The Opening Belle

 New Zealand Trade Balance (NZD) Aug: -353M (exp -350M; prev 282M)

- Exports (NZD) Aug: 4.41B (exp 4.41B; prev 4.91B)

- Imports (NZD) Aug: 4.76B (exp 4.76B; prev 4.63B)— LiveSquawk (@LiveSquawk) September 23, 2020 

Both Fed Vice Chair Richard Clarida and Chicago Fed President Charles Evans were adamant on Wednesday: Rates will not increase until labor markets recover fully from the economic downturn caused by the coronavirus, and prices hit the Fed’s target.

Several policymakers said that further government aid from Congress is needed, with Clarida emphasizing that the U.S. economy could return from the current “deep hole” of joblessness and weak demand in perhaps three years.

Congress is readying to leave Washington as soon as this week until after the election without passing a coronavirus economic stimulus bill that members of both parties, businesses and hard-hit Americans all agree is desperately needed.

 Looking at the shift in the VIX futures curve - Nov trading at highest premium to Oct, but the shift from Oct to higher vol post election is clear too...contested is looking ugly - options price a 3% move on the day pic.twitter.com/0qRWGHlt8Q— Chris Weston (@ChrisWeston_PS) September 23, 2020 

"we are very likely to face a credit crunch kind of issue as we get towards the end of this year,”

“It would have been fine if the pandemic lasted three months, but the pandemic isn’t lasting three months,”

“It’s lasting much longer than that and so there’s definitely a need for more targeted spending.”

While China’s coastal provinces and major cities are recovering from the coronavirus pandemic, firms in its poorer western and central provinces are falling well behind in metrics like output and sales revenue, a private survey showed on Thursday.

The majority of firms are recovering far more slowly than those in wealthier areas around Beijing, Shanghai and Guangdong, said a report from China Beige Book International (CBB).

While revenue and profits for the third quarter saw steep declines year-on-year across China, many interior provinces also saw output, domestic orders, and sales prices falling from the second quarter as well, according to a quarterly survey of thousands of Chinese firms by the U.S.-based consultancy.

For instance, sales revenues increased 41% quarter-on-quarter for Shanghai and the wealthy eastern provinces of Zhejiang and Jiangsu, but fell by 10% in the more remote western regions of Tibet, Gansu, Qinghai and Xinjiang, it said.

A quarterly report issued jointly by the research arm of Alibaba-backed Ant Group and Southwestern University of Finance and Economics showed the vulnerability of low income families to the epidemic.

Most households with annual incomes below 100,000 yuan ($14,800) reported their wealth declined in the first and second quarters. Those with incomes above 300,000 yuan reported consistent gains.

“Higher-income households have probably built up savings, because of the forced reduction in consumption during lockdown, and could now be ready for a spending spree,” said Wei He, an analyst at research firm Gavekal Dragonomics, in a note.

“It is lower-income households that face a longer slog of normalizing their finances,” he said.

The impact on consumption could be considerable. Some 600 million Chinese people earn a monthly income of barely 1,000 yuan, according to Premier Li Keqiang, speaking in May.

That would be over 40% of the country’s population.

 Nice chart from the @rhodium_group China risk report shows China bank assets (over $40 trillion) doubling as % world GDP btw 2010 and 2020 to about 45%. Last time s'thing like this happened, think Japan 1980s. pic.twitter.com/aefVyHmRbb— George Magnus (@georgemagnus1) September 23, 2020 

Mr Sunak is expected to announce that, when furlough ends, it will be replaced with a wage top-up scheme for those able to work at least half their contracted hours. He is studying a model under which employers pay 100 per cent for hours worked, with the Government paying a proportion of the remaining full-time wage.

In one example, the Government and employers would share the cost of paying a worker two thirds of their "missing" wages. Employees would have to work at least half their contracted hours to qualify, and a cap was expected on the maximum top-up available.

In talks with the Treasury, business leaders called for targeted support for the worst-hit sectors, including aerospace, aviation, hospitality and retail, meaning Mr Sunak may limit the help to sectors that need it most.

The furlough scheme will not be extended because the Chancellor was determined that people should no longer be paid for not working, sources said. While the scheme cost about £11  billion a month, a top-up scheme would cost £1  billion a month, according to the Institute for Employment Studies.

Mr Sunak has been working on contingency plans for a second rescue package since the summer, but has been determined that extra measures should only support jobs that are sustainable in the long term rather than so-called "zombie" jobs that have become unviable.