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The U.S. Presidential Debate Looms Large: Global Week Ahead
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In the Global Week Ahead, the first U.S. Presidential debate is the key global event.
The Biden-Trump debate likely steps in front of the U.S. nonfarm payroll report out on Friday. It is unusual to see the monthly jobs report eclipsed by a different event.
But the U.S. Presidential election on Nov. 3rd looms large.
Reuter’s journalist Noel Randewich wrote this on Sept. 26th—
“Some U.S. stocks could face more volatility next week as President Donald Trump and rival Joe Biden face off in their first debate ahead of a November election that betting services currently view as almost a coin flip.
“A strong performance in Tuesday's debate by Biden, who currently has a modest lead in betting odds and polls, might boost stocks related to global trade and renewable energy, while a perceived debate victory by Trump could benefit fossil fuel and defense companies.
“The first of three scheduled debates comes at a fraught moment on Wall Street.
“The S&P 500 has tumbled -10% from record highs in recent weeks as investors worry about a prolonged recovery from the coronavirus and uncertainty related to the Nov. 3rd vote, including the possibility of a delay in announcing a winner.”
Next are Reuters’ five world market themes, re-ordered for equities.
(1) Q4 Begins
An extraordinary year is shuffling into its final stretch and it’s packed with blockbuster events -- the race for a coronavirus cure or vaccine, a seismic U.S. presidential election and a possible no-deal Brexit that would end a 3-1/2-year-long UK-Brussels standoff with a bang.
Squaring the books after Q3 will be interesting too.
Markets have lost altitude lately, but top tech stocks, while some 20% off peaks, are still up 65% year-to-date. Chinese shares have leapt 13%, while a dollar that spent recent months slumbering could suddenly be heading for its best month since 2016.
(2) What of More Stimulus… and Vaccines?
By now we were meant to have resumed shopping, dining, traveling and commuting. Instead, regional lockdowns are returning, the global COVID-19 death count is marching toward a million and stocks are swooning.
All that has trained market focus on stimulus and vaccines. Governments from Canada and Britain to Thailand are stepping up on the former. The U.S. Congress is dithering over further relief, but the possibility of mass evictions and defaults in an election year may persuade lawmakers to break the deadlock.
As for vaccines, several companies are conducting final-stage clinical trials; any signs of their efficacy would likely boost sentiment.
The COVID resurgence has ended talk of V- or U-shaped bouncebacks. Without more stimulus or vaccines, the trajectory could end up looking like a W or even an L.
(3) Non-farm Payrolls for September on Friday
September U.S. jobs data, out on Friday, will be watched even more closely than usual over growing concern on lawmakers’ failure to agree on fresh fiscal stimulus to protect the economy. This will also be the final monthly gauge of the U.S. jobs market before Election Day on Nov. 3.
Analysts polled by Reuters expect payrolls rose 875,000, after growing by 1.371 million in August. Recent data, including weekly jobless claims, suggest a nascent economic recovery may be fading as the effects of the last fiscal stimulus wane.
Fed Chief Chair Jerome Powell on Thursday told lawmakers that fresh fiscal stimulus could make the difference between a continued recovery and a much slower economic slog.
But a new deal before the presidential election looks unlikely, dimming the prospects for stock markets already hurt by election uncertainty and concern about the economy. A weak payrolls number could add to the angst.
(4) European Consumer Inflation Data Out Wednesday
Preliminary September Eurozone inflation data is out Wednesday and, rest assured, the ECB will be watching closely.
August inflation turned negative for the first time since May 2016. With the economy showing signs of weakening amid the coronavirus resurgence, concern is growing. ECB board member Fabio Panetta warned that inflation remains “uncomfortably” below its near-2% target.
Market-based inflation expectations, closely tracked by rate-setters, are also flashing warnings, having fallen to two-month lows. No wonder that speculation about another round of ECB stimulus before year-end is building, as are expectations for a rate cut in 2021.
(5) Will Europe’s Struggling Banks Consolidate?
