
  • BOJ left policy unchanged
  • US blacklisting China’s top Chip maker-BBG
  • UK Factory orders 10-month highs
  • German IFO, Business climate indicator better then forecast head of the IFO “German economy is resilient”
  • The Fed’s balance sheet jumped by 1.66% vs prior week, the biggest weekly jump in a few months. Currently stands at $7.411 T
  • Soybeans up through $12 trading 6-year highs. Ongoing strikes in Argentina the reason for the latest Push higher. Per USDA 90% of expected soy exports have been booked” Supplies becoming thin, as the US must keep a  certain amount of beans for domestic use.
  • Iron ore traded on Dalian exchange +3.2% overnight, once again near 9-year highs
  • LME copper >$8,000 7-year highs overnight Goldman and BlackRock calling for some new super cycle in Commodities (BBG) hard to argue with this so far.
  • Gold looking at a 3rd weekly gain in a bit surprised by this.
  • DCE Iron Ore close +6.23% SHFE Steel Rebar +2.91% Zinc 1.55% ZC Thermal Coal +3.63% Coking Coal +2.90%-Mizuho

Markets sideways for now, Waiting on word from Congress regarding stimulus and spending bills. Today Quadruple witching and SPX rebalance and tesla addition to SPX.

 From Mizuho “Get ready for Dec Opex and Tesla games today. Tesla’s grand entrance into the S&P 500 is expected to be preceded by a huge trade, with the addition to the S&P 500 forcing index-tracking funds to buy over $80 billion worth of Tesla shares by the end of today’s session so their portfolios correctly reflect the index, according to S&P Dow Jones Indices. Those funds will simultaneously have to sell other S&P 500 constituents’ shares worth the same amount. Tesla is by far the most traded stock on Wall Street, with $18 billion worth of its shares exchanged on average in each session over the past 12 months, easily beating Apple, in second place with average daily trades of $14 billion, according to Refinitiv – Reuters.

Charts

Jan Beans demand continues to be strong

Cotton , haven’t talked about this in while,Recall last weeks WASDE number was bullish and Today’s export data friendly. The move has gone a bit under the radar

12-16

 Optimism continues to grow regarding a Stimulus package “FOX NEWS REPORTER PERGRAM: IT IS NOT OUT OF THE QUESTION THAT THE SIDES COULD GET COVID DEAL TODAY. BUT IT MAY TAKE A WHILE TO PROCESS. MEANING A FEW DAYS. AND FOX IS TOLD THAT WHILE THE OMNIBUS SPENDING PACKAGE IS IN “GOOD” SHAPE, POLICY ISSUES STILL REMAIN.

Pay attention to 8:45 markit Econ PMI data last month big mover

 Dollar lower approaching the 90 handle, current lows 90.128, Stimulus trade in play Gold a bit higher Bonds and Ultras weaker, Stocks higher led by Russell +.4% spoos and nas +.2%   Gold lacking  a bid  this morning take note  but  Bitcoin is  trading 19980 in the futures + 1.75% Silver following the playbook +2.1%

 Just hitting Wire “BREAKING … Hill negotiators are on the brink of a $900bn coronavirus rescue package that would include a new round of direct payments, but would leave out state and local aid, and a liability shield. A deal could come as early as early this morning.

 Not only Stimulus deal but Solid Econ data out of EZ as PMI Data beat handily driving the bid in stocks (ITC markets for numbers)

  • -FRA Dec Prelim Mfg. PMI: 51.1 vs 50.1 cons
  • -FRA Dec Prelim Servs PMI: 49.2 vs 40.0 cons
  • -GER Dec Prelim Mfg PMI: 58.6 vs 56.4 cons
  • -GER Dec Prelim Servs PMI: 47.7 vs 44.0 cons
  • -EZ Dec Prelim Mfg PMI: 55.5 vs 53.0 cons
  • -EZ Dec Prelim Servs PMI: 47.3 vs 41.9 cons
  •  

Stoxx 50 +.5%, Dax +1.4% (autos strong) Mib +.65% Euro poked her ahead above 1.22 for the first time in 2 years.

