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The Opening Belle - No Caution In Commodities

Dec. 11, 2020 3:53 AM ET
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Summary

  • Iron Ore Booms - Drives $AUD Higher.
  • FDA Approve Pfizer Vaccine.
  • U.S. & EU To Sanction Turkey.
  • New U.S. Mortgage Rules.
  • Stopgap Funding Bill Vote.

The Opening Belle - No Caution In Commodities

Another mixed overnight session, with a little more red than green.

KOSPI outperforms after strong export data;

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Macrodesiac partnered with Utrust, some people asked me why... How it started; > Oh wait what?! I can accept BTC payments now??? — David Belle (@davidbelle_) June 12, 2020[https://twitter.com/davidbelle_/status/1271413726965567488?ref_src=twsrc%5Etfw]Utrust have come a long way in a short time…

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Commodities boom lifts $A above US75¢

The Australian dollar is heading to US80¢ as a boom in commodity prices led by iron ore lifted the currency above US75¢ for the first time in two-and-a-half years and the sharemarket sealed its sixth successive weekly advance.
Australia's currency rose to US75.72¢ late in the session, the most against the greenback since June 14, 2018, supported by a bullish outlook for the domestic economy and roaring industrial commodity prices.
"It’s absolutely on fire," said HSBC Australian chief economist Paul Bloxham. "We’ve had in mind for a while it would go up and we have a forecast it will go to US80¢ by the middle of next year."
Iron ore is now fetching $US156.58 a tonne in the spot market. That's bullish for next week's budget update, which should show an improved fiscal position from October's federal budget.
The sharemarket sustained its sixth straight weekly advance -- just -- limping to a five-day gain of 0.1 per cent after falling 40.5 points on Friday when CSL shares lost more than 3 per cent on the scrapping of clinical trials of its COVID-19 vaccine in collaboration with UQ.

FDA panel recommends approval of Pfizer’s Covid vaccine for emergency use

A key Food and Drug Administration advisory panel voted 17 to 4 with one member abstaining on Thursday to recommend the approval of Pfizer and BioNTech’s coronavirus vaccine for emergency use, the last step before the FDA gives the final OK to broadly distribute the first doses throughout the United States.
If the FDA accepts the nonbinding recommendation from the Vaccines and Related Biological Products Advisory Committee — which is expected — it would mark a pivotal moment in the Covid-19 pandemic, which has infected more than 15.4 million people and killed roughly 290,000 in the U.S. in less than a year.
The FDA could grant emergency use authorization of Pfizer’s vaccine as early as Friday, James Hildreth, a member of the committee, told NBC’s “Weekend Today” on Saturday. An emergency use authorization, or EUA, generally allows a drug or vaccine to be administered to a limited population or setting, such as to hospitalized patients, as the agency continues to evaluate safety data.
It’s unclear whether the FDA will authorize Pfizer and BioNTech’s vaccine for use in certain groups. Some people, including pregnant women and young children, will likely have to wait to get the vaccine in the U.S. until Pfizer can finish trials on those specific groups. The FDA said Tuesday that there is currently insufficient data to make conclusions about the safety of the vaccine in children under age 16, pregnant women and people with compromised immune systems. Regulators in Canada, the U.K. and Bahrain have all cleared the vaccine for use by most adults.
The committee recommended emergency authorization of the vaccine for people who are 16 years old and older. Prior to the vote, some experts in the meeting argued to limit its recommendation to people who are at least 18, saying the safety data on 16- and 17-year olds was “thin.”
President Donald Trump’s coronavirus vaccine czar, Dr. Moncef Slaoui, has said the U.S. should be able to distribute enough coronavirus vaccine doses to immunize 100 million Americans, nearly a third of the U.S. population, by the end of February. He has said the entire U.S. population could be vaccinated against Covid-19 by June.
Pfizer said last week its full-scale production lines in the U.S. and Europe are now complete and it is “confident” it will be able to supply the targeted doses.

Turkey are in the firing line, although the U.S are taking a harder line than the EU...

