If the U.S. still had an exporting manufacturing base commensurate with its GDP a declining dollar would be something to celebrate. Of course, as the old saying goes "If we had some ham, we could make ham and eggs, if we had some eggs."
From Marc to Market:
Overview: The markets did not wait for the final vote count and took stocks and bonds higher while pushing the greenback lower. While it appears Biden will be the next US President, investors seemed to like the fact that his agenda will be checked by a Senate that may remain in Republican hands. Stocks are on a tear. Led by more than a 3% advance in Hong Kong and a nearly 2.5% in South Korea, the MSCI Asia Pacific Index rose to its best level since March 2018 today. Europe's Dow Jones Stoxx 600 is up almost 1% to bring this week's rally to more than 6.5%. US shares are extending their advance as well, and the S&P 500 futures are up around 2%. Bonds have also continued to rally. The US 10-year yield is off two basis points to 0.74%, a 13 bp decline this week. European bond yields are also lower, with the periphery leading the way. The greenback remains heavy. The euro pushed above $1.18. Sterling is firm, trading through $1.30, even after the Bank of England extended its bond purchases by more than expected. The Australian dollar is establishing a hold above $0.7200. The Chinese yuan is at new two-year highs. Most emerging market currencies are higher, and the JP Morgan Emerging Market Currency Index is approaching its 200-day moving average, which it has not traded above this year. It is the first day since October 21 that gold is holding above $1900. It reached almost $1920 in Europe. Oil prices are consolidating after yesterday's 4% surge.
Asia Pacific
China's leader Xi gave a speech at the trade expo in Shanghai earlier today. He seemed to try to reassure the world that the "dual circulation" and the move to block the Ant IPO were no signs of China turning inward. Still, he seemed to clear that China will become less dependent on foreign technology, which is an expression of import substitution. Even the claim that China will import more than $22 trillion of goods over the next decade poised to limited growth in imports. China imported around $2.1 trillion of goods last year (before the pandemic). Some observers have argued that because China runs a trade surplus, it is not doing "its share" to help the world economy. Yet, the net balance may be a poor metric for such a claim. It is the gross imports that provide a source of demand for many countries' commodities and goods.
Despite escalating trade tensions with China, Australia reported a much larger than expected trade surplus for September. The trade surplus more than doubled from August's A$2.6 bln to A$5.6. The average monthly surplus is running about A$1.5 bln more than a year ago. Exports were stronger than expected, rising 4% on the month after a 4% decline in August. Imports tumbled 6%, The median forecast in the Bloomberg survey anticipated a 1% decline, while the August series was revised to show a 1% gain instead of 2%. About half the decline in merchandise imports is accounted for by the ASEAN countries and the other half from the EU....
....MUCH MORE