Retail sales at 7;30 might be ignored due to stimulus announcement. Update Retails sales missed badly and last months revised lower… Fed decision at 1 even though they may stand pat on all stimulus measures there are plenty of moving parts today so likely some market movement at 1:00   Dot plots, Updated econ Projections new forward guidance

From Pro farmer

  “FOMC meeting concludes today… Federal Reserve releases a policy statement and economic projections at 1 p.m. CT, and Chairman Jerome Powell holds a press conference at 1:30 p.m. CT. Traders will watch for new guidance on asset-purchase plans, potential changes to the composition of the Treasury purchases, projections on the pace of the recovery and interest-rate increases, and how officials are gauging uncertainty in their forecasts. Analysts at Goldman Sachs Group Inc. said there is a possibility of a dovish surprise today by the Fed that could spur further dollar weakness. Economists say the Fed may deliver fresh guidance on its asset purchases, tying how long the buying will continue to substantial progress in

meeting its goals of full employment and 2% inflation. Updated economic forecasts will also be issued by Fed members with changes expected since the November unemployment rate of 6.7% is already under the 7% to 8% the Fed forecast in September. Its GDP outlook for 2021 could also rise. Powell is expected to push for added fiscal stimulus by lawmakers.”

Lumber Managed Money

A proxy For speculators shows this investor category not on board for the run up in Lumber ..This time. net longs decreasing for third consecutive week

At least End users merchants,producers doing what you would expect, selling on the move higher increasing net shorts

Lumber curve today vs 1 week ago short term demand high as backwardation in Curve jumps

Some Comments from Bloomberg may help explain the Surge in demand for a time of the year when it normally is absent

Morning 12-15

China Data released Yesterday evening, Industrial production good retail sales a bit of a disappointment

 More good news from Moderna:

  • BN 12/15 12:54 *MODERNA VACCINE IS SAFE, EFFECTIVE AGAINST COVID-19: FDA STAFF
  • FDA: DATA SHOWS FAVORABLE SAFETY PROFILE FOR MODERNA SHOT: CNBC
  • *FDA MAKES REPORT AVAILABLE AHEAD OF DEC. 17 ADVISORY PANEL
  • *FDA POSTS BRIEFING DOCUMENTS ON MODERNA COVID VACCINE

Metals

 With Strong industrial production number and optimism high for further steel demand iron ore back on the bid overnight new all-time highs in China, From Morgan Stanley “no winter blues for china’s steel production”. Steel rebar in China +2.3% Overnight, Nickel touched 14-month Highs yesterday, Copper +.5% today, Silver +1.7%, Platinum =2% and palladium +1.5% A bit of reflation trade today Cl +.7% even gold higher this morning +1%

Stocks:

 Spoos bid yesterday morning closed lower on Day, SPX has closed lower 4 consecutive days haven’t seem 5 since February. Positive start again this morning Spoos and Nasdaq +.6% Russell +.7% Stoxx +.3% Dax +.6 But Cac little changed and FTSE down on day. Treasuries lower but Bunds steady to higher two narrative running the market for Now negative Brexit issues and positive reflation vaccine optimism in US.  Yesterday 2 bi partisian  relief bills were presented in the senate one with state Aid and one without Let’s hope a dea,l a small deal can be reached by Friday. Winter storm headed to East coast, Nat gas priced this in already, gas down 1.5%

News.

Morning 12-14

 Risk On

 “Momentous day: Electoral College votes today, ending the 2020 election; and the Pfizer vaccine rolls out to the public, beginning the end of the pandemic.  “@Eamonjavers CNBC

HHS Sec. Azar predicts the general population could see access to the COVID vaccine “by late February going into March,” telling @SavannahGuthrie: “I I think you’ll start seeing much more like a flu vaccination campaign, people going into their Kroger, their CVS, their Walgreens”

Politico: bipartisan Senate group expected to release its $908 billion coronavirus bill today, with a likely twist, per two sources familiar. Two pieces: will be a $748 billion piece with less controversial spending and then a $160 billion state and local plus liability piece. McConnell suggested last week separating state and local and liability from the overall package. Seems like this is what is happening here

Moderna expected to win approval on Thursday to start distribution of its drug, Positive vaccine news outweighs negative news

 GBP +175 ticks on Brexit optimism

Other news:

  A bit scary supposedly Russian hackers from a group named APT29 hacked into NSA  State Department, Military, Treasury and the Pentagon.

