A few charts

an update from last week SPX/IWC ( micro cap Stocks)

200 D MA crude oil Coniuation chart

Lumber weekly chart new all time highs

..lastly from IFR news regarding this weeks long end auctions

‘ After some better buying by real money managers in the belly this morning, sellers returned. Back into bear steepening mode. Not so much because the markets believe a stimulus bill will get done this week. More because traders and investors have an eye on supply. The record sized $112 bn Refunding, particularly the $38 bn 10s Wednesday and $26 bn 30s Thursday. That supply is the largest dv01 risk, in the history of auctions. By far. Back in the May Refunding, auction buyers bid on only $91 bn. That enormous $21 bn add-on will increasingly end up as dealer awards. And dealers always bid for more size, in higher yield increments. As opposed to end users that often bid well below the prevailing yield, to be guaranteed their bonds.

M2

From Pantheon Economics

“The Covid pandemic is a disinflationary event, because it has crushed demand. The next stage of disinflation will come as wage growth slows. Next year, when the vaccine has allowed activity to return to normal, the gigantic expansion in the money supply will become a potential inflation threat, but right now policymakers want to concentrate only on the first order threat, which is the damage being done by the virus.”

Above is chat of M2 Money supply dropping in back to back weeks.Now per Nomura’s McElligot he believes the drop in M2 is being put to use in the Economy,A good sign(https://heisenbergreport.com/2020/08/10/nomuras-mcelligott-the-m2-pro-cyclical-signal-may-be-triggering-in-stocks/s ) you can see by Chart back to back weeks of Declines is a rare occurrence, will this lead to Inflation or can we just hope that Money is being pushed back into economy and hopefully give recovery a needed omphh…

Morning

China:  

    Futures on sovereign notes due in a decade jumped as much as   
0.47%, the most since June 11, to 99.28. The yield on the bonds
dropped 3 basis points to 2.96%. 

                             
  China reported data on Monday that showed July core inflation, 
which removes the more volatile food and energy prices, was    
0.5% year-on-year, compared with 0.9% in June. The reading is  
the weakest since 2010. (Mizuho)

  August 15th is the touted date for the US-China compliance meeting. By the end of the first half of this year, China had bought about 23% of the total purchase target of more than $170 billion for goods in 2020, according to calculations based on Chinese Customs Administration data – Bloomberg

Politico Money.

  Via Goldman Sachs: “We now expect that at least one vaccine will be approved by the end of 2020 and will be widely distributed by the end of [the second quarter of] 2021 … We have incorporated this timeline as our baseline forecast, and now assume consumer services spending accelerates in the first half of 2021 as consumers resume activities that would previously have exposed them to Covid-19 risk.”

“We still expect the unemployment rate to decline to 9.0% by end-2020, but now expect a larger decline to 6.5% by the end of 2021 (vs. 7.0% previously). Despite these forecast upgrades, the near-term downside risks have risen due to Congress’s failure to pass a Phase 4 fiscal package.”  ( Emphasis mine)

Markets:

 All a game on Friday Copper +2.8% so far today recouping half of Fridays losses’ Gold +.75% Silver +3.5% the latter recouping all of Fridays Loses. Easy in hindsight but Friday’s action was just a bit of Position squaring it seems due to the run up in the Dollar. Speaking of Dollar Steady to higher so far today. The Yuan weaker by a touch but still trading lower for third consecutive day. Stocks Sideways, typical for a Monday post payrolls. CL +1.5%, Platinum +3% and palladium +2.6% Japanese holiday today causing overnight trade to be a bit slower than normal.

 Big week for Treasury Auctions some $112 B with duration from 13 weeks to 30 years. Market demand for the paper must be monitored.

 Trump Executive order Does nothing immediately to help average citizen, but something is better than nothing, I guess. Congress needs to act to make a difference immediately, supposedly negotiations between two sides will continue today.  This week does  have some Economic highlights CPI and Retail sales and on Friday U of Michigan  preliminary read for August. Until We know for certain the fate of next Stimulus package markets will be a sideways trade, just another outcome that markets are waiting on. The Economy is leveling  off after a few months of strong data, retail sales on Friday will give us a glimpse into the all-important consumer Spending,  will there be a back to school surge in Supplies?

Jobs

You make the call if this is great jobs report,Numbers are moving in the right direction though

Total employed people in US
part time workers unemployed for Economic reasons
payroll gains Service providing Industry

Morning 8-7

Via Mizuho 

 ◘ Big Tech Factoid of the day: At $6.2 trillion, the combined market cap of Apple, Amazon, Microsoft and Google is now greater than the GDP of every country in the world with the exception of the US and China. On March 9, 2009 their combined market cap was $326 billion. (@mktoutperform)

 More tariffs:

Trade

  • President Trumpto announce 10% tariff on some Canadian Aluminium
  • -Canadian Dep PM Freeland: Pres Trump’s latest tariffs in aluminium are both unwarranted & unacceptable as the trade is mutually beneficial; in response we’ll be announcing a dollar for dollar countermeasures at 16:00 BST later today (ITC Markets)

China: (ITC markets)

  • US President Trump issued executive orders banning any US transactions with ByteDance, owner of video-sharing app TikTok, and Tencent, owner of the WeChat app, starting in 45 days
  • -Chinese July Trade Balance: +$62.33b vs +$42.6b cons; Exports +7.2% y/y vs -0.6% cons, Imports -1.4% y/y vs +0.9% cons .. Imports a bit of A disappointment as oil, Soybeans and iron ore slowed vs last month
  • Tencemt shares down 10% at one point overnight I believe the 8th biggest company in the world??
  • We chat is the worlds most used messaging app

Stimulus Deal chatter(ITC)

  • Stalemate continues over Covid aid… After over three hours of negotiations Thursday evening, both sides blamed each other, accusing each other of not moving enough in bridging the $1 trillion proposed by Senate Republicans and the $3.5 trillion backed by Democrats.(Pro farmer)
    WH Chief of Staff Meadows: If we don’t reach a top line number in these talks, there’s very little incentive to have further talks
  • -US Tsy Sec Mnuchin: The C-19 relief bill talks are close on a lot of issues but remain apart on a handful of others; Pres Trump won’t sign a bill with a large amount of money for state & local gvt’s; will try & narrow their differences later today
  • -US House Speaker Pelosi: We remain very far apart
  • -Senate Democratic Leader Schumer: We’re disappointed by this meeting

Payrolls Today, the surprise would be a stronger than expected number, a weaker number unless well below Zero is priced in. The range and uncertainty around today’s report is quite large as High frequency data from the Likes of home base a service that measures employment trends daily to jobless claims mid-month, services PMI employment  point  to a disappointing number.  I believe the Number could have an impact on Congressional negotiations regarding stimulus package as an ugly number may force the two sides to come together. Watch UE rate and Revisions. Dollar stronger on day creating a bit of Risk off feel so far today.