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What Happens to Markets If Trump Wins?

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What’s in Today’s Report:

  • What Happens To Markets If Trump Wins?
  • Oil Update and EIA Analysis

Futures are marginally weaker following negative stimulus headlines overnight.

President Trump tweeted that stimulus talks had again hit an impasse, implying there would be no deal before the election.  This has always been the base case for the market, but as we and others have said, as long as the market expects the $1.5T-$2.0T in stimulus before year-end, the breakdown in negotiations isn’t a major headwind on stocks.

Today, stimulus headlines will continue to move the tape in the short term, but we’ve also got an important economic report via weekly Jobless Claims (E: 868k) and if that number breaks above 900k, we’ll see concern start to rise the economic recovery is starting to slip.

Other notable events today include Existing Home Sales (E: 6.2M) and three Fed speakers: Barkin & Daly (1:10 p.m. ET), Kaplan (6:00 p.m. ET).

Finally, earnings season is starting to head up, and while stimulus talks are dominating the headlines, earnings are still important.  Some report to watch today include:  KO ($0.45), AAL (-$5.62), T ($0.77), LUV (-$2.44), UNP ($2.03), INTC ($1.10), COF ($1.99), STX ($0.98).

A Familiar Question: 1998 or 2000?

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What’s in Today’s Report:

  • Stimulus Negotiations Update
  • A Familiar Question: 1998 or 2000? (Yield Curve Update)

Stock futures are flat after wavering between gains and losses overnight as investors hold out hope for a last minute stimulus bill while COVID-19 cases continued to rise around the globe.

There were no notable economic releases overnight and no major data points are due to be released today.

Looking into today’s session the lack of economic data will leave investors interested in Fed chatter with several officials speaking over the course of the day: Brainard (8:50 a.m. ET), Mester (10:00 a.m. ET), Kaplan, Daly, & Kashkari (12:00 p.m. ET), Barkin (1 p.m. ET).

Earnings will also continue to be closely watched with multiple notable reports due to be released today: VZ ($1.22), WGO ($0.90), AN ($1.63), TSLA ($0.58), CMG ($3.44), CSX ($0.93), and DFS ($1.63).

While the aforementioned factors will continue to be monitored by investors today, stimulus remains by far the most important influence on markets right now and any progress towards a sizeable, market friendly deal that is actually passable in the near term could trigger a big rally in stocks. Conversely, if talks fall apart and the timeline for a deal is pushed back, we could see stocks begin a potentially steep pullback on the news.

Asset Allocations (Long and Short Term)

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What’s in Today’s Report:

  • Thoughts on Asset Allocations (Short and Long Term)

Stock futures are trading higher this morning amid cautious optimism for a last-minute stimulus deal.

There were no market-moving economic reports overnight however updates from Washington suggest that Speaker Pelosi and Treasury Secretary Mnuchin are continuing to make progress towards a deal ahead of today’s deadline.

Looking into today’s session, there is one economic report ahead of the bell: Housing Starts (1.451M), and a few Fed speakers: Quarles (10:50 a.m. ET), Evans (1:00 p.m. ET), Brainard (3:00 p.m. ET), and Bostic (5:00 p.m. ET).

Earnings season is continuing to pick up with several notable corporations releasing Q3 results today: LMT ($6.07), PM ($1.35), PG ($1.43), SYF ($3.47), TRV ($2.94), NFLX ($2.12), SNAP (-$0.05), and TXN ($1.26).

Bottom line, the economic data and Fed chatter likely won’t move markets today and while earnings could influence the price action in specific sectors, investor focus is almost exclusively on Washington and today’s deadline to reach a stimulus deal. So, reports of progress towards a deal will be supportive of stocks recovering from yesterday’s declines while news that the two sides remain far apart on certain issues could see stocks fall to fresh multi-week lows.

Sevens Report – October Economic Breaker Panel

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What’s in Today’s Report:

  • October Economic Breaker Panel:  How Long Can the Economic Plateau Last?

Futures are sharply lower as surging coronavirus cases in Europe are sparking fears of another self-imposed economic slowdown.

New lockdowns were announced across Europe, with some of the toughest measures coming in London and Paris.

Today there are several important economic reports, including Jobless Claims (E: 833K), Empire State Manufacturing (E: 14.5) and Philly Fed (E: 14.5).  Markets will want to see jobless claims get below 800k to show the labor market is improving, while Empire and Philly provide the first look at October economic data and markets will want to see stability.  With futures down sharply, any disappointment in the economic data could exacerbate the losses.

We also get multiple Fed speakers today, Bostic (9:00 a.m. ET), Kaplan (11:00 a.m. ET), Quarles (11:00 a.m. ET) plus some notable earnings, TSM ($0.92), WBA ($0.96), MS ($1.26), but I don’t think any of that will move markets unless there’s a big surprise lurking.

Three Sectors to Watch if Biden Wins

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What’s in Today’s Report:

  • Three Sectors to Watch if Biden Wins

Stock futures pulled back overnight on news that JNJ halted a phase 3 trial for a COVID-19 vaccine due to an adverse reaction in one of the volunteers, however, futures have since stabilized and are only modestly lower this morning.

Economically, Chinese trade data showed that exports continued to rise in September, up from 9.5% to 9.9% pointing to an ongoing recovery in the Chinese economy.

Today, there is one economic release due ahead of the bell: CPI (E: 0.2%) and one Fed speaker late this evening: Daly (8:00 p.m. ET) but neither is expected to materially move markets given the other market influences on the calendar today.

The first of which is the start of Q3 earnings season with several big names scheduled to release results including: JPM ($2.35), C ($1.01), DAL (-$3.10), JNJ ($1.99), FAST ($0.37), FRB ($1.38), and BLK ($7.46).

