Take Five: Deal or no deal
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[November 21, 2020] (Reuters)
- - 1/ STICKY TALKS
Britain and the European Union are said to be on the verge of clinching
a post-Brexit trade deal that would regulate their relationship after
the transition period ends on Jan. 1, 2021 -- six weeks away.
Diplomats say three sticking points remain and EU leaders are stressing
the need to prepare for a no-deal. Brexit deadlines have come and gone
several times in the past, but negotiators are making a final push and
the consensus is London and Brussels will come to some sort of agreement
- possibly a bare-bones deal with details to be decided down the line.
Recent gains in sterling <GBP=D3> and UK stocks <.FTMC> imply assets are
pumped up by hopes of a COVID-19 vaccine and a Brexit deal. They could
be in for a rocky ride.
2/SHOPPING SIGNALS
In a typical year, U.S. shoppers would be gearing up for "Black Friday,"
the kick-off event for the holiday season. But this is 2020. Surging
coronavirus cases make the familiar scenes of consumers crowding into
stores to snap up bargains unlikely.
![](http://archives.lincolndailynews.com/2020/Nov/21/images/ads/current/knollenburgauction_sda_TIP_2020.png)
Oxford Economics expects holiday sales to rise only 0.6% from a year ago
due to a confluence of COVID-19, suffering incomes and a weak job
market. Macy's expects a tough time with a possible 20% sales decline
over the fall.
Retailers aren't all gloomy: Walmart forecasts a promising holiday
season. Upcoming earnings from Nordstrom, Gap and Dollar Tree will offer
more pointers.
The Solactive-ProShares Bricks and Mortar Retail Store index <.SOEMTYTR>
slightly outperformed the S&P500 this year, but that pales against a 70%
jump at Amazon, the winner of the stay-at-home economy. -Walmart
forecasts promising holiday season as online sales soar-Does vaccine
promise put U.S. consumers in a shopping mood? Retailers may have clues.
3/ PMI PESSIMISM
Flash readings of November business activity from Europe and the United
States on Monday will reveal just how bad the damage was from the
resurgent coronavirus and the restrictions imposed to contain it.
Having bounced off the initial COVID-19 trough, global PMIs are again
teetering around 50 - the barrier between expansion and contraction.
The hit this time shouldn't be as severe, with restrictions less harsh
and businesses better prepared. But if market reaction to the latest
weaker-than-expected U.S. data is anything to go by, investors may err
on the side of caution until a vaccine is rolled out, fiscal stimulus in
Europe and the U.S. is confirmed and signs of a rebound are entrenched.
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Small toy figures are seen in front of a Brexit logo in this
illustration picture, March 30, 2019. REUTERS/Dado Ruvic/Illustration
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4/ WON WATCH
South Koreans are watching for a strengthening currency. No one expects the Bank
of Korea to do much about already record- low interest rates when it meets on
Thursday.
Instead, all eyes are on currency markets, where the central bank is believed to
be selling the won <KRW=KFTC> to stop it hitting 1,100 per dollar – a line that
may bring pain to an economy riding on tech exports.
Other countries face a similar dilemma. Asia’s quick rebound from the pandemic
and higher yields, coupled with a slower pace of investment and imports create a
goldilocks-like balance of payments tailwind for currencies.
Authorities in Thailand and China are also actively massaging gains in the baht
and yuan. Indonesia and the Philippines have used the opportunity to deliver
surprise rate cuts this month.
5/ A BIT MORE?
Bitcoin has soared more than 150% this year, to within touching distance of the
2017 record highs of around $20,000. Many expect the rally to end in tears, as
it did three years ago when bitcoin crashed 50% within a month.
Others differ: Calling it the new gold, Citi analyst Tom Fitzpatrick predicted
bitcoin would soar past $300,000 within 12 to 24 months. Bitcoin fans cite
improved market infrastructure, a greater mainstream investor presence and
better liquidity for why they think this rally has legs.
![](http://archives.lincolndailynews.com/2020/Nov/21/images/ads/current/graue_sda_2016.png)
While central banks are in full money-printing mode, bitcoin supply is capped.
But it's still a volatile, retail-dominated market with patchy regulation and
frequent hacks. For now, the bulls appear in command.
(Reporting by Lewis Krauskopf in New York, Dhara Ranasinghe, Tommy Wilkes, Tom
Wilson in London and Vidya Ranganathan in Singapore. Compiled by Sujata Rao,
edited by Karin Strohecker, Larry King)
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