European policymakers have stopped worrying that the region’s banks are too big to fail, and instead fret they are too small to survive.
Average return on equity — a measure of profitability — at European banks is around 7%, half that of their American peers. The STOXX Europe 600 bank index has fallen back below levels hit during the 2008 crisis and hovers off record lows.
For regulators, deals may be the only way out of the malaise. They are trying to make tie-ups easier — helping drive mergers of domestic retail lenders in Italy and Spain this year.
Now focus is on banking giants, with sources saying UBS examined a tie-up with Credit Suisse earlier this year. Deutsche Bank hinted this week it could join the fray once it finishes its latest overhaul.
Muted share price reaction suggest investors have limited confidence mega deals can be pulled off just yet. But with losses caused by COVID-19 set to crystalize in the coming months, some may soon have no other option.
Top Zacks #1 Rank Stocks
Let’s take a look at the “Belle of the Ball” – remote-working driven stocks.
Intuit (INTU - Free Report) : This is a $318 per share Computer-Software stock, making for a whopping $106B market cap stock. I see a poor Zacks Value score of F, a good Zacks Growth score of B, and a lousy Zacks Momentum score of F.
FedEx Corp. (FDX - Free Report) : This is a $250 a share Air Transportation-Cargo stock, making for a $64B market cap stock. I see an average Zacks Value score of C, a great Zacks Growth score of A, and a good Zacks Momentum score of B.
NetEase (NTES - Free Report) : This stock takes the prize for most overvalued Zacks #1 Rank tech stock. At a stunning $472 a share, making for a $60B market cap. Scarily, there is a Zacks Value score of F, a Zacks Growth score of F, and a Zacks Momentum score of F.
To no surprise, we are seeing Nasdaq weakness the last few weeks.
Tech momentum traders are taking profits off the table on overvalued stocks like these.
Key Global Macro
The U.S. nonfarm payroll report on Friday is the big macro indicator out this week.
On Monday, Mexico’s household unemployment rate comes out. The latest reading was 5.4%.
China’s Caixin manufacturing PMI comes out. 53.1 is expected. 53.1 was the prior reading.
On Tuesday, the first U.S. presidential debates will be held Tuesday night at 9 pm ET. The second debate will be October 15th. The third and final one will be October 22nd. VP candidates duke it out October 7th.
A Conference Board measure of consumer confidence will include consumers’ assessment of whether jobs are plentiful or harder to get. 89.8 is consensus, with the prior at 84.8.
On Wednesday, ADP Private Payrolls for September come out. +650K is consensus. +428 is the prior reading.
Japan’s Tankan survey comes out. Look for a 0.5 lift in the All Industries index, down from 3.2 in the prior reading.
On Thursday, the U.S. ISM report on manufacturing comes out. 56.2 is the consensus. 56.0 is the prior reading.
Brazil’s PMI for manufacturing was 64.7 in the prior reading. We get an update.
The Reserve Bank of India should stay pat at a repo rate of 4.0%.
On Friday, the Eurozone’s inflation reading arrives for September. -0.1% m/m is expected. -0.2% m/m was the prior reading.
U.S. nonfarm payrolls for September should be +900K, with +1,371M the prior reading.
Conclusion
Will I be watching the first Presidential debate?
I think so.
Will a strong performance by either candidate matter to me?
No!
My mind is made up. Like so many others out there.
Polls haven’t moved more in favor of Biden since early June. Trump gained back some minimal lost ground since bottoming in early July.
Even looking back to before the virus pandemic hit in early March in the USA, the polls don’t move much, really. Over 2020, Biden gets no better than 50% across polls. And no worse than 47%. Trump goes from 45% at the high end in national polls, to 41% at the low end.
Regardless, it is voting at the U.S. state level that matters the most. Poll moves there are what I will be watching in the weeks ahead.
Here is how Nate Silver at polling firm FiveThirtyEight summed it up the backdrop—
“Add it all up, and the state polls are a tiny bit better for Biden than his national polls show — but only a tiny bit.
