Thursday, December 10, 2020
Top Story
LPL Research’s Global GDP Forecasts
We forecast global GDP growth of 4.5–5%, led by emerging markets where our forecast is 5–5.5% with potential upside. We believe growth in international developed economies may lag behind the United States in 2021, although a strong fiscal response may help Japan. We provide additional details in today’s LPL Research blog and the new Outlook 2021: Powering Forward.
Daily Insights
Stocks firmly lower. Weakness from Wednesday’s sell-off is spilling over into early trading as the NASDAQ 100 has weighed on the market rally, while small cap and value indexes continue to outperform.
- European markets are being dragged down by US weakness.
- Asian markets were modestly lower.
- US investors continue to grapple with the likelihood of additional fiscal stimulus.
- The European Central Bank bond-buying program was raised by 500 billion Euros, and the program was extended by nine months.
Weekly jobless claims worse than expected. 853,000 Americans filed for unemployment insurance last week according to the Department of Labor, above Bloomberg consensus forecasts of 725,000 and topping all but one Bloomberg survey estimate. Continuing claims also missed expectations, tallying 5.8 million receiving ongoing benefits versus Bloomberg consensus of 5.2 million. The troubling rise in jobless claims comes on the heels of greater restrictions on activity to curb the spread of COVID-19.
New Street View video. LPL Research Chief Market Strategist Ryan Detrick talks about a divided Congress, Research’s economic forecasts, and stock and bond performance in 2021 on the new client-approved Street View video, LPL Research’s Outlook 2021.
No Brexit breakthrough. Dinner talks on Wednesday between British Prime Minster Boris Johnson and European Commission President Ursula von der Leyen failed to yield any progress on the elusive Brexit trade deal. Large gaps remain on issues of fishing rights, business competition rules, and policing of the deal. Talks will continue this week, and the British government reports it will make a firm decision Sunday whether there is any prospect of a deal happening in time to be ratified before the looming December 31, 2020, deadline.
Hanukkah begins today. Hanukkah, the Jewish festival of lights, begins in the evening of December 10 through December 18.
Technical update. US equities lost early gains Wednesday, falling throughout the session and concluding with a 0.8% loss for the S&P 500 Index. Technology and communications led the sell-off—both sectors fell more than 1.2%—while energy, industrials, and materials all gained modest ground. Yesterday’s leadership profile was inconsistent with previous COVID-19 fueled sell-offs, where we would expect cyclical value and small caps to underperform. The S&P 500 has technical support in the range from 3550–3600.
COVID-19 news. New daily COVID-19 cases have breached the 200,000 level, while the 7-day average of new cases rose to 26.8% on Wednesday (source: COVID Tracking Project).
- Canada joins the list of countries with approval for Pfizer-BioNTech vaccine.
- The Food and Drug Administration will meet today to formally review whether to grant Emergency Use Authorization.
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