Staff / Rossi
· The Secretary of the Treasury intends to end financial stimuli by the end of the year, while the Fed expects them to continue.
London, November 20, 2020. European markets remain slightly higher this afternoon, according to the global investment platform eToro.
However, stocks in the US opened lower today, with mood clouded by news that officials in Washington clash over the response to the pandemic.
Treasury Secretary Steven Mnuchin and Federal Reserve Chairman Jerome Powell disagree on various emergency loan programs that were started to support businesses during the pandemic.
Mnuchin said in a letter after the markets closed that he would allow the programs to expire, arguing that credit markets have now regained sufficient strength. In response, the Federal Reserve said in a statement that it “would prefer that the full suite of emergency facilities established during the pandemic continue to play its important role in supporting our still tense and vulnerable economy.”
The issue was endorsed by Charles Evans, chairman of the Chicago Federal Reserve, who declared himself “disappointed” by Mnuchin’s decision.
Investors have been looking forward to a new round of fiscal stimulus, and news that policymakers on the monetary side of the equation disagree will not be welcomed.
Brands increases 18% in Victoria’s Secret recovery
All three major US stock indices rose Thursday, with the Nasdaq Composite rising 0.9% and the S&P 500 0.4%. At the top of the S&P was L Brands, the firm behind Victoria’s Secret and other brands, which jumped about 18% after beating expectations in its third-quarter report.
The company made a profit of $ 330 million, up from a loss of $ 252 million a year ago, driven by the strength of its Bath & Body Works brand and an improvement at Victoria’s Secret. CEO Andrew Meslow said the firm is heading into the holiday season with a “well-positioned” inventory. In 2020, the L Brands share price has risen more than 100%, after a sustained decline for several years.
In other retail news, Macy’s CEO Jeff Genette said in an interview with the WSJ that the company has shown it can safely operate stores during the pandemic. The firm has been pressuring states and cities not to close their stores due to the increase in Covid-19 cases, which is heading into a crucial Christmas season. So far this year, despite having risen more than 40% in the last three months, the stock is still down 46%.
S&P 500: -1.2% Wednesday, + 10.4% on the year
Dow Jones: -1.2% Wednesday, + 3.2% on the year
Nasdaq Comp .: -0.8% Wed, + 31.5% on the year
UK Stocks Pull Back, Cineworld Seeks Lifesaver
Both the FTSE 100 and the FTSE 250 fell yesterday, 0.8% and 1% respectively. So far this year, the FTSE 100 is below its US counterpart, the S&P 500, by more than 25 percentage points, despite a rally in recent weeks. On Thursday, chemical firm Johnson Matthey, restructuring specialist Melrose Industries and Rolls Royce were among the biggest losers, falling 5.6%, 4.7% and 3.9% respectively. The UK oil giants also fell back, with BP falling 3.3% and Royal Dutch Shell 2.5%.
In the FTSE 250, Aston Martin Lagonda and Cineworld Group were the biggest losers, falling 12.3% and 8.7% respectively. Yesterday, The WSJ reported that Cineworld is in talks with investors to secure its financial lifeline, after warning last month that it could run out of cash by the end of the year.
FTSE 100: -0.8% Thursday, -16% on the year
FTSE 250: -1% Thursday, -10.9% on the year
What to Watch
Foot Locker: In the past three months, this retailer’s share price has risen 52%, leading to a 6% gain so far this year, after the lifting of isolation allowed its stores to reopen. Footlocker delivers its third quarter report today, where investors will be eager to know how they plan to deal with any new lockdown, with new cases of Covid-19 running at record levels. Analysts are split between a Buy rating and a Hold rating and expect earnings per share of $ 0.63 for the quarter.
UK Services Sector: On Monday, the Markit / CIPS UK Service Sector Purchasing Managers Index for November will be reported. The data being released is flash based on a substantial but not complete set of total survey responses, but given that the majority of the UK economy is made up of the service sector, it is a critical indicator of your health . Expectations are that the reading has fallen against October, below 50, which is the demarcation line between expansion and contraction.
Goldman Sachs estimates that the digital Yuan could represent 15% of global payments
The digital yuan, China’s planned national virtual currency, could account for 15% of total consumer payments in ten years, Goldman Sachs predicted.
In a report by CoinDesk, Goldman Sachs said that Electronic Payment in Digital Currency (DC / EP) could be a more attractive alternative to existing digital payment services provided by Fintech companies in a cashless environment.
The anonymity enabled by the separation of a bank account and the yuan digital wallet, offline payments, and interconnectivity with various payment options could also make the digital yuan a success.
“In 10 years we expect the DC / EP to reach 1,000 million available users, have 1.6 trillion RMB (229 billion dollars) issued, 19 billion RMB (2.7 billion dollars) in total annual payment value (POS) and represents 15% of total consumer payments ”, says the report.
Goldman Sachs said consumer payments – transactions in which users make purchases through a digital payment platform – will see the fiercest competition between providers.
“Consumption is the main source of income for third-party payment providers (3PP), given its higher utilization rate than transfers and financial transactions; therefore, payment institutions consider consumer payments as commercial payments, ”the report said.