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Five Things

Jobless data due, virus surges in America and Trump still hasn't conceded. 

Economy check

Initial jobless claims are expected to show a small improvement from last week's 751,000 total when the data is released at 8:30 a.m. Eastern Time. Policymakers are becoming increasingly concerned that the resurgence of the pandemic in the U.S. is putting the recovery in jeopardy. Later today Fed Chair Jerome Powell speaks at the European Central Bank's annual forum, which investors will monitor closely for any hints of a change in his assessment of risks. Data from the U.K. showed the economy expanded less than forecast in the third quarter


The seemingly relentless rise in Covid cases in the U.S. continues, with more than 135,000 new infections reported yesterday and 1,393 deaths, pushing the seven-day average above 1,000 for the first time since Aug. 20. Moderna Inc. may report results of the trial of its vaccine candidate within days, with experts hoping for positive results similar to those achieved by Pfizer Inc. There was some good news in Europe as cases appear to be plateauing in the hardest-hit countries as new lockdowns take effect. 

Still not called

President-elect Joe Biden is stacking his transition team with policy academics and former Obama administration officials, a clear break from President Donald Trump's policy of choosing industry insiders. Biden's picks still have no close access to government officials until the administrator of the General Services Administration issues a finding that he is the incoming president. She has so far declined to do this as Trump continues to challenge the election results. The president's legal actions have yet to produce anything that looks like it might even come close to flipping the result

Markets slip

Worries that stocks have run too far too fast and disappointing corporate results mean the global rally is losing steam. Overnight, the MSCI Asia Pacific Index added 0.1% while Japan's Topix index closed 0.2% lower. In Europe, the Stoxx 6000 Index had slipped 0.2% by 5:50 a.m. with banks the worst performing industry sector. S&P 500 futures pointed to little change at the open, the 10-year Treasury yield was at 0.946% and gold gained. 

Coming up... 

As well as claims data, October U.S. inflation numbers are due at 8:30 a.m. American crude oil inventories data is at 11:00 p.m. The monthly budget statement for October is at 2:00 p.m. Fed Chair Jerome Powell, European Central Bank President Christine Lagarde and Bank of England Governor Andrew Bailey all speak later. Walt Disney Co., Cisco Systems Inc. and Applied Materials Inc. are among the companies reporting results. 

What we've been reading

This is what's caught our eye over the last 24 hours.

And finally, here's what Joe's interested in this morning

Today we get the latest reading of CPI, and economists expect that on a core basis it will be up 1.7% from last year, which is the same as last month. CPI growth plunged during the acute phase of the crisis, and then it bounced back, but the question here is whether it's already rolling over well shy of the Fed's 2% target. All that being said, it's quite striking how if you look over the last two decades, it's pretty stable -- oscillating in a fairly narrow range, never tipping into outright deflation, and never really soaring either.

This brings to mind a conversation that Tracy Alloway and I recently had with Ruth Krivoy, who was the head of the Venezuelan central bank in the early 90s. Obviously these days, Venezuela is associated with soaring inflation, egregious money printing, and stacks of worthless paper bills with numerous zeroes on them. A point that Krivoy makes is that sure, Venezuela has run irresponsible macro policies, but a key element behind the country's inflation has been corruption, the erosion of civil society, and ultimately the lack of trust in the currency. In a way, the money printing is the final straw, but the real damage precedes it.

Now granted, the phenomenon of hyperinflation in Venezuela is a world away from questions about inflation in the U.S. and whether or when we'll get back to a 2% target, or whether today's number will come in at 1.7% or 1.8%, or whatever. But her insights do speak to a certain limit of mathematical analysis. You can come up with equations or relationships that try to anticipate where prices will be, based on Fed actions or unemployment or government spending or growth, or whatever else you want. But at least at the more extreme levels, there's an aspect of it that can't be modeled. How do you measure loss of trust in a currency? How do you measure panic buying driving prices of all kinds of goods up at once? These are questions of true consequences, for which there really are no easy answers.

Joe Weisenthal is an editor at Bloomberg.

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