What the Vaccine News Means for Markets

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What’s in Today’s Report:

  • Vaccine Playbook (Specific Sectors and ETFs)
  • What the Vaccine Means for Markets
  • Why Stocks Have Rallied (Four Reasons – Not Just the Election and Vaccine)
  • Weekly Market Preview:  How High Can Stocks Go?
  • Weekly Economic Cheat Sheet:  Jobless Claims the Key Number on Thursday

Futures have exploded to new all-time highs on positive vaccine results from Pfizer, combined with election uncertainty.

Pfizer just released results stating its COVID-19 vaccine is more than 90% effective in preventing COVID-19 infection among people who had not been previously infected.  That 90% is much higher than was expected.

Election clarity had stocks higher pre-vaccine news as Biden was projected to win the Presidency.

Today it’s all about momentum and as stocks should surge led by value, cyclicals and the “Get out and spend” sectors.

Tom Essaye Quoted in Oil and Gas 360 on November 3, 2020

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“Ultimately, the markets, want clarity and the main threat to risk assets this week is the emergence of a contested election…” Tom Essaye, founder of The Sevens Report, wrote in a note. Click here to read the full article.

Tom Essaye Quoted in Axios on November 4, 2020

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Stock investors may be in something of a “post-election fog” or a “drunken euphoria” about an apparent quick conclusion to the presidential race but may also be repricing expectations for economic growth, says Tom Essaye, director of Sevens Report Research. Click here to read the full article.

Jobs Report Preview

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What’s in Today’s Report:

  • Jobs Report Preview
  • Why Is the Dollar Dropping So Sharply (Hint:  It’s Not the Election)
  • FOMC Reaction

Futures are moderately lower mostly on digestion of this week’s massive rally, although the political news over the last 24 hours was a slight negative for markets.

Biden continued to move closer to securing 270 Electoral College votes and is now leading in Georgia, Arizona, and Nevada, and some of those states may be called today.

However, both Georgia Senate races appear headed to a runoff in early January, and that could delay stimulus into early 2021 (this is the “reason” for the weakness in futures, other than just digestion).

Today focus will remain on the election as several states could be called, effectively ending the election (court cases will continue but as of yet none appear powerful enough to overturn the apparent result).

Economically, the jobs report will be in focus and the expectations are as follows: Job Adds: 600K, Unemployment Rate: 7.7%.  A number moderately better than expectations (that’s strong enough to reflect a good recovery but not so strong that the amount of expected stimulus starts to move lower) is the best outcome for stocks.

Sevens Report Co-editor Tyler Richey Quoted in MarketWatch on November 5, 2020

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On balance, the supply data Wednesday were “bullish for energy as oil stockpiles and production fell while…” analysts at Sevens Report Research wrote in Thursday’s newsletter. Click here to read the full article.

Tom Essaye Quoted in Unseen Opportunity on November 4, 2020

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Tom Essaye, founder of The Sevens Report, also sees plenty of upside despite unclear vote totals.

“News of a contested election could cause a sharp drop in stocks in the very short term, …” he said. Click here to read the full article.

Tom Essaye Quoted in NBC News on November 3, 2020

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“Ultimately, the markets want clarity, and the main threat this week is the emergence of a contested…” Tom Essaye, founder of The Sevens Report and a stock market analyst, wrote in a note. Click here to read the full article.

Market Outlook in A Divided Government

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What’s in Today’s Report:

  • Market Outlook in a Divided Government
  • Macro Landscape Beyond Politics (It’s Getting More Positive)
  • FOMC Preview

Futures are sharply higher again thanks to momentum from Wednesday’s rally, combined with more than expected QE from the Bank of England.

The Bank of England will increase its QE program by 150 billion Pounds, larger than the expected 100 billion, underscoring that global central banks are become more active in supporting their economies.

Politically, markets expect Biden to reach 270 electoral votes today with the official call of Nevada (which would put him exactly at 270).  The market is viewing the election as largely decided despite what will be a myriad of legal challenges.

Today the big event is the FOMC Announcement (2:00 p.m. ET) and Fed Chair Press Conference (2:30 p.m. ET).  I’d expect the Fed will keep a lower than normal profile given the election uncertainty, but the market’s focus will be any commentary that implies it’s open to more QE (if they don’t mention it, we could see mild disappointment like we saw in September).

Beyond the Fed and election headline watching, we also get weekly Jobless Claims (E: 745K) and markets will want to see that number continue to decline.

Election Roadmap Update (What’s It Means for Markets?)

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It’s been a very late night and a very early morning and much of this analysis has been changing by the hour, and as such hasn’t been edited.  Please forgive any excessive typos.

What’s in Today’s Report:

  • Election Roadmap Update (It’s All About Tier 3 Now)
  • Three Key Takeaways from Last Night’s Election (No Blue Wave But Maybe a Contested Election)
  • What’s Next:  When We Can Expect Results From the Six Remaining States

Futures have gyrated wildly throughout the night on the shifting election outlook but as of this writing they are  marginally higher.

In the Presidential election numerous (seven) states remain undecided and the Presidential race is very close.

Republicans have outperformed in Senate races and are now favored to hold the majority, likely yielding a divided government.

Today focus will remain on the election and specifically when the remaining six states (NC/GA/PA/MI/WI/NV) are called.

Outside of the election, we also get the ADP Employment Report (E: 600K) and the ISM Services Index (E: 57.6), but while important reports, they’ll be overshadowed by the election headlines, and we need to be prepared for a lot of “noise” and intra-day volatility.

Tom Essaye Quoted in Courthouse News Service on November 3, 2020

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“If the race is decided by the verdict in a single state … and the margin is close (less than 1%), then both the Biden and Trump campaigns will send lawyers…” wrote Tom Essaye, president of The Sevens Report. Click here to read the full article.