The Opening Belle - Strong China PMI

 European Opening Calls:#FTSE 6442 -0.34%#DAX 13296 -0.13%#CAC 5575 -0.14%#AEX 611 -0.05%#MIB 21993 +0.10%#IBEX 8204 -0.21%#OMX 1918 -0.03%#STOXX 3519 -0.07%#IGOpeningCall— IGSquawk (@IGSquawk) December 3, 2020 

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Growth in China’s services sector accelerated in November as new business rose at the fastest pace in over a decade, a private survey showed on Thursday, pointing to a further recovery in consumer demand after the country curbed its coronavirus outbreak.

The Caixin/Markit services Purchasing Managers’ Index (PMI) rose to 57.8, the second highest reading since April 2010, from October’s 56.8.

Total new business in November hit the highest level since April 2010, with new export business expanding for the first time in five months, the survey showed.

Services firms hired more workers for the fourth straight month in November and at a much faster pace, the survey found, while business confidence improved to the highest in over nine-and-a-half years.

“To sum up, both the manufacturing and service sectors recovered at a faster pace as overseas demand kept expanding and employment saw substantial improvement,” said Wang Zhe, senior economist at Caixin Insight Group, in an statement accompanying the data release.

“We expect the economic recovery in the post-epidemic era to continue for several months. At the same time, deciding how to gradually withdraw the easing policies launched during the epidemic will require careful planning as uncertainties still exist inside and outside China,” Wang said, referring to crisis measures unveiled earlier in the year to support the economy.

The survey also showed stronger demand enabled firms to pass on some of their higher costs to clients by raising output prices. A sub-index for prices charged rose to the highest since February 2010.

Activity in Japan’s services sector continued to falter in November, a private sector survey showed, as a resurgence in coronavirus infections weighed on new business and employment conditions.

The world’s third-largest economy has been gradually recovering from a virus-induced slump earlier this year, but it is expected to take years before it will return to pre-pandemic levels, especially within the service sector, which contributes nearly 70% of its gross domestic product.

The final Jibun Bank Japan Services Purchasing Managers’ Index (PMI) was little changed from October’s reading, edging up to a seasonally adjusted 47.8 from 47.7.

Though the final result was better than a preliminary 46.7 reading, the headline index remained firmly in contraction territory below the 50 neutral level.

Surveyed firms said a third wave of COVID-19 infections had depressed demand and led to more challenging business conditions.

“There were indications that the tentative recovery in the Japanese service sector lost momentum,” said Usamah Bhatti, economist at IHS Markit, which compiles the survey.

“A sharper fall in new business signified that demand remains fragile amid short-term uncertainty surrounding the length of the pandemic.”

The main reading was weighed by a faster contraction of new business, which fell at the quickest pace in three months.

Job market conditions also eased, slipping back into contraction, though the pace of job shedding remained minimal, the survey showed.

The U.S. House of Representatives passed a law to kick Chinese companies off U.S. stock exchanges if they do not fully comply with the country’s auditing rules, giving President Donald Trump one more tool to threaten Beijing with before leaving office.

The measure passed the House by unanimous voice vote, after passing the Senate unanimously in May, sending it to Trump, who the White House said is expected to sign it into law.

“The Holding Foreign Companies Accountable Act” bars securities of foreign companies from being listed on any U.S. exchange if they have failed to comply with the U.S. Public Accounting Oversight Board’s audits for three years in a row.

While is applies to companies from any country, the legislation’s sponsors intended it to target Chinese companies listed in the United States, such as Alibaba, tech firm Pinduoduo Inc and oil giant PetroChina Co Ltd..

The Trump administration expanded economic pressure on China’s western region of Xinjiang, banning cotton imports from a powerful Chinese quasi-military organization that it says uses the forced labor of detained Uighur Muslims.

The U.S. Customs and Border Protection agency said on Wednesday its “Withhold Release Order” would ban cotton and cotton products from the Xinjiang Production and Construction Corps (XPCC), one of China’s largest producers.

The targeting of XPCC, which produced here 30% of China's cotton in 2015, follows a Treasury Department ban in July on all dollar transactions with the sprawling business-and-paramilitary entity, founded in 1954 to settle China's far west.

Department of Homeland Security Secretary Kenneth Cuccinelli, who oversees the border agency, called “Made in China” a “warning label.”

“The cheap cotton goods you may be buying for family and friends during this season of giving - if coming from China - may have been made by slave labor in some of the most egregious human rights violations existing today in the modern world,” he told a news conference.

Cuccinelli said a region-wide Xinjiang cotton import ban was still being studied.

New guidelines mean that travel visas for China’s 92 million party members will be limited to one month, single entry — if the State Department can figure out who they are.

The Trump administration on Wednesday issued new rules to curtail travel to the United States by members of the Chinese Communist Party and their immediate families, a move certain to further exacerbate tensions between the two countries.

