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Impeachment 2.0, Dollar Bounce, Social Media Bans - What's up in Markets

EconomyJan 11, 2021 06:38AM ET
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© Reuters

By Geoffrey Smith 

Investing.com -- The Democratic Party puts the wheels in motion for another Trump impeachment. Social media cracks down on right-wing extremism; the dollar bounces as Bitcoin corrects sharply downward, and Twitter and Amazon draw the ire of conservatives after pulling the plug on President Trump and social media site Parler. Stocks, oil and other risk assets have weakened in response. Here’s what you need to know in financial markets on Monday, January 11th.

1. Impeachment 2.0

House Speaker Nancy Pelosi threatened to being impeachment proceedings against Donald Trump if Vice-President Mike Pence fails to invoke the 25th Amendment to remove him from office within 24 hours.

Pence has reportedly already ruled out making such a move, increasing the odds that Trump will become the first president to be impeached twice. Analysts over the weekend said the move raised the risk of a lack of bipartisan cooperation in the coming months, which may complicate the passing of future spending bills.

It’s far from clear that enough Republican Senators would vote to convict Trump if an impeachment trial reaches the upper chamber. Given the need for a two-thirds majority, over 16 out of the GOP’s 50 Senators would need to convict him.  

2. Dollar bounces, crypto tumbles

The U.S. dollar bounced over the weekend, as investors scaled back their bets on a free-spending Congress supporting the economy with massive stimulus packages this year.

By 6:30 AM ET (1130 GMT), the dollar index that measures the greenback against a basket of advanced economy currencies was up 0.4% at 90.46, a full point above the three-year low that it hit last week.

As so often, the dollar is being supported by the rise in Treasury bond yields, where the 10-year has settled into a range above 1.10%, having gained 10 basis points in the course of the last week (prices and yields move inversely to one another).

The dollar’s rebound has been accompanied by some cooling off of rallies in assets touted as hedges against dollar debasement. Bitcoin fell 13.7% to $34,855, after hitting $40,000 for the first time on Friday, while Ethereum fell 17% to $1,092.50.

3. Stocks set to open lower

U.S. stock futures are set to open markedly lower later, with investors adopting a more cautious stance against the backdrop of the impeachment move and the ongoing devastation of the Covid-19 pandemic.

The latter factor had taken something of a back seat last week, with investors choosing to focus on the prospect of stimulus and recovery tomorrow rather than today’s public health disaster. However, the rate of new infections continue to increase, while the number of hospital admissions appears to have plateaued more for reasons of capacity than an actual improvement in the trend.  The seven-day average for deaths due to Covid-19 has hit a new high for each of the last three days.

By 6:30 AM ET, Dow Jones Futures were down 203 points, or 0.7%, while S&P 500 Futures were down 0.6% and NASDAQ Futures were down 0.5%.

Stocks likely to be in focus later include Twitter (NYSE:TWTR), which permanently blocked Trump’s account over the weekend, and Amazon (NASDAQ:AMZN), which said it will stop hosting right-wing social media platform Parler.  

4. U.S. boosts Taiwan, snubs Beijing; virus hits Chinese stocks 

The Trump administration lifted its restrictions on contacts between U.S. diplomats and Taiwanese officials, in a calculated snub to Beijing.  

The move is the latest in a string of actions in the dying days of the Trump presidency to ratchet up political pressure on China.

The Taiwan Weighted stock index rose 0.6% in response, while mainland Chinese indices all fell by 1% or more – albeit the latter owed more to the imposition of tougher lockdown measures in Hebei, the region surrounding Beijing, in response to a local surge in Covid-19 cases.

5. Froth comes off oil 

Crude oil prices also lost some of their froth in line with the broader retracement in risk assets.

By 6:30 AM ET, U.S. crude futures were down 0.8% at $51.84 a barrel, while Brent crude futures were down 1.3% at $55.24 a barrel.

That’s despite Goldman Sachs analysts saying that crude could hit $65 this year, as a slow improvement in demand exposes underlying market tightness (a tightness that depends on Saudi Arabia and OPEC continue to withhold millions of barrels a day in capacity at least through the first half of the year).

Crude continues to attract speculative buying from financial players: CFTC data showed net longs in crude futures near their highest in five months on Friday.

