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This Global Week Ahead will surely be inundated with updates on President Trump’s health.
The U.S. election has not failed to surprise. The outcome and implications from the latest turn of events is not clear at all.
Let’s hope for a speedy recovery for all of those infected by COVID-19, wherever they are.
In terms of fundamental news, I don’t see much rising to the level of last Friday’s U.S. nonfarm payroll report.
The big job add-backs from the initial COVID-19 lockdowns are behind us. 1.76M job additions in July, +1.49M adds in August, and +660K adds in September speak for itself.
While Q3 is unofficially in the books, and Q4 has begun, we have a bit of time for the bulk of official earnings reports to land.
Yet, there are interesting earnings reports out in the Global Week Ahead.
Keep an eye on —
Monday: Fortesque Metals (FSUGY) – iron ore
Tuesday: Paychex (PAYX) – payroll processing
Wednesday: Lamb Weston (LW) – global frozen potato products
Thursday: Delta Air (DAL), Carnival (CCL), Domino’s Pizza (DPZ)
Friday: Infosys (INFY) – India based IT outsourcing
Next are Reuters’ five world market themes, reordered for equity traders:
(1) President Trump Suffers from COVID-19
Donald Trump has joined the list of world leaders who fell prey to the coronavirus after shrugging off risks, scorning masks and making public appearances without following distancing guidelines. But a U.S. president testing positive four weeks before elections, will cause far more ructions than the recent illnesses of the Brazilian or British leaders.
As campaigning enters its final stretch, Trump’s extended stay in DC could help Democratic challenger Joe Biden cement his sizable poll lead. Trump hospitalized, any cabinet members falling ill, or calls to postpone elections could mean a major setback for stock markets.
A rush to hedge such risks is lifting gold prices as well as equity and currency volatility.
In reality, all bets are off -- even Betfair has suspended punts on the election outcome.
(2) Eurozone Finance Ministers Meet Monday on COVID-19 Recovery Fund
European finance ministers meet on Monday to discuss implementation of a 750 billion-euro coronavirus recovery fund, widely hailed as game-changing when it was announced earlier this year. But squabbles over disbursements threaten to sour the mood.
Germany is proposing a rule of law conditionality scheme for countries accessing funds from the bloc; some lawmakers favor an even stronger link. In July, the EU declined to settle details to avoid vetoes from Hungary and Poland. So the meeting could well see an outcry from those two countries.
The first bond sale to finance the SURE jobless scheme is weeks away, a step towards making the European Union one of Europe’s most significant borrowers. But delays to the fund spell bad news to economic recovery.
(3) PMIs Show Weaker Services vis-à-vis Manufacturing, Globally
As the world economy recovers, a gulf is opening between manufacturing and services, the latter hit by renewed COVID curbs and the ending of emergency unemployment schemes. Following Europe’s sharp services PMI contraction, U.S. September data are due on Monday.
Remember, services such as retail, hospitality or transport account for two-thirds of U.S. jobs. But so far, unlike Europe or Japan, U.S. non-manufacturing activity remains in expansion territory, an index from the Institute of Supply Management showed.
That may change if additional assistance for the unemployed and small business doesn’t materialize -- personal income has already shown a drop. The House of Representatives finally approved a $2.2 trillion relief package, but the Republican-controlled Senate is expected to nix the plan.
(4) M&A on the Front Burner
It was the busiest summer on record for dealmakers, with global M&A activity up 80% in the year’s third quarter to a record $1 trillion-plus. But will the surge last as we enter the final stretch of 2020?
The $2.2 trillion January-September deal tally is still 21% below year-ago levels, but bankers say companies are unwilling to stand still, despite coronavirus and upcoming U.S. elections. That could lead to entire industries being reshaped -- for example, Europe’s financial sector after Spanish and Italian bank mergers.
Cross-border deals may also recover. Britain is emerging as a key focus for U.S. buyers, an example being Nvidia’s $40 billion swoop on British chip designer Arm Holdings.
Private equity may also help drive leveraged buyouts, following U.S. fund KKR, which has been a prolific investor during the pandemic.
(5) Armenia-Azerbaijan: Back at War
The Armenia-Azerbaijan conflict has become another stage for a standoff between Russia and Turkey, already at loggerheads over Libya and Syria.
Neither can afford a war, yet they seem incapable of avoiding a squabble, despite the toll on Russia’s rouble -- not long ago seen as an emerging-market safe haven -- and the hit to Turkey’s already embattled lira.
Coming against a backdrop of a looming U.S. election, Trump’s illness and emerging-market underperformance this year, the shifting sands of geopolitics may portend more bumps ahead for investors.
Zacks #1 Rank (STRONG BUY) Stocks
Let’s focus solely on tech stocks.
(1) Infineon Technologies AG (IFNNY - Free Report) : This is a $30 Electronics - Semiconductor industry stock, based in Munich, Germany. That gives it a $39.7B market cap. I see a Zacks Value score of F, a Zacks Growth score of D, and a Zacks Momentum score of D.