From Reuters” Bitcoin rallies >$19k again as institutional interest grows as the global volume of negative-yielding debt hit fresh ATH of   
$18.4tn. Life insurance giant MassMutual has announced it has  
already invested $100mn in Bitcoin for its general fund.  

 This week we see Central bank decisions from FED, BOE, BOJ, Mexico Switzerland and Russia

 Stocks higher, Spoos +.8%, nas +.4% Russell +1.2% Stoxx +1%, Dax +1.2% as is Mib NKY closed little changed China CSi 300 +1%   Bund yields +3 bps, US 10s +3.5 30s +4 bps Dollar index new YTD lows -50 ticks  Gold not trading higher  Gold -1% Silver little changed, copper also trading lower hmmm no reflation trade today?

Gold headed for first quarterly loss in 12

What is going here?

EuroDollar white pack a few big buy orders

and the Red pack

Via Bloomberg

Red pack buying having an impact on 2 year yields 240 min chart below, yields approaching all time lows.

And mentioned above FRA/OIS, 3 month implied market rates and overnight indexed swap a proxy for fed Funds dail chart below ,will this drag two year yield closer to zero ,seems that way

Morning 12-11

 Overnight range in MARCH Spoos 47 handles, recall earlier this week we saw a 10 and a 15-handle overnight range

 Stocks in the Red   Lack of Stimulus deal, A European vaccine from Sanofi and Glaxo delayed trials as it failed to produce a response in older people (BBG), and I guess worries of A no Brexit deal grow as Boris Johnson says “Britain should prepare to leave EU without a trade Deal” BBG GBO down 3 big handles from Wednesday Highs. Dollars index a touch higher

Spoos and Nasdaq -.75%, Russell -1.25%, European stock hit a bit harder Stoxx -1.3%, Dax -1.7% All 20 Stoxx 600 sectors down on day EU banks -2.8% and telecommunications stocks -3% your leading sectors to downside. A bit of a risk off narrative Bunds +60 ticks Treasuries bid 10-year yields flirted 1% last week today .87. If it was a true Risk off move Gold would be higher but not the case gold and silver little changed to lower Platinum -1% Copper down -1.2%, but both LME and Comex touched ~7-year highs today, reflation trade in full swing there. Oil Little changed yesterday brent settled >$50 first time since march, And CL work g on a 6th consecutive higher weekly close The VIx dipped below 20 Failed to take out 19 todays highs 25.13 in the spot   So a bit of nervousness back into the market here at the end of the  week.  Below weekly Copper chart

 Cattle comments Pro Farmer “Beef price freefall continues… Choice and Select values dropped $3.67 and $3.18, respectively, on Thursday, extending the market’s dramatic retreat. Once again, soft prices led to strong movement, with 185 loads changing hands. Retreating beef prices have caused the cash market to weaken, too, with prices fading as the week progressed. Iowa saw some additional trade between $103 and $104 yesterday, with Nebraska seeing light action at $106. Earlier in the week, cash action ranged from $104 to $107 in those areas. The Southern Plains saw light trade earlier this week around $108.

 Lumber 10 out of 11 days higher close yesterdays Limit up move in January was dome with the second biggest volume in that particular contract months Life. Spot prices are once again off to the races, Warm weather forecast indicating no seasonal slowdown   thus demand increasing.  Comments from some of the nation’s biggest homebuilder continue to say demand is high and supply low for new homes.

News:

BofA said on Friday that its wealth management clients further increased allocation to equities in their portfolios last week, closing in on the record levels seen in March 2015, as they prepare for stronger returns in 2021 Reuters

Morgan Stanley said on Friday that it expects the FTSE 250 index to drop 6% to 10% if Britain fails to agree a trade deal with the European Union before the end of a transition period….. reuters

FDA Approved Pfizer vaccine for emergency … Distribution next week?