New record highs in Nasdaq 100 DJIA and S&P 500 futures.
From Marc to Market:
Overview: The new week has begun with robust risk appetites, driving stocks and stocks higher and sending the dollar broadly lower. Nearly all the equity markets in the Asia Pacific region gained more than 1%, except Malaysia and Indonesia. The Nikkei, which posted its highest close before the weekend in almost 30 years, rallied another 2.1% today. The Dow Jones Stoxx 600 in Europe is up around 1.5% today, led by the information technology, industrials, and consumer discretionary sectors. US stocks are firm, and the S&P 500 is poised to gap higher. Benchmark 10-year yields are lower. The 10-year Treasury yield is softer at about 0.80%. European yields are mostly 1-3 bp lower, though Moody's upgrade of Greece before the weekend has seen Greek bonds rally strongly. The 10-year yield is off 7 bp to 0.73%. Its two-year yield is minus seven basis points. China's 10-year yield rose a few basis points to nearly 3.23%, a new high for the year. The dollar was weaker against nearly all the world's currencies, but the gains against the European complex and the yen have been unwound. The Antipodeans and Scandis lead the major currencies, while the new central banker in Turkey has seen the lira rally strongly. JP Morgan's Emerging Market Currency Index is up for the fifth consecutive session. Gold is extending last week's nearly 4% advance. It is consolidating at reaching $1965. Crude oil is firm, perhaps underpinned by the softer greenback, but it remains inside the pre-weekend range.
Asia Pacific
China reported its October trade and reserve figures over the weekend. Exports surged, and imports plunged, resulting in a larger trade surplus. Exports rose the fastest in 19 months. The 11.4% year-over-year increase follows the 9.9% increase in September. A Reuters poll found a median forecast for a 9.3% gain. Imports slowed to 4.7% year-over-year, half of what was expected in the Reuters survey and down from 13.2% in September. As a result, the trade surplus jumped to $58.4 bln from $37.0 bln. Despite the overall decline in imports, China boosted the import of US goods (32.9%) ostensibly to fulfill its obligations under the Phase 1 trade deal. Exports to the US have increased by 22.4%. The war camp that objects to nearly everything China does, including when they release their data, argues that the trade surplus means that China is "stealing" the aggregate demand of others. China imports $2 trillion of the world's product, and many emerging market countries and industries rely on it. But look at its exports too. The largest increase this year was medical gear (43%). Here China is not hurting world growth. It is not replacing Europe, the US, or others' domestic output. That train left the station many years ago. It is now providing medical devices and medicines that Europe and the US no longer produce. Electronic exports, including the new iPhone, also increased. Many foreign producers use China as an export platform. China suffered a large protein shortage. Its meat imports have risen by 75%, and grain imports are up over a fifth. Cosmetic and toiletry imports rose by more than a quarter.
Taiwan also reported strong trade figures. Its October exports rose 11.2% from a year ago, well above the median Bloomberg forecast anticipated after a 9.4% increase in September. Imports were off 1%, less than half the decline expected, and follows a 5.4% decline in September. The overall trade balance rose to nearly $7.5 bln, a new record, from $7.1 bln. Export to China and Hong Kong rose almost 17%, while exports to the US rose by 21.4%. Electronic exports were stronger though officials said that the delayed launch of the iPhone helped boost exports. Taiwan Semiconductor Manufacturing Company said it was struggling to meet demand. The new 5G smartphones require 30%-40% more chip content than 4G phones. We note that South Korea also report strong exports in October, helped by autos and semiconductor chips.....
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