Additionally, today is Amazon’s “Prime Day” so online shopping activity will be significantly elevated but if initial reports suggest a weaker than anticipated consumer turnout, the disappointment could weigh on stocks.

Apple is also set to unveil the latest iPhone models at a product launch and given the weight the stock carries in the major indexes, a good event will be good for markets while an underwhelming event could see a good portion of yesterday’s gains given back.

Is A Blue Wave Really Good for Stocks?

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What’s in Today’s Report:

  • Is a Blue Wave Really Good for Stocks?

Futures are moderately higher again on momentum from the previous day’s rally, as it was another quiet night of news.

Economic data overnight was disappointing, as the Chinese Composite PMI missed estimates (54.5 vs. (E) 55.0), as did Japanese Household Spending and UK IP.

Politically, nothing  changed overnight, as no stimulus is expected until after the election.

Today there are no notable economic reports and only one Fed speaker, Barkin at 9:00 a.m. ET, so stimulus headlines will likely drive trading, as they have all week.

Why are Treasury Yields Breaking Out?

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What’s in Today’s Report:

  • Why Are Treasury Yields Breaking Out (And Cyclical Sectors Outperforming?)
  • Weekly EIA Report and Oil Update

Futures are modestly higher mostly on momentum from yesterday’s rally, following a quiet night of news.

The Vice Presidential debate was traditional and didn’t provide any surprises and won’t impact the Presidential race.  Currently the market is fully expecting a Biden win and partially pricing in a “Blue Wave” in November.

Economically, German exports slightly beat estimates, rising 2.4% vs. (E) 1.5%, but that number isn’t moving markets.

Today focus will remain on chatter of any potential stand-alone stimulus bills for the airlines or direct payments to citizens, but nothing is expected.  Beyond stimulus, we do get an important economic report via Jobless Claims (E: 819K), and markets will want to see continued improvement to show the recovery is indeed ongoing.  A drop below 800k would be positive surprise.

Finally, there are multiple Fed speakers today including Rosengren (12:10 p.m. ET), Kaplan (1:00 p.m. ET), Bostic (2:00 p.m. ET) and Barkin (2:30 p.m. ET), but none of them should move markets.

Market Multiple Table: September Update

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What’s in Today’s Report:

  • Market Multiple Table: September Update

Stock futures are modestly lower today as investors digest yesterday’s strong equity rally and assess the COVID-19 outbreak among politicians after President Trump’s return to the White House from Walter Reed Medical Center.

Economically, German Manufacturers’ Orders grew 4.5% vs. (E) 2.3% in August but positive economic data remains a near-term negative for risk assets as it reduces pressure for lawmakers to unleash more stimulus.

Looking into today’s session, there are two economic reports to watch: Goods & Services Trade (E: -$66.5) before the bell and JOLTS (E: 6.250M) shortly after the open but neither is expected to materially move markets.

There are also multiple Fed speakers today including: Harker (12:00 p.m. ET), Bostic (2:00 p.m. ET), and Kaplan (6:00 p.m. ET) but Powell (10:40 a.m. ET) will be the most closely watched as the market looks for further clues into future policy.

Beyond economic data and Fed speakers, markets will continue to focus on Capitol Hill and the ongoing negotiations for the next stimulus deal. Specifically, Speaker Pelosi and Treasury Secretary Mnuchin are expected to have a follow up call today so investors will be anxiously waiting for any updates from their conversation.

Jobs Report Preview

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What’s in Today’s Report:

  • Jobs Report Preview
  • EIA Takeaways and Oil Data

Futures are moderately higher on more stimulus hopes combined with solid economic data.

Positive chatter regarding a potential stimulus deal continued overnight with whispers implying the deal may be worth more than $1.5T.  But, I want to again caution that many hurdles remain to get a deal done by the election (most important of all being if it can pass the Senate, and that remains unclear).

Economic data was solid overnight as Final Sept. EU manufacturing PMIs met expectations at 53.7.

Stimulus headlines will drive trading today and there’s an outside chance we get an announcement of a deal between Treasury Secretary Mnuchin and Speaker Pelosi.  But, while the market will embrace that, as mentioned, it remains to be seen if the Senate will pass something prior to the election.

Outside of stimulus, we get two important reports on growth (Jobless Claims (E: 850K and ISM Manufacturing PMI (E: 56.3)) and one on inflation (Core PCE Price Index (1.4%)) and the market will want to see solid numbers across the board to imply the economic recovery is not plateauing.  Finally, there are two Fed speakers today, Williams (11:00 a.m. ET) and Bowman (3:00 p.m. ET), but neither should move markets.

Has the Market Reached “Fair” Value Yet?

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What’s in Today’s Report:

  • Pullback Update:  Have We Reached “Fair Value” Yet?
  • Weekly Economic Cheat Sheet:  Jobs Friday, PMI’s Thursday (It’s an Important Week)
  • Weekly Market Preview:  Coronavirus and stimulus hopes are the near term divers of stocks.

Futures are sharply higher thanks mostly to momentum from Friday’s rally, although there were incrementally positive headlines on stimulus and coronavirus over the weekend that are also helping stocks rally this morning

Speaker Pelosi made optimistic comments on a pre-election stimulus deal, but nothing specific was mentioned.

On the coronavirus front, cases keep rising, but news that Florida was fully reopening and European countries were planning more surgical shutdowns both helped sentiment.

Today there are no notable economic reports and no Fed speakers, so markets will be focused on whether the S&P 500 can hold Friday and this mornings’ gains.  From an influence standpoint, in the near term coronavirus cases and stimulus hopes are driving markets, and any incrementally negative headlines on either topic will risk seeing Friday’s gains given back.