The Opening Belle

Risk sentiment has improved this morning after last nights 'Trump-Bomb'.

Down under, the ASX rallied strongly with consumer stocks leading the way.

Markets are betting that the tax cuts announced yesterday will boost spending.

U.S Futures are perking up too

Soooo, about last night.

NO STIMULUS... Or political games?

Trump cancelled negotiations.

There was a kneejerk reaction, with markets selling off initially.

Then everything calmed down again.

Is the boy crying wolf again?

Are these the actions of a desperate man or a stable genius?

As usual, everything was announced on twitter.

 ...request, and looking to the future of our Country. I have instructed my representatives to stop negotiating until after the election when, immediately after I win, we will pass a major Stimulus Bill that focuses on hardworking Americans and Small Business. I have asked...— Donald J. Trump (@realDonaldTrump) October 6, 2020 

 ...@senatemajldr Mitch McConnell not to delay, but to instead focus full time on approving my outstanding nominee to the United States Supreme Court, Amy Coney Barrett. Our Economy is doing very well. The Stock Market is at record levels, JOBS and unemployment...— Donald J. Trump (@realDonaldTrump) October 6, 2020 

 Crazy Nancy Pelosi and the Radical Left Democrats were just playing “games” with the desperately needed Workers Stimulus Payments.They just wanted to take care of Democrat failed, high crime, Cities and States. They were never in it to help the workers, and they never will be!— Donald J. Trump (@realDonaldTrump) October 6, 2020 

 The House & Senate should IMMEDIATELY Approve 25 Billion Dollars for Airline Payroll Support, & 135 Billion Dollars for Paycheck Protection Program for Small Business. Both of these will be fully paid for with unused funds from the Cares Act. Have this money. I will sign now!— Donald J. Trump (@realDonaldTrump) October 7, 2020 

 If I am sent a Stand Alone Bill for Stimulus Checks ($1,200), they will go out to our great people IMMEDIATELY. I am ready to sign right now. Are you listening Nancy? @MarkMeadows @senatemajldr @kevinomccarthy @SpeakerPelosi @SenSchumer— Donald J. Trump (@realDonaldTrump) October 7, 2020 

Are you listening Nancy?

He's as subtle as a brick.  

Cancelling the negotiations unilaterally means Trump can take charge of the situation, reinforce the message that he wants to get stimulus done, and lay the blame at the Democrats feet.

It's very transparent to those who pay attention to politics.

Perhaps not quite so transparent to your average Joe who just want the money, and doesn't understand or appreciate political games.

This no-nonsense, 'getting things done' approach is exactly what resonated with voters in the first place, and this latest action is an effort by Trump to reframe the debate in his favour in their eyes.

If there is no response from Democrats now, it would not be surprising to see Trump sign executive orders for further stimulus to ramp up the pressure.

These would be purely symbolic, as congress would need to approve the orders before any payments could be made.

It sets up an interesting political dynamic though.

Democrats would be actively blocking stimulus to the economy on the grounds of it 'not being the right way to do things'.

How would the public react to that?

Political chess.

Are you listening Nancy?

In other news...

Big tech are under fire.

This is nothing new, but the pressure seems to be ramping up.

A U.S. House of Representatives panel looking into abuses of market power by four big technology companies found they used “killer acquisitions” to smite rivals, charged exorbitant fees and forced small businesses into “oppressive” contracts in the name of profit.

The panel’s report also broadly recommended structural separations but stopped short of saying a specific company should be broken up.

The story is well worth monitoring.

Some good primers via Reuters.

In the UK, Sunak's been busy.

British Finance Minister Rishi Sunak plans to take on new powers to block companies from listing on the London Stock Exchange on national security grounds, The Times reported on Wednesday.

Under the proposed move, the Treasury is expected to lay out a series of scenarios in which the powers could be used, such as reasonable suspicion that a hostile foreign state was seeking to deliberately undermine the reputation of the London Stock Exchange, the Times reported, citing a government official.

A listing could also be blocked if it was judged to potentially help a foreign state more easily access state and commercial secrets, the report added.

He shouldn't face too much opposition there.

The Covid lockdown measures are not so black and white...

The row erupted as Boris Johnson faces a growing Conservative backlash over his handling of the coronavirus crisis, with critics arguing that lockdown measures such as the 10pm curfew for pubs and restaurants are damaging the economy and could even be increasing infections.

A Parliamentary vote on the curfew – which had been expected by MPs on Wednesday – has been delayed until next week after dozens of Conservatives threatened to rebel and Labour refused to publicly back the measure.

Now Mr Sunak is understood to be insisting that decisions about which towns should be put in the "red" zone of the "traffic light" system should be made by a new committee of himself, Mr Johnson and Matt Hancock, the Health Secretary.

That would exclude the Cabinet Office minister Michael Gove from the decision-making process, meaning the Chancellor – a "hawk" who wants to protect the economy – would not be outnumbered by Mr Gove and Mr Hancock, "doves" who want stricter lockdown measures.

Two of the European Central Bank’s top officials signaled the need for extra monetary and fiscal stimulus as the euro zone struggles to sustain its economic recovery from the coronavirus pandemic.

ECB President Christine Lagarde said that a “cliff effect” in which fiscal aid is withdrawn too soon is her greatest fear, while chief economist Philip Lane said it could be “prudent” to add extra monetary support to sustainably lift inflation.

The policy makers spoke shortly before France’s statistics agency predicted that the recovery in Europe’s second-largest economy will grind to a halt in the final three months of the year. Virus infections in the country, as in many others, have accelerated lately and triggered new restrictions on public life and travel.

Lagarde also said officials are “very attentive” to the exchange rate, after a jump in the euro this year weighed on inflation by depressing import costs.

Looking ahead, nothing on the calendar really stands out.

FOMC minutes will be eagerly scrutinised for details of disagreements between members, but I have no idea why anyone would bother.

It makes good headlines I guess.

Although it's easy to disagree while everything is theoretical and no decisions need to be made.

ECB's Lagarde, the Fed's Williams (x 2), Kashkari & Evans are speaking today.