Highlights

Wall Street Breakfast

Author: bmotrader   |   Latest post: Fri, 27 Nov 2020, 6:40 AM

 

Wall Street Breakfast: Campaign Trail Ends With Market Rally

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Tech mega-caps continue to be the big gainers across the board following a razor-thin election and outstanding political uncertainty (didn't the sell-side say a lack of immediate results would be negative for the market?) Anyways, many voices are chiming in on the catalysts for the move higher after additional outsized gains were seen from stock index futures overnight: Dow 1.4%; S&P 500 2%; Nasdaq 3%. Some are saying the rally over the last 24 hours is due to less regulatory risk (due to a divided White House and Congress), making major policy changes difficult to enact. Others feel the broad selloff last week is getting many traders off the sidelines, while some believe their presidential candidate and agenda would be a net positive for equities. Markets also don't appear to be paying attention to the coronavirus front, with the U.S. reporting more than 100,000 new cases in a single day for the first time ever on Wednesday.

Election count continues

It all comes down to Arizona and Nevada. Barring different recount results or court battle outcomes, President Trump will have to take one of those states, as well as Georgia, North Carolina and Pennsylvania to reclaim the presidency. While he's currently ahead in the latter states, all Biden needs to do is pull ahead, or walk away with one of the wins out West. Looking to future fiscal policies, traders are also concentrating on the battle for the Senate, where odds are increasing that Republicans will keep control after victories by Susan Collins in Maine and Joni Ernst in Iowa.

Stimulus bill by end of the year?

Senate Majority Leader Mitch McConnell has flagged a new economic stimulus bill as his top priority when the chamber returns to work next week. "Hopefully, the partisan passions that prevented us from doing another rescue package will subside with the election. And I think we need to do it and I think we need to do it before the end of the year." In other economic news, the Fed is likely to lay low today during its penultimate policy meeting of 2020, while jobless claims will provide the latest snapshot of the pace of recovery in the labor market.

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Another dose of bond purchases

An extra round of stimulus has been launched in England as the country enters a second lockdown that runs from today until December 2. The U.K.'s central bank boosted its bond-buying program by a larger-than-expected £150B, taking the government's purchase target to £875B to help the economy weather another wave of coronavirus restrictions. Benchmark interest rates remain unchanged at 0.1%, though the BOE is exploring sub-zero territory, and has asked British lenders about their preparedness for negative interest rates.

TikTok arguments made in court

The battle surrounding TikTok is coming back into focus as lawyers for the Chinese-owned video app clashed with the DOJ's legal team in federal court to stave off a government-ordered shutdown set for Nov. 12. District Judge Carl Nichols previously blocked an attempt by the Trump administration to impose a September ban on new TikTok downloads in the U.S., saying the move amounted to a prohibited use of broad emergency powers, but he didn't immediately rule on the latest shutdown attempt. The Nov. 12 deadline is aimed at pressuring TikTok parent ByteDance (BDNCE) to reach a settlement transferring TikTok's ownership to a group that would potentially include Oracle (NYSE:ORCL) and Walmart (NYSE:WMT). Details of the structure are still up in the air as the companies try to ensure it would win final approval from both the Chinese and American governments.

Accelerating stock sales

Jeff Bezos has unloaded another 1M shares of Amazon (NASDAQ:AMZN) for $3B as part of a prearranged 10b5-1 trading plan, marking the latest in a series of sales that now exceed $10B this year. That's a notable jump from 2019, when the Amazon CEO sold $2.8B worth of shares, though he continues to hold more than 10% of the company - a stake worth around nearly $170B and makes him the richest person in the world. Bezos has previously said he sells about $1B of Amazon stock each year to fund his rocket startup, Blue Origin, and launched a $10B Earth Fund back in February to combat the effects of climate change.

U.S. quits Paris climate accords

The Trump administration has officially pulled out of the Paris Climate Agreement after giving the required year's notice last November. It makes the country the only one of 197 signatories to have withdrawn from the deal struck in 2015, and which Joe Biden has said would be revived if he is elected president. The pact is non-binding, meaning nations aren't required to meet any specific requirements, but the Obama administration had pledged to reduce American emissions by about 26%-28% by 2025, compared with 2005 levels, when signing the deal in 2016. In the absence of federal action, many U.S. states and businesses have set clean energy mandates to meet Paris targets, with 25 U.S. governors pledging to coordinate on climate policies.

Wednesday's Key Earnings

Energy Transfer (NYSE:ET) 7.1% AH seeing no impact from election outcome.
Expedia (NASDAQ:EXPE) 5.7% AH showing off sequential improvements.
Fitbit (NYSE:FIT) 1% AH topping consensus on top and bottom lines.
Match Group (NASDAQ:MTCH) 3% AH as Q3 revenues grew by double digits.
Qualcomm (NASDAQ:QCOM) 13% AH on 5G-driven FQ4 beats, upside forecast.

Today's Markets

In Asia, Japan 1.7%. Hong Kong 3.3%. China 1.3%. India 1.8%.
In Europe, at midday, London 0.5%. Paris 1.1%. Frankfurt 1.6%.
Futures at 6:20, Dow 1.4%. S&P 2%. Nasdaq 3%. Crude -0.3% to $39.04. Gold 1.2% at $1918.20. Bitcoin 6.6% to $14638.
Ten-year Treasury Yield -3 bps to 0.74%
Today's Economic Calendar



 

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