| Moderna's vaccine is 94.5% effective. Kissinger warns Biden to open dialogue with China — fast. And the U.S. dollar may drop 20% next year, Citigroup says. Moderna said its Covid-19 vaccine was 94.5% effective in a preliminary analysis of a large late-stage clinical trial. Company shares rose as much as 15% in New York. The highly positive readout comes just a week after a similar shot developed by Pfizer and BioNTech SE was found to be more than 90% effective in an interim analysis. Both shots rely on a technology called messenger RNA; here's how they stack up against each other. If Covid-19 vaccines do become widely distributed and help to revive global trade, the dollar may drop as much as 20% in 2021, Citigroup says. Asian stocks looked set for gains Tuesday after a positive vaccine update sent U.S. equities tied to an economic reopening higher while defensive tech shares lagged. The dollar fell. The S&P 500 closed at an all-time high after the Moderna news. Stocks poised to benefit from a reopening, such as cruise lines and air carriers, were among the best performers. Futures gained in Japan and Hong Kong. Benchmark Treasury yields ticked back above 0.90% and oil jumped. Elsewhere, Australia's stock exchange is expected to open after it was closed for most of Monday's session because of a software issue. Former U.S. Secretary of State Henry Kissinger said the incoming Biden administration should move quickly to restore lines of communication with China or risk a crisis that could escalate into military conflict on par with World War I. Speaking at the Bloomberg New Economy Forum, the 97-year-old said military technologies available today would make such a crisis "even more difficult to control" than those of earlier eras. "America and China are now drifting increasingly toward confrontation, and they're conducting their diplomacy in a confrontational way." Here's more on all the U.S.-China flashpoints. Meanwhile, Australia is building a coalition of "like-minded" democracies pushing back against what they view as Beijing's increasing expansionism in the Indo-Pacific. Credit trading desks will be a bright spot for hiring on Wall Street in the coming months, according to consulting giant McKinsey. That's in contrast with an otherwise bleak landscape for job hunters in finance. Firms are poised to build up their credit trading desks in anticipation of increased investor demand over the next 12 to 18 months, McKinsey said in a wide-ranging report on the industry. Innovations in credit investing — including portfolio, index and ETF trading — have brought in new revenue streams that have grown rapidly in recent years, McKinsey partner George Kuznetsov said. "Banks realize they will lose relevance if they don't gain the new capabilities very fast," so firms that are behind will poach from competitors, forcing them, in turn, to look to fill vacancies, he said. Since unveiling a goal last month to double the size of the economy by 2035, President Xi Jinping has embarked on a sweeping crackdown of some of Hong Kong's most valuable companies. The shock suspension of Ant Group's $35 billion IPO was quickly followed by more rules to rein in former tech darlings Tencent and Alibaba, leading to a $290 billion equity sell off last week. He's also moved to further snuff out any opposition in Hong Kong's legislature, the most democratic institution under Chinese rule. And authorities are forcing bond investors to take more responsibility for risk in a debt market where defaults have been historically rare. Still, the strengthening grip of the Party in Hong Kong belies an easy-money frenzy occurring there of late. What We've Been ReadingThis is what's caught our eye over the past 24 hours: And finally, here's what Tracy's interested in todayIs Hong Kong on its way to being demoted to "emerging market" status? That's the suggestion from Mark Makepeace, the former CEO of benchmark index provider FTSE Russell. He argues that if the territory's independent judiciary is threatened by the new national security law "then Hong Kong should be treated in the same way as China" by index providers and "that would lead to a demotion of Hong Kong to become an emerging market." Generally the path of economic development and financial liberalization goes in one direction, so it would be pretty extraordinary for Hong Kong to be downgraded in this way. Right now, it looks like a remote possibility given that index providers such as FTSE or MSCI typically look at a wide array of criteria in making their assessments of a market — including economic maturity, size and ease of trading, and accessibility. As Travis Lundy, a long-time Hong Kong markets-watcher and independent analyst who publishes on the Smartkarma platform, notes: "The only way I see Hong Kong might be demoted to 'emerging market' status is if capital controls are implemented making it significantly more difficult to invest." Still, Makepeace's remarks highlight two things. The first is the immense amount of nervousness surrounding the future of Hong Kong given the recent crackdown on pro-democracy voices and opposition lawmakers. The second is the immense power of the benchmark index providers when it comes to shaping the norms of what's considered acceptable in international finance (or in this case, international financial centers). You can follow Tracy Alloway on Twitter at @tracyalloway. | 
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