It has been a mostly positive day for Asian markets, taking their cue from Wall Street. Equity markets powered higher overnight after President Trump signed on the stimulus/government funding omnibus bill. The buy everything recovery trade was back in evidence in Asia, with the US dollar easing, and precious metals and energy rallying.

Equity markets were a more mixed picture. China markets were unable to shake regulatory fears in the tech sector as the government tightened the noose around Alibaba and its Ant Financial subsidiary. The government’s actions to rein in big tech in China will create a more level playing field in the future for emerging technology companies in China. Cross-subsidisation, loss-leading scorched earth market-share practises, buying out potential threats and generally ignoring the rules other more established incumbents have to follow, are often complaints heard elsewhere in the name of “innovation.” There is obviously a political angle to China’s actions as well, but their actions, and the reactions, will be watched closely elsewhere internationally.

The outgoing Trump administration’s threat to widen the ban on US companies investing in military-controlled Chinese entities or their perception has also weighed on China’s sentiment today.

Pleasingly, bitcoin reversed track almost immediately after I said it had the momentum to trade to USD30,000 after breaking USD28,000 yesterday. Bitcoin traded below USD26,000 this morning before rising back to USD26,400 as I write, still down 2.30% for the day. There is a vast difference between investable and tradeable, and Bitcoin represents the dangers of confusing the two perfectly. Readers should duly note the difference.

Sentiment has also been lifted by two votes that passed through the Democrat-controlled House of Representatives. Firstly, they voted to override the presidential veto of the defense funding bill. Secondly, House Democrats voted to extend direct stimulus payments to citizens from USD600 to USD2000, as per President Trump’s wish. Stimulus and political stability are magic panaceas for financial markets, but both measures now move to the Republican-controlled Senate.

The defense bill should pass with bi-partisan support, overriding the veto. However, the fate of the USD2,000 payments is unclear. Given their past intransigence on this matter, I expect Senate Republicans to administer the coup de grace to the idea, even with a double senate runoff in Georgia next week. That too-close-to-call Senate runoff and the extra stimulus brick wall in the Senate may erode the buy everything sentiment prevalent in markets today.

Data-wise, the cupboard is bare, with the US Redbook for December and the US Case-Schiller House Price Indexes unlikely to be market-moving events. That leaves markets at the mercy of headline-driven reactions, during a very illiquid period of the year for financial markets. Especially so if the volumes we see this week are dominated by the retail FOMO-herd. Wiser heads are sitting this week out.

Britain will likely continue to be a source of volatility as well. Brexit Armageddon fears are being stoked as January the 1st approaches. For all the doomsday talk I have been reading about fresh food shortages and thousands of trucks caught in a bureaucratic nightmare on both sides of the English Channel, I am left wondering if we are talking about 2020 or 1940. The honest answer is we do not know what January 1st will hold. In all likelihood, there will be delays and a bedding-in period as the new reality and processes are explored and enacted. I very much doubt, though that Europe is looking to starve Britain of fresh food. Everybody, calm down, Churchill would be rolling in his grave.

The second point of concern is, of course, Covid-19. There is no doubt that Britain is struggling under the weight of cases and that the lockdown measures will now delay its recovery, as will countries around the world closing borders to UK travellers. Britain is not alone here by any measure, but the situation is not being helped by even respected press publications using the term “mutant virus.” Viruses are always mutating; that’s what they do. A better term would be “mutated strain,” of which there have been a few Covid-19 variants globally already. Mutant strain makes it appear that Britain is in the grip of a zombie apocalypse, not Covid-19.

The Astra/Zeneca Covid-19 vaccine’s approval, blissfully available in large quantities and at room temperature, is imminent, likely this week. It will be a game-changer for Her Majesty and her subjects. Britain is down, but not out, although I acknowledge that all of the above will act as a cap on gains in UK asset markets this week.