Impeachment 2.0, Dollar Bounce, Social Media Bans - What's up in Markets
 

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Comments (13)
AIM Investor Journal
AIM Investor Journal Jan 11, 2021 10:51AM ET
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I believe the rebound in the USD and US yields may have more to do with growth expectations, especially now Congress and the Senate will be able to pass through any legislation Biden sees fit. I don't think the effects of future stimulus are in any way priced in yet and when the figures are revealed, then we may see a weakening of the dollar. The news about Covid outbreaks in China will be supporting dollar sentiment at the moment also encouraging flight to safety amid downgrades to growth forecasts and weakening commodity prices. Europe is now in a similar situation to the US with regards virus numbers and will be under various forms of lockdowns for many months to come. What is certain to come is more stimulus and that will be welcomed by markets and commodities, particularly those in high demand like rhodium and palladium.
Miles Mc
Miles Mc Jan 11, 2021 10:26AM ET
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Right: "Twitter silencing Trump, and the banishment of Parler is hindering free speech!" Left: "REEEE those are private companies and they can do whatever they want!" Right: "Great, now that we understand that, lets let private companies open back up so they can feed their families!" Left: "REEEE NO!!  THATS DIFFERENT!"
Mg Yb
Mg Yb Jan 11, 2021 10:26AM ET
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Within a month after getting selected as Chancellor, young Adolf ********prohibited publications and meetings that would hinder public security and banned opposition newspapers.
Nison Kay
Nison Kay Jan 11, 2021 10:05AM ET
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typical hypocritical left. telling Belarus their election was rigged and favoring the overturning of their election while telling us our election wasn't rigged. do dropping all investigation and censoring everybody with an opinion beside them. they are begging for war.
Ad Cline
Ad Cline Jan 11, 2021 10:05AM ET
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nison Kay another supper of Belarus's history of rigged elections.
Ad Cline
Ad Cline Jan 11, 2021 10:05AM ET
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the Belarus dictator is world famous for corruption and fixed elections. war with who Nison, your overlords in Moscow. there almost as big a joke as the leadership in Minsk.
Jarrad Peter
Jarrad Peter Jan 11, 2021 10:05AM ET
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so you are saying that the state of 'democracy' in the US is the same as a third world eastern european government?
Jo Pa
Jo Pa Jan 11, 2021 9:19AM ET
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Dems want to impeach Trump so voters are prevented from voting for the 'wrong' person again.
Nison Kay
Nison Kay Jan 11, 2021 9:19AM ET
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it's amazing how they keep trying until they get their way. also crying about the cop killed when nobody mentions a true hero unarmed airfoce vet shot for no reason. cops die everyday in liberal cities from their policies and they don't care.
Chris Jackson
Chris Jackson Jan 11, 2021 9:19AM ET
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nison she was shot for a reason
carolyn horton
carolyn horton Jan 11, 2021 9:19AM ET
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That's right. This independent 59 year old black woman voted who has worked 20 years in the legal system throughout our California in the court systems and have taken depositions, says that cops and the legal system are crooks. And with my experience you're not going to convince myself otherwise. So yea to a point I don't care.
Jo Pa
Jo Pa Jan 11, 2021 9:16AM ET
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Americans are about to learn what a dictatorship is, where all opposition is censored and silenced.
Mg Yb
Mg Yb Jan 11, 2021 9:16AM ET
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Within a month after getting selected as Chancellor, young Adolf prohibited publications and meetings that would hinder public security and banned opposition newspapers.
choyan miah
choyan miah Jan 11, 2021 7:40AM ET
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good
Zach Earle
Zach Earle Jan 11, 2021 7:30AM ET
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I hate hearing about bitcoin. Who the *****cares to read about hot air in their morning market-report?
carolyn horton
carolyn horton Jan 11, 2021 7:30AM ET
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I do because this 59 year old black woman is going to make money of this rigged system
Phil Wohlrab
Phil Wohlrab Jan 11, 2021 7:06AM ET
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The dollar bounce is a blip on Americas road to hyperinflation
Ridha B younes
Ridha B younes Jan 11, 2021 7:05AM ET
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impeachment implications on gold history said gold and silver spike with good economic . more clarification will be apreciated as it is looking like business as usual and experts said gold can't go up instead it will drop . infact that was amazing as gold dropped to 1817 in the first 4 hours now it's back 1849
Arthur Sommer
Arthur Sommer Jan 11, 2021 7:05AM ET
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Dollar goes up gold goes down, dollar goes down gold goes up, may not always be that simple but start with that
WILLIAM HAGERTY
WILLIAM HAGERTY Jan 11, 2021 7:04AM ET
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Another waste of time and money.
Mase Gumbo
Mase Gumbo Jan 11, 2021 7:04AM ET
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if there is no price to pay for it youll see it more often...do you really want that
Tim Shubert
Tim Shubert Jan 11, 2021 6:56AM ET
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Looks like the Pelosi gang is more interested in bashing the outgoing President than working towards helping the people most affected by the pandemic. Her position in CRWD she took back in Nov has paid off nicely, though. She sure knows how to pick them, I'll give her that.
carolyn horton
carolyn horton Jan 11, 2021 6:56AM ET
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Both needs to be done just Trump and get me my 2000.00. But I don't want a one time pay, I want monthly
Sam Iam
Sam Iam Jan 11, 2021 6:53AM ET
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Trump never had a chance. He was up against total corruption from all courts/politicians.
carolyn horton
carolyn horton Jan 11, 2021 6:53AM ET
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Be honest trumps a crook along with the system of amerikkka
Horde NotTrade
Horde NotTrade Jan 11, 2021 6:46AM ET
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Pelosi is an air head and is a bigger threat to the American people than China.
Van Doza
Van Doza Jan 11, 2021 6:46AM ET
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Can I please hear an AMEN! ???
Miles Mc
Miles Mc Jan 11, 2021 6:46AM ET
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Van Doza  Awoman
Mg Yb
Mg Yb Jan 11, 2021 6:46AM ET
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Miles Mc brilliant
Boyoung Schang
Boyoung Schang Jan 11, 2021 6:46AM ET
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Miles Mc  Abyman, Atransgenderman, Agayman, etc... why should we stop at Awoman? Let's keep going!:)
 
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