“The results from red, purple and blue states combined imply that Biden is ahead by 8.0 percentage points nationally (you get the same results whether using 2012 or 2016 as a baseline) as compared with his current 7.3-point lead in national polls.
“Perhaps the broader lesson here is that we don’t really need national polls for all that much.
“In fact, our model uses them fairly sparingly. The election is contested at the state level.
“Although it can be useful to know where the national popular vote stands for various reasons, you don’t actually need national polls to forecast it — you can come up with pretty good (indeed, often better) estimates of the national popular vote by using state polls instead.”
Have a Great Trading Week!
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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The U.S. Presidential Debate Looms Large: Global Week Ahead
In the Global Week Ahead, the first U.S. Presidential debate is the key global event.
The Biden-Trump debate likely steps in front of the U.S. nonfarm payroll report out on Friday. It is unusual to see the monthly jobs report eclipsed by a different event.
But the U.S. Presidential election on Nov. 3rd looms large.
Reuter’s journalist Noel Randewich wrote this on Sept. 26th—
“Some U.S. stocks could face more volatility next week as President Donald Trump and rival Joe Biden face off in their first debate ahead of a November election that betting services currently view as almost a coin flip.
“A strong performance in Tuesday's debate by Biden, who currently has a modest lead in betting odds and polls, might boost stocks related to global trade and renewable energy, while a perceived debate victory by Trump could benefit fossil fuel and defense companies.
“The first of three scheduled debates comes at a fraught moment on Wall Street.
“The S&P 500 has tumbled -10% from record highs in recent weeks as investors worry about a prolonged recovery from the coronavirus and uncertainty related to the Nov. 3rd vote, including the possibility of a delay in announcing a winner.”
Next are Reuters’ five world market themes, re-ordered for equities.
(1) Q4 Begins
An extraordinary year is shuffling into its final stretch and it’s packed with blockbuster events -- the race for a coronavirus cure or vaccine, a seismic U.S. presidential election and a possible no-deal Brexit that would end a 3-1/2-year-long UK-Brussels standoff with a bang.
Squaring the books after Q3 will be interesting too.
Markets have lost altitude lately, but top tech stocks, while some 20% off peaks, are still up 65% year-to-date. Chinese shares have leapt 13%, while a dollar that spent recent months slumbering could suddenly be heading for its best month since 2016.
(2) What of More Stimulus… and Vaccines?
By now we were meant to have resumed shopping, dining, traveling and commuting. Instead, regional lockdowns are returning, the global COVID-19 death count is marching toward a million and stocks are swooning.
All that has trained market focus on stimulus and vaccines. Governments from Canada and Britain to Thailand are stepping up on the former. The U.S. Congress is dithering over further relief, but the possibility of mass evictions and defaults in an election year may persuade lawmakers to break the deadlock.
As for vaccines, several companies are conducting final-stage clinical trials; any signs of their efficacy would likely boost sentiment.
The COVID resurgence has ended talk of V- or U-shaped bouncebacks. Without more stimulus or vaccines, the trajectory could end up looking like a W or even an L.
(3) Non-farm Payrolls for September on Friday
September U.S. jobs data, out on Friday, will be watched even more closely than usual over growing concern on lawmakers’ failure to agree on fresh fiscal stimulus to protect the economy. This will also be the final monthly gauge of the U.S. jobs market before Election Day on Nov. 3.
Analysts polled by Reuters expect payrolls rose 875,000, after growing by 1.371 million in August. Recent data, including weekly jobless claims, suggest a nascent economic recovery may be fading as the effects of the last fiscal stimulus wane.
Fed Chief Chair Jerome Powell on Thursday told lawmakers that fresh fiscal stimulus could make the difference between a continued recovery and a much slower economic slog.
But a new deal before the presidential election looks unlikely, dimming the prospects for stock markets already hurt by election uncertainty and concern about the economy. A weak payrolls number could add to the angst.
(4) European Consumer Inflation Data Out Wednesday