New York Stock Exchange on Wall Street in New York, USA. New York = correspondent Cho Jae-gil
The number of deaths from the novel coronavirus infection (Corona 19) in the United States is increasing rapidly. Over the past 12 days, 4491 people died. The biggest fatality came out after the pandemic declaration on March 11 last year.
In the United States, it is difficult to get normal treatment even in an emergency. Because there is not enough intensive care unit. Corona deaths, which began to increase again from last November, are out of control for the new year. It is a national disaster situation.
Still, the market doesn’t seem to be interested in this. The fact that the most deaths in the world come from the United States is because it is already’old news’. The same goes for vaccine distribution.
The market’s interest was focused on the interest rate movement in the US Treasury, the remarks by Fed Chairman Jerome Powell, and the stimulus package of President-elect Joe Biden. This means that new news is the key variable. This is also the reason why predictions of the future are impossible.
Below is an interview with Korea Economic Daily TV’Good Morning Investment Morning’ this morning.
▶<질문1> Please point out the characteristics of the US stock market that closed first.
The Dow and S&P 500 and Nasdaq indices were mixed all day long and closed slightly weaker. Even though the unemployment crisis was intensifying, they were looking forward to the release of stimulus measures.
Interest has been focused on the economic stimulus package that US President-elect Joe Biden, who will take office on the 20th, will be released shortly after the market closes.
According to the package that Biden unveiled at 7 a.m. Korean time, additional stimulus measures total $1.9 trillion. Under the stimulus law established at the end of last year, each American is receiving $600 in cash, and Biden’s stimulus package has decided to give it $1,400 more. Cash payments per capita amount to $2,000 this month alone. It also included extended unemployment benefits, vaccine purchase and vaccination costs, ending March. Biden’s stimulus package is expected to have a positive impact on the future stock market.
Jerome Powell Chairman of the US Central Bank (Fed). Reuters Yonhap News
Fed Chairman Jerome Powell’s comments also focused on reassuring the mayor. Powell drew a line in a video talk with Professor Marcus Brunermeier of Princeton University this morning in Korean time, saying, “It’s not time to talk about the exit strategy for the monthly bond buying program.”
Since June of last year, the Fed has been supplying liquidity to the market by purchasing more than $120 billion in government bonds and mortgage securities (MBS) every month, but it will continue for the time being. “The lesson learned from the global financial crisis is to be careful not to close (asset purchases) too soon,” he said. He also promised, “When the time of decision comes, we will communicate very transparently with the market.”
▶<질문2> Recently, interest in government bond rates has been focused, and the key is the rate of increase in government bond rates.
That’s right. Anxiety amplified as the interest rate of the US 10-year Treasury Bond, which is the scale of the global economy, surged. The Corona Pandemic Declaration was issued in March last year, and the interest rate on government bonds is the same as last February, just before that.
When the economy improves, it is natural that prices rise and government bond yields rise, but the problem is speed. Since the Treasury yield is linked to the interest rate of loan products, a large jump in a short period of time can increase the burden on companies and households that are not ready. In addition, if interpreted as a precursor to inflation and an increase in the base rate, the stock market could also be hit.
The 10-year U.S. Treasury Bond yield, which is on the rise recently. Capture Investing.com
However, the actual price level in the US is still low. In December last year, the consumer price index rose 1.4%, far below the central bank’s (Fed) target of 2.0%. The Fed has repeatedly said it will not raise its base rate even if the inflation rate temporarily exceeds 2%.
In this regard, investment bank Societe Generale recently warned that “the stock market bubble will burst before the 10-year Treasury bond rate reaches 1.5% per year.” The 10-year yield is 1.13% per year as of the 14th.
▶<질문3> ‘CES 2021’ is over, and there were any Korean companies that received special attention.
This year, CES was held for the first time in its 54-year history, so the number of exhibitors was only half compared to last year. Although attention has declined, there are a number of Korean companies that have been introduced to foreign media with new technologies and new products. There were a total of 386 products and technologies that received the Innovation Award this time, and 100 of them were taken by Korean companies.
Samsung Electronics brought out a robot vacuum cleaner equipped with artificial intelligence (AI), and LG Electronics brought out a wearable air cleaning mask and a rollable phone (a smartphone that can be rolled up and opened). The two companies also showcased next-generation mobility technologies.
Inside the Apple Store near Wall Street in New York, USA. New York = correspondent Cho Jae-gil
GS Caltex unveiled a futuristic gas station and Mando, an auto parts maker, each with an advanced driving system. Among Korean startups, M2S is the only small and medium-sized business to receive the CES Best Innovation Award for its eye health healthcare solution.
▶<질문4> Finally, let’s organize the major schedules and events for investors to check.
Next week’s biggest event is the inauguration of President-elect Biden (20th). The National Mall, a large park in downtown Washington, is also set to be shut down as protesters in support of President Donald Trump have raised the possibility of a sudden unrest. The Pentagon plans to deploy at least 10,000 state national defense forces in Washington, so it is unlikely that massive violent protests will recur.
A notable economic indicator is the number of new unemployment benefits claims on the 21st. Although it is counted on a weekly basis, this is because the number of new unemployed people surged to nearly 1 million last week. Last week, the number of claims was 965,000, an increase of 181,000 in a week. The increase was the largest since March last year, and the market forecast (800,000 cases) also exceeded 170,000 cases. Although the vaccine is being distributed, its effectiveness is still difficult to feel, and the economic containment measures have been further strengthened.
On the same day, the number of housing starts and permits comes out. The dominant observation is that the US housing market will continue to boom.
Corporate performance announcements for the fourth quarter of last year are also in full swing. 159 of the companies listed on the New York Stock Exchange will release their report cards next week. On Monday the 18th, it is closed because it is a Martin Luther King holiday, but on the 19th, Netflix, which has many Korean investors, discloses the results. On the same day, Goldman Sachs, Bank of America (BofA), and petroleum development company Halle Burton also reported 4Q results.
On the 20th, Morgan Stanley, United Airlines, Procter & Gamble (P&G), and on the 21st, Intel, IBM, and American Airline will each disclose their performance.
New York = Correspondent Cho Jae-gil [email protected]