. Europe wallows in a deadlock holiday
http://ntvforex.com/news/?id=ee8437. . 7 20 2020 2 48 27 AM . . . The weekend news will not have given investors much clarity to start the week, after a listless New York session on Friday night. The main story to emerge was that the European Union talks on the mooted #EUR 750 billion pandemic recovery fund had stalled. As ever with Europe, one team, one dream, becomes a deadlock holiday whenever the subject of jointly issued debt, or fiscal transfers between the countries of the block come up. . Germany and France left the talks early, in a sign talks weren t going well. The intractable fiscal trust issue between the Northern Europe frugal four, and the Southern Club Med countries is as strong as ever. The EU s weak underbelly has always been its inability to respond quickly to urgent situations and fiscally work together, leaving the ECB to paper over the cracks. The only person who will be happy with the weekend events will be the UK PM Boris Johnson, who is probably humming I told you so under his grey mop. The EU has dodged several bullets since the inception of the Euro, mostly by the rest of the world doing the hard work for them, and a hefty dose of good luck. One day that luck is going to run out. . It is symptomatic of the lack of inertia in global markets at the moment, that the effect on the Euro has been precisely zero. #EUR #USD is sharply unchanged from Friday s close at 1.1430. Traders may still believe that the EU will cobble something together at the last moment, and the steady price action will comfort Euro long positions. . The US Congress faces its very own fiscal cliff this week, somewhat lost in the noise of the Covid 19 pandemic. This week is the last for the direct monetary transfers to the general populace from the Federal Government. Washington DC will have to immediately and quickly decide whether to extend the programme, and if so, in what shape, form and size. Depending on how ugly or not the bi partisanship becomes, this story has the potential to move markets later in the week. . Those discussions are taking on more urgency as Covid 19 continues its rampage across the Southern and Western United States. Enhanced shutdowns are now a genuine possibility as the US failed to emerge from even the first wave of the pandemic. Elsewhere, the news was equally bad. Things are going from bad to worse in India and Brazil. Worryingly, countries such as Hong Kong, and Victoria and New South Wales States in Australia are facing second waves, with social restrictions ramped up once again. That trend is being repeated across the globe and could well undermine any incipient globally recovery in Q3. Markets have not priced in, or are refusing to countenance, this outcome. . I will dwell on the US earnings season but briefly. In a nutshell, big tech such as Microsoft and Intel should produce sparkling results this week. Tesla could make a small profit or a loss. If it makes a profit, that could see another wave of buying of Tesla stock as it edges closer to the Samp P 500 entry. United Airlines also reports this week but buying airlines, consumer discretionary, or high street retail is catching the proverbial knife. Make sure you have plenty of spare fingers. . Economic data this week is bookended by China s Loan Prime Rate LPR decisions this morning, and South Korea s GDP on Thursday. Both the one and five year LPR s were left unchanged today. China s approach is surgical stimulus, and they remain wary of stoking asset price inflation by one size fits all rate cutting. South Korea s Q2 GDP is expected to shrink again on Thursday, tipping it into its first technical recession since SARS in 2003. There is a very broad range of forecasts out there though, and thus, the potential for a positive surprise. . Japan s exports for June were released this morning. Exports YoY shrunk by a larger than expected 26.2%. Japan remains the region s laggard and is now confronting its own escalating Covid 19 issues. The rest of the day s calendar is strictly second tier across Europe and the United States, hinting at a listless day ahead with attention focussed on headlines and US earnings reports. . Asian equities start the week mixed . Wall Street gave no hints for the coming week, as its major indices finished almost unchanged in a directionless session. The Samp P 500 rose 0.29%, with the Nasdaq creeping 0.28% higher. The Dow Jones eased by an innocuous 0.23%. . The story is much the same across Asia today. The weak data from Japan earlier has seen the Nikkei 225 ease by 0.35%, with South Koreas Kospi falling 0.50%. Hong Kong has declined 0.55% and the Straits Times in 0.20% lower. Australian shares are slightly lower, weighed down by Covid 19 concerns. The ASX 200 is down 0.50%, and the All Ordinaries is lower by 0.40%. . Mainland China has had an equally directionless start, both the Shanghai Composite and CSI are unchanged in ch...