The new policy, which took immediate effect, limits the maximum validity of travel visas for party members and their families to one month and a single entry, according to two people familiar with the matter. A State Department spokesman said in an emailed statement it was reducing the validity of visas for party members from 10 years to one month.

Previously, party members, like other Chinese citizens, could obtain visitor visas for the United States of up to 10 years in duration. The new measures do not affect party members’ eligibility for other kinds of visas, such as immigration, one of the people added.

In principle, the policy change could affect the travel of roughly 270 million people — China has about 92 million Communist Party members — though in practice, it might be difficult to determine who, apart from high-level officials, belongs to the party. The new visa rules add to the now yearslong conflict between the two countries on trade, technology and much else.

Australia's trade surplus increased to AUD 7.46 billion in October 2020 from an upwardly revised AUD 5.82 billion in the previous month and easily beating market consensus of a surplus AUD 5.8 billion.

This was the biggest trade surplus since April, amid improving global demand as more countries and states reopen further following the COVID-19 lockdowns. Exports surged 5 percent month-over-month to AUD 35.72 billion, while imports edged up 1 percent to AUD 28.26 billion.

Commenting on the latest survey results, Bernard Aw, Principal Econmist at IHS Markit, said:

"The recovery in the Australian service sector moved up a gear in November, with business activity expanding at the strongest pace for four months, according to the latest PMI data.

"Most encouraging was a further strengthening of demand, where survey data showed new business growth accelerating midway through the fourth quarter.

A sustained upturn in activity and sales led firms to take on extra workers for the first time since the start of 2020.

"Growth in the service sector, however, was marred by an intensification in cost inflation, with input prices rising at the fastest rate for two years, linked to government subsidy reductions.

"Business sentiment also remained elevated, supported by expectations of a greater recovery from the COVID-19 downturn alongside strengthening market confidence in the months ahead."

 Our daily update is published. States reported 1.4 million tests, 196k cases, and 2,733 deaths. There are 100,226 people currently hospitalized with COVID-19 in the US —the first time hospitalizations have exceeded 100k. pic.twitter.com/8QSKujBGao— The COVID Tracking Project (@COVID19Tracking) December 3, 2020 

“The city and county orders are the same. In the past there have been some minor differences but currently they are the same,” said Alex Comisar, a spokesman for Mayor Eric Garcetti.

“My message couldn’t be simpler: It’s time to hunker down,”  Garcetti said Wednesday. “It’s time to cancel everything. And if it isn’t essential, don’t do it.”

“Don’t meet up with others outside your household. Don’t host a gathering, don’t attend a gathering and follow our targeted safer-at-home order, if you’re able to stay home, stay at home. Just be smart and stay apart.”

 Risk of economic scarring... @Alignable survey finds that 48% of #SmallBusinesses are at risk of closure by the end of 2020 (based on revenues being below what they needed to stay in business)

via @SoberLook pic.twitter.com/ANhwbeuoza— Gregory Daco (@GregDaco) December 3, 2020 

 Fewer employees working at #SmallBusinesses & more small businesses closing over past month

via @homebase_data @SoberLook pic.twitter.com/8aVpWyims2— Gregory Daco (@GregDaco) December 3, 2020 

 Summarizing every single 2021 year ahead "research" forecast:

- S&P up 10-15%

- 10Y between 1% and 1.5%

- Dollar lower

- Inflation higher

- Central banks will ensure nothing bad happens

Saved you 10,000 pages of reading— zerohedge (@zerohedge) December 2, 2020 

Tense negotiations have made progress; no guarantee of deal

Russia is said to be ready to agree on gentler easing of curbs

OPEC+ is making headway in its negotiations on oil-output cuts, raising the odds that Thursday’s meeting can salvage a deal after failed talks earlier in the week.

The Organization of Petroleum Exporting Countries and its allies need to hash out an agreement on supply levels for next year. Initially, talks had centered on delaying the January production hike by three months, but that option ran into obstacles on Monday amid a clash between Saudi Arabia and the UAE. Since then, delegates have been trying to find a way forward.

A gentler tapering of the production cuts could offer a potential compromise after days of tense talks, offering something to members that are concerned about the fragility of the market, and also to nations that are impatient to raise production. The Russian government, after internal talks with its own oil companies, is ready to agree to a gradual easing of supply curbs within the first quarter of 2021, said a person familiar with the discussions.

France warned it could veto a trade deal between the U.K. and the European Union if it doesn’t like the terms, piling pressure on the EU negotiating team not to make further concessions as talks build to a climax.

France is leading a group of countries worried that Barnier will surrender too much access to British fishing waters and back down on conditions designed to prevent U.K. businesses getting an unfair competitive advantage.

An EU diplomat briefed on the meeting said some countries were of the view that no deal wouldn’t be the end of the world because they could resume negotiations in 2021. This would mean, however, that trade with the U.K. would become subject to tariffs and quotas after the end of the post-Brexit transition period on Dec. 31.

A second diplomat said France’s view wasn’t the opinion of most EU countries and that Barnier’s briefing was intended to calm nerves in Paris.