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Financial markets picked themselves up and dusted themselves of overnight, after a torrid week. Sentiment improved after headlines started appearing that the United Kingdom and European Union have finally reached a provisional Brexit trade agreement. In the United States, weekly Jobless Claims fell to just over 800,000, a much lower fall than forecast, although personal spending and income fell more than expected as Covid-19 extracted its pound of flesh.

President Trump pardoned his son-in-law’s dad, vetoed the defence spending bill, and threatened to veto the combined fiscal stimulus/government funding bill for 2021. His main gripe is that the direct payments to Americans were too small. Asian markets completely ignored the latter news yesterday, much to my surprise, and European and North American markets did much the same. The developments have sent Congressional representatives scrambling to vote for bigger cheques in some quarters, while marshalling forces to override the Presidential vetoes in others.

The bluff and double bluff mishmash in Washington DC hasn’t dented sentiment one iota from a markets perspective. Equities, energy and precious metals all rose, and the US dollar fell, in a typical buy-everything day. On deeper thought, it could well be that a large net fiscal response could emerge when the dust settles. The primary reason for that being the Georgia double-header Senate run-off in the first week of January. That will decide control of the Senate, and recalcitrant Republicans Senators may not want to be tarred as the grinches who stole Christmas ahead of that crucial election.

Brexit optimism boosts pound

A potential Brexit deal saw sterling roar back to life, rising 1.02% to 1.3490. Sterling has risen another 0.50% to 1.3550 in Asia today, with UK press saying that PM Johnson will address the nation at 1100 LDN time today. The announcement by Santa-Boris comes in the nick of time. Still, it leaves the UK isolated internationally due to Covid-19, with thousands of trucks marooned on each side of the English Channel, and follows more of England’s regions being moved into a hard tier-4 lockdown. With Christmas in England starting to resemble one reminiscent of the wartime blitz, it is perhaps not surprising that sterling’s bullish reaction is underwhelming. Not helping is that the world is long enough sterling to fill in the English Channel.

Jack Ma’s woes appear to be continuing in Asia today. Chinese authorities are announcing that they are investigating Ali Baba for monopolistic behaviour. Ali Baba shares fell over 5.0% this morning, and although market sentiment as a whole is positive today, mainland and Hong Kong equities are likely to pause for thought. The US administration perversely will be watching with interest as bi-partisan support grows in the US for more controls on big tech. More aggressive legislation is passing through Russia’s Parliament to reign in Facebook and Google as well.

Reports that Alphabet had asked AI researchers inside the company to paint smiley emojis on their AI research won’t be helping their cause. Although not a story for this year or the first part of the next, I can’t help but suspect that 2021 will be big tech’s Standard Oil year. If the Democrats somehow win both Georgia primaries, my big tech bashing meter will swing to 100% and stay there.

The global data calendar is, unsurprisingly, offering no stocking fillers as much of the world heads into a Christmas Eve half-day. Singapore Industrial Production presents a threadbare stocking filler, with November YOY industrial Production expected to jump to around 10% after falling -0.90% in October.

Barring any surprise headlines, the overnight developments on both sides of the Atlantic should be enough to ensure that Santa drops buy-everything, global-recovery rallies into investors’ Christmas stockings to finish the shortened week.