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Pre-market actions: the global economy is closing for another uncertain winter




So far, the new wave of Covid-19 has had only a limited impact on the activity of the 19 countries that use the euro. The IHS Markit Purchasing Managers Index, a key indicator of the economy, rose in November after slipping to its six-month low in October, data showed Tuesday.

“A stronger expansion in business activity in November defied economists’ expectations of a slowdown, but is unlikely to prevent the eurozone from experiencing slower growth in the fourth quarter, especially since the increase virus cases are expected to cause further disruption to the economy in December, “said Chris Williamson, chief economist at IHS Markit.

France could also announce new Covid-19 rules after reporting more than 30,000 new infections on Tuesday, a level last seen in early August. Government officials are expected to discuss new measures on Wednesday.

Ruben Segura-Cayuela, economist for Europe at Bank of America, told me that more data is needed to assess what restrictions in Europe might mean for the region’s economy. He noted that with each wave of Covid-19 infections, the economic impact has diminished as businesses and consumers learn to cope.

“We know there will be a reaction, we just don’t know if it will be of the same magnitude,” he said. “I guess, based on what we’ve seen over the past few months, it will be smaller.”

Much now depends on how the situation in Germany develops, said Jessica Hinds, Europe economist at Capital Economics. She told me it was “plausible” that Europe would stagnate at the end of the year if its largest economy goes into lockdown.

“We are likely to see economic activity affected, just as the increase in the number of cases makes consumers more fearful and governments are demanding a stricter Covid pass [screening] for various activities, ”said Hinds.

Around the world: Uncertainty in Europe comes as Chinese authorities consider further stimulus measures to tackle stagnation at a difficult time for the economy, given the steep rise in prices. Labor shortages and supply chain delays are also weighing on production in the United States, where IHS Markit’s PMI is at two-month low, although expectations for the future improve on hopes of more stability next year.

The global recovery from the pandemic remains intact. Consumer spending is still high that buyers tap into the accumulated savings.

“The US economy continues to run at full speed,” said Williamson. “Despite a slower pace of business expansion in November, growth remains above the long-term pre-pandemic average as companies continue to focus on increasing their capacity to respond to the growing demand.”

But more than 20 months after the start of the pandemic, reading the direction of the economy remains a difficult task, making it essential to watch the new numbers closely.

Watch this space: A US data dump arrives Wednesday before Thanksgiving. Shortly we will have the second estimate of third quarter GDP, jobless claims for last week, personal income and spending, a crucial measure of inflation and Federal Reserve minutes.

Market ignores the release of millions of barrels of oil

The White House’s announcement this week that China, India, Japan, South Korea and the UK are all joining the United States in the first coordinated emergency oil release in a decade did not lower gas prices until the Thanksgiving holiday.
Why Biden's offer to lower gas prices is more of a band-aid than a game changer

The latest: US oil prices were stable Wednesday after gaining 2.3% Tuesday. The average price of gasoline in the United States remains stubbornly at $ 3.40 per gallon from $ 2.11 a year ago.

Which give? First, investors had been anticipate the move. US oil fell about 10% from the end of October as discussions on the exploitation of strategic reserves increased. Prices are still around 7% below levels reached towards the end of last month.

Investors have also started to assess an impact on oil demand over the winter due to an increase in coronavirus cases, said strategist Damien Courvalin at Goldman Sachs.

In addition, the number of barrels to be put on the market estimated between 70 million and 80 million is lower than the 100 million barrels or more which were expected, by Courvalin.

And then: gasoline prices could start to fall again in the short term. The “best-case scenario” is that prices drop 15 to 20 cents a gallon, Bob McNally, president of Rapidan Energy Group, told my CNN Business colleague Matt Egan.

But coordinated release shouldn’t make a lasting difference, given the global market dynamics.
Oil supply has not kept up with rising demand as the global economy recovers from Covid-19. There is a finite amount of oil in the reserves, which cannot be exploited indefinitely. And the oil companies do not increase production as quickly as they could have had in the past. Some prioritize repayment to shareholders rather than new investments; others are reducing their production to refocus on renewable energies as pressure mounts to tackle the climate crisis.

The latest puzzle for supply chains? Disappearance of ships

Just as some of the bottlenecks in global supply chains begin to ease, another complicating factor has emerged: ships in Chinese waters are disappearance of industry monitoring systems.

Analysts told my CNN Business colleague Laura He that they started noticing the drop in shipping traffic towards the end of October, as China prepares to enact data privacy legislation.

Usually, maritime data companies are able to track ships around the world because they are equipped with an automatic identification system, or AIS, transceiver. This system allows vessels to send information such as position, speed, course and name to stations based along the coast using a high frequency radio.

But this is not happening in the world’s second-largest economy, a key player in global trade. In the past three weeks, the number of vessels sending signals from the country has fallen by nearly 90%, according to data from global maritime data provider VesselsValue.

Analysts believe the culprit is China’s Personal Information Protection Law, which went into effect on November 1. the data could end up in the hands of foreign governments.

The law does not mention shipping data. But Chinese data providers could withhold information as a precaution.

Why it matters: As Christmas approaches, a loss of information from mainland China, home to six of the world’s 10 busiest container ports, could create more problems for a global shipping industry already in trouble.


Deere publishes its results before the US markets open.

Also today :

  • The second estimate of third-quarter U.S. GDP, initial jobless claims for last week, and durable goods orders for October are released at 8:30 a.m. ET.
  • Next comes personal income and spending data at 10 a.m. ET, along with the Federal Reserve’s preferred measure of inflation and new home sales in the United States.
  • The November Fed meeting minutes arrive at 2 p.m. ET.

Coming soon: U.S. markets are closed for Thanksgiving and will close early Friday. We’re taking a break for the holidays and hope you can too. Before the bell will be back in your inbox on Sunday.




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