U.S. set to sanction Turkey over Russian defense system

The United States is poised to impose sanctions on Turkey over its acquisition last year of Russian S-400 air defense systems, five sources including three U.S. officials told Reuters on Thursday, a move likely to worsen already problematic ties between the two NATO allies.
The long-anticipated step, which is likely to infuriate Ankara and weigh on Turkey’s relations with the incoming administration of President-elect Joe Biden, is expected to be announced as early as Friday, sources have said.
The sanctions would target Turkey’s Presidency of Defence Industries and its head, Ismail Demir, sources have said. They would be damaging but narrower than the severe scenarios some analysts have outlined.
Two sources familiar with the matter, including a U.S. official speaking on the condition of anonymity, said President Donald Trump had given aides the blessing for the sanctions.
The U.S. State Department could still change plans and widen or narrow the scope of planned sanctions against Turkey.
However, sources said the announcement of the sanctions in their current form was imminent.

EU to prepare new sanctions over Turkish gas drilling

European Union leaders agreed on Thursday to prepare limited sanctions on Turkish individuals over an energy exploration dispute with Greece and Cyprus, postponing any harsher steps until March as countries sparred over how to handle Ankara.
Shying away from a threat made in October to consider wider economic measures, EU leaders agreed a summit statement that paves the way to punish individuals accused of planning or taking part in what the bloc says is unauthorised drilling off Cyprus.
The steps did not go far enough for Greece, with envoys saying the country expressed frustration that the EU was hesitant to target Turkey’s economy over the hydrocarbons dispute, as Germany, Italy and Spain pushed to give diplomacy more time.
France, angered by Turkish foreign policy in Syria and Libya, has sought to push the EU to consider sectorial sanctions on Turkey’s economy, but did not have wide support.

EU leaders also agreed to extend Russia sanctions

U.S. consumer watchdog finalizes new mortgage rules

The U.S. consumer watchdog on Thursday finalized two rules relaxing mortgage-lending requirements regarding a borrower’s ability to repay, in a bid to boost the range of products available to lower-income, riskier customers.
The changes from the Consumer Financial Protection Bureau (CFPB) are part of a broader push by President Trump’s administration to boost affordable mortgage products by reducing lenders’ liability and compliance risk, although some consumer advocates say the changes could hurt vulnerable borrowers.
One measure expands the definition of a general “qualified mortgage,” a category of lower-risked mortgage, by replacing the existing 43% debt-to-income ratio limit with a price-based limit. It also gives lenders more leeway to make “reasonable determinations” of a borrower’s likelihood to repay.
The agency has also created a new “seasoned” qualified mortgage, which would give lenders certain liability protections after they have held the loans in a portfolio for at least three years. Under the new category proposed in August, a first-lien, fixed-rate “seasoned” loan can become a general qualified mortgage after 36 months of timely borrower payments.
“The Bureau’s primary objective with this final rule is to ensure access to responsible, affordable mortgage credit,” CFPB Director Kathy Kraninger said in a statement.
The changes come ahead of a Jan. 10 expiration of a federal exemption that makes higher-risk mortgages eligible for purchase by government-run entities Fannie Mae and Freddie Mac.
The CFPB has said that ending that exemption and redefining the ability to repay will increase mortgage competition.

Looking ahead, Brexit talks will continue ahead of the Sunday deadline (that everyone knows isn't really a deadline).

Unfortunately, EU leaders were distracted by disagreements over climate targets last night, so Brexit was bumped from the agenda.

However, that does mean Brexit will be on today's EU summit agenda, so there should be plenty of comments rolling in.

Fridays have seen some GBP selling recently as traders look to reduce the risk of holding over the weekend. Worth keeping an eye on today in the likely scenario that no early breakthrough is achieved.

The stopgap funding bill is about the best we can hope for on the U.S. stimulus front today.

‘Get off our damn asses’: Stimulus debacle exposes broken Washington

Top negotiators can’t agree where to start talks let alone how to finish them.

A couple of quotes that sum up the state of negotiations;

“If they’re not going to do what we really want, then we’re not going to do what they really want.”
“Maybe we don’t have enough people in here who have ever been poor,”

The one-week stopgap funding bill is expected to pass the senate today.

On the calendar, final inflation figures from Germany & Spain are unlikely to move the needle this morning. Likewise, the U.S. PPI, UofMich surveys and the Baker Hughes rig count this afternoon.

Analyst's Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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