(2) Keysight Technologies (KEYS - Free Report) : This is a $98 Electronics - Measuring Instruments industry stock. That gives it a $18.2B market cap. I see a Zacks Value score of F, a Zacks Growth score of C, and a Zacks Momentum score of B.
(3) Garmin Ltd. (GRMN - Free Report) : This is a $95 Electronics - Miscellaneous Products industry stock. That gives it a $18.1B market cap. I see a Zacks Value score of D, a Zacks Growth score of D, and a Zacks Momentum score of A.
The three tech stocks all share Zacks Value scores of D or F. That shows you the momentum trend traders in action. Beware.
Key Global Macro
The start of a new trading week could be informed by several material developments.
- One will be ongoing negotiations toward a U.S. fiscal stimulus package
- Two will be a weekend Brexit meeting
- Third will be U.S. President Trump’s condition and implications for the November 3rd election
On Monday, the U.S. ISM for Services for September came out at 57.8%. 56.2% had been the consensus.
In contrast, European Services PMI could be 47.6, with France Services PMI at 47.5 and Germany Services PMI at 49.1.
Australia’s Reserve Bank (the RBA) should stay pat at 0.25%.
On Tuesday, ECB President LaGarde speaks today and tomorrow.
Fed Chair Powell addresses the U.S. business economist community (NABE) at a conference in Chicago. Chicago Fed’s Evans speaks at an opening luncheon on Monday.
On Wednesday, Peru’s central bank should remain on hold at 0.25%.
The U.S. Vice Presidential debate should go forward.
On Thursday, keep an eye on weekly U.S. jobless claims. 823K is consensus.
On Friday, look for Canada to add +152.5K jobs and mark an unemployment rate at 10% for a mild improvement, to perhaps 9.8%.
Conclusion
Keep calm about the status of the U.S. Presidential election. The stock markets are looking ahead 6-12-18 months.
Don’t get Recency Bias. We tend to give greater importance to the most recent event.
Which means trading only on what has just recently happened.
There could also be a kind of Gambler’s Fallacy in play, with respect to the President’s health. This is the literal opposite of Recency Bias.
What is it? When a certain result has happened more frequently in the past, the bias is to believe there is a higher probability of a different result in the future.
Events are not certain, or in sequence, at all. Implications can be found months or years from now. Not in the week ahead.
That’s it for me.
Regards,
John Blank
Will you retire a millionaire?
One out of every six people retires a multimillionaire. Get smart tips you can do today to become one of them in a new Special Report, “7 Things You Can Do Now to Retire a Multimillionaire.” Click to get it free >>
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How Long Is an Event's Shadow? Global Week Ahead
This Global Week Ahead will surely be inundated with updates on President Trump’s health.
The U.S. election has not failed to surprise. The outcome and implications from the latest turn of events is not clear at all.
Let’s hope for a speedy recovery for all of those infected by COVID-19, wherever they are.
In terms of fundamental news, I don’t see much rising to the level of last Friday’s U.S. nonfarm payroll report.
The big job add-backs from the initial COVID-19 lockdowns are behind us. 1.76M job additions in July, +1.49M adds in August, and +660K adds in September speak for itself.
While Q3 is unofficially in the books, and Q4 has begun, we have a bit of time for the bulk of official earnings reports to land.
Yet, there are interesting earnings reports out in the Global Week Ahead.
Keep an eye on —
Monday: Fortesque Metals (FSUGY) – iron ore
Tuesday: Paychex (PAYX) – payroll processing
Wednesday: Lamb Weston (LW) – global frozen potato products
Thursday: Delta Air (DAL), Carnival (CCL), Domino’s Pizza (DPZ)
Friday: Infosys (INFY) – India based IT outsourcing
Next are Reuters’ five world market themes, reordered for equity traders:
(1) President Trump Suffers from COVID-19
Donald Trump has joined the list of world leaders who fell prey to the coronavirus after shrugging off risks, scorning masks and making public appearances without following distancing guidelines. But a U.S. president testing positive four weeks before elections, will cause far more ructions than the recent illnesses of the Brazilian or British leaders.
As campaigning enters its final stretch, Trump’s extended stay in DC could help Democratic challenger Joe Biden cement his sizable poll lead. Trump hospitalized, any cabinet members falling ill, or calls to postpone elections could mean a major setback for stock markets.
A rush to hedge such risks is lifting gold prices as well as equity and currency volatility.
In reality, all bets are off -- even Betfair has suspended punts on the election outcome.
(2) Eurozone Finance Ministers Meet Monday on COVID-19 Recovery Fund
European finance ministers meet on Monday to discuss implementation of a 750 billion-euro coronavirus recovery fund, widely hailed as game-changing when it was announced earlier this year. But squabbles over disbursements threaten to sour the mood.
Germany is proposing a rule of law conditionality scheme for countries accessing funds from the bloc; some lawmakers favor an even stronger link. In July, the EU declined to settle details to avoid vetoes from Hungary and Poland. So the meeting could well see an outcry from those two countries.
