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Livesquawk - US Briefing - Thursday 25.02
US Briefing - Thursday 25.02
Headlines
  • Fed's Clarida: QE Taper Talk Premature, Policy Now Appropriate
  • US Senators Weigh Paring Back Biden's $1.9T Covid-19 Aid Plan
  • US Steps Up Talks With Taiwan To Secure Chip Supply Chain
  • China Calls Biden Effort To Shift US Supply Chains Unrealistic
  • ECB’s Schnabel: MonPol Must Not Be Withdrawn Prematurely
  • ECB’s Lane: Will Buy Bonds Flexibly To Prevent Undue Tightening
  • EZ Feb. Econ, Industrial, Services Confidence Beat Estimates
  • German Mar. GfK Consumer Confidence: -12.9 Beats Forecasts
  • UK’s Truss: Seeking Early Meeting With USTR To Discuss Tariffs
  • Sunak Urged To Unleash $140B Fiscal Push To Aid Recovery
  • Moderna Plans Multi-Pronged Approach On Virus Variants
  • Israel Study; Pfizer-BioNTech Shot Could Help End Pandemic
  • Japan To End State Of Emergency In 5 Prefectures At End Of Feb
  • Aussie Dollar Rises Past 80 Cents For First Time Since Feb 2018
  • NZ Gvt Forces Central Bank to Include Housing In Rate Setting
  • French 10Y Gvt Bond Yield Turns Positive First Time Since June
  • Nvidia Slips On Concern About Growth Of Data Centre Business
  • StanChart Restores Div, Reaffirms Targets As Virus Halves Profit
  • SAP Shares Rise; Proposes Increased Div. Of EUR1.85/Share
  • Bayer Q4 Rev Misses; Raises 2021 Rev, Adj. EBITDA Forecasts
  • Anglo American FY Earnings Beat As Commodity Prices Soar
  • DS Smith Jumps On FTSE 100 As Mondi Weighs $7B Deal
  • Hong Kong Plans To Hike Stock Trading Tax From August 1
Commentary
PCE Inflation Set To Slip, Rise Likely Later In 2021

Economists say the US Federal Reserve’s preferred measure of consumer price growth will likely show a decline in January on the back of softer headline US inflation, but household costs are widely expected to increase as the year progresses.

 

The January rate of annual core PCE inflation is expected to ease to 1.4% from 1.5% in the previous month, economists said. The US Labor Department reported earlier this month that its core inflation rate fell to 1.4% from 1.6% in December.

 

Economists forecast a monthly core PCE rate of 0.2% versus the 0.3% growth in the final month of 2020. Continue Reading

Moderna Plans Multi-Pronged Approach On Virus Variants

Moderna Inc. is planning to study multiple approaches to vaccine booster shots that could protect against emerging coronavirus variants, while gearing up to produce more doses of its shots this year and next.

 

In a statement, Moderna said it had completed manufacturing doses of a new version of its Covid-19 vaccine modified to target the South Africa strain, or B.1.351, and shipped it to researchers at the National Institutes of Health for clinical study. The South Africa booster shot is part of a multi-pronged strategy Moderna is taking against new variants, the company said.

 

In addition to the South Africa specific booster, the company is testing a third dose of its existing vaccine in a clinical study, and it also plans to test a booster that will combine the South Africa-specific vaccine and its existing vaccine, the company said. Clinical studies will be done both at the NIH and through Moderna. Shares of Moderna rallied in after-hours trading in New York, rising more than 5.6%. Moderna said it plans to evaluate both the combined vaccine and the South Africa-specific one as an initial shot for people who haven’t yet been vaccinated.

(Bloomberg – Continue Reading)

Deutsche: US Stocks Could See $170 Billion Stimulus Boost

US stimulus checks could unleash a $170 billion wave of fresh retail inflows to the stock market, according to Deutsche Bank AG strategists. A survey of retail investors showed respondents planned to put 37% of their stimulus cash directly into equities, a team including Parag Thatte wrote in a note Wednesday. With potentially $465 billion of direct stimulus being planned, that adds up to $170 billion, they said.

 

 “Retail sentiment remains positive across the board, regardless of age, income or when the investor began trading,” the strategists wrote. “Retail investors say they expect to maintain or add to their stock holdings even as the economy re-opens.”

 

A combination of free trading apps and direct government stimulus has helped fuel a boom in retail involvement in the stock market, most notably from first-time investors. Their influence has begun to impact markets, including the world of options, and trading volumes have skyrocketed. Democrats are racing to pass President Joe Biden’s $1.9 trillion pandemic aid package without Republican support, a bill that includes $1,400 checks for many Americans. Congress already authorized two rounds of direct payments, first in March last year, then in late December.

(Bloomberg – Continue Reading)

JPMorgan’s Kolanovic: ‘VIX Bubble’ May Spark Stock Rally

The market’s so-called fear gauge is elevated, and that could bode well for stocks if history is a guide. The spread between the Cboe Volatility Index, or VIX, and two-week S&P 500 realized volatility has widened to a point that historically has been followed by a volatility decline and stocks on average moving higher, JPMorgan Chase & Co. strategists Marko Kolanovic and Bram Kaplan wrote in a note Wednesday. Historically, three months after that spread moved this wide, the VIX fell 11 points and the market rallied an average 12% with a move higher 87% of the time, they said.

 

“Given the VIX is at a near-record premium to actual equity volatility, we think selling the ‘VIX bubble’ represents a good market opportunity,” the strategists wrote. The VIX jumped a year ago as the Covid-19 pandemic began to spread and affect the global economy, sending markets into a tailspin. The gauge, which has a lifetime average around 19.5, has largely remained above 20 even as stocks hit record highs on encouraging pandemic news. It has also stayed high relative to measures of swings in other asset classes like credit and rates.

 

There is one potential caveat for equity volatility investors. Michael Purves, the CEO of Tallbacken Capital Advisors LLC, said there are fewer participants willing to bet on declining swings after the culling of the short-volatility industry via VIX spikes in 2018 and March 2020.

(Bloomberg – Continue Reading)

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