The first bond sale to finance the SURE jobless scheme is weeks away, a step towards making the European Union one of Europe’s most significant borrowers. But delays to the fund spell bad news to economic recovery.
(3) PMIs Show Weaker Services vis-à-vis Manufacturing, Globally
As the world economy recovers, a gulf is opening between manufacturing and services, the latter hit by renewed COVID curbs and the ending of emergency unemployment schemes. Following Europe’s sharp services PMI contraction, U.S. September data are due on Monday.
Remember, services such as retail, hospitality or transport account for two-thirds of U.S. jobs. But so far, unlike Europe or Japan, U.S. non-manufacturing activity remains in expansion territory, an index from the Institute of Supply Management showed.
That may change if additional assistance for the unemployed and small business doesn’t materialize -- personal income has already shown a drop. The House of Representatives finally approved a $2.2 trillion relief package, but the Republican-controlled Senate is expected to nix the plan.
(4) M&A on the Front Burner
It was the busiest summer on record for dealmakers, with global M&A activity up 80% in the year’s third quarter to a record $1 trillion-plus. But will the surge last as we enter the final stretch of 2020?
The $2.2 trillion January-September deal tally is still 21% below year-ago levels, but bankers say companies are unwilling to stand still, despite coronavirus and upcoming U.S. elections. That could lead to entire industries being reshaped -- for example, Europe’s financial sector after Spanish and Italian bank mergers.
Cross-border deals may also recover. Britain is emerging as a key focus for U.S. buyers, an example being Nvidia’s $40 billion swoop on British chip designer Arm Holdings.
Private equity may also help drive leveraged buyouts, following U.S. fund KKR, which has been a prolific investor during the pandemic.
(5) Armenia-Azerbaijan: Back at War
The Armenia-Azerbaijan conflict has become another stage for a standoff between Russia and Turkey, already at loggerheads over Libya and Syria.
Neither can afford a war, yet they seem incapable of avoiding a squabble, despite the toll on Russia’s rouble -- not long ago seen as an emerging-market safe haven -- and the hit to Turkey’s already embattled lira.
Coming against a backdrop of a looming U.S. election, Trump’s illness and emerging-market underperformance this year, the shifting sands of geopolitics may portend more bumps ahead for investors.
Zacks #1 Rank (STRONG BUY) Stocks
Let’s focus solely on tech stocks.
(1) Infineon Technologies AG (IFNNY - Free Report) : This is a $30 Electronics - Semiconductor industry stock, based in Munich, Germany. That gives it a $39.7B market cap. I see a Zacks Value score of F, a Zacks Growth score of D, and a Zacks Momentum score of D.
(2) Keysight Technologies (KEYS - Free Report) : This is a $98 Electronics - Measuring Instruments industry stock. That gives it a $18.2B market cap. I see a Zacks Value score of F, a Zacks Growth score of C, and a Zacks Momentum score of B.
(3) Garmin Ltd. (GRMN - Free Report) : This is a $95 Electronics - Miscellaneous Products industry stock. That gives it a $18.1B market cap. I see a Zacks Value score of D, a Zacks Growth score of D, and a Zacks Momentum score of A.
The three tech stocks all share Zacks Value scores of D or F. That shows you the momentum trend traders in action. Beware.
Key Global Macro
The start of a new trading week could be informed by several material developments.
On Monday, the U.S. ISM for Services for September came out at 57.8%. 56.2% had been the consensus.
In contrast, European Services PMI could be 47.6, with France Services PMI at 47.5 and Germany Services PMI at 49.1.
Australia’s Reserve Bank (the RBA) should stay pat at 0.25%.
On Tuesday, ECB President LaGarde speaks today and tomorrow.
Fed Chair Powell addresses the U.S. business economist community (NABE) at a conference in Chicago. Chicago Fed’s Evans speaks at an opening luncheon on Monday.
On Wednesday, Peru’s central bank should remain on hold at 0.25%.
The U.S. Vice Presidential debate should go forward.
On Thursday, keep an eye on weekly U.S. jobless claims. 823K is consensus.
On Friday, look for Canada to add +152.5K jobs and mark an unemployment rate at 10% for a mild improvement, to perhaps 9.8%.
Conclusion
Keep calm about the status of the U.S. Presidential election. The stock markets are looking ahead 6-12-18 months.
Don’t get Recency Bias. We tend to give greater importance to the most recent event.
Which means trading only on what has just recently happened.
There could also be a kind of Gambler’s Fallacy in play, with respect to the President’s health. This is the literal opposite of Recency Bias.
What is it? When a certain result has happened more frequently in the past, the bias is to believe there is a higher probability of a different result in the future.
Events are not certain, or in sequence, at all. Implications can be found months or years from now. Not in the week ahead.
That’s it for me.
Regards,
John Blank
Will you retire a millionaire?
One out of every six people retires a multimillionaire. Get smart tips you can do today to become one of them in a new Special Report, “7 Things You Can Do Now to Retire a Multimillionaire.”
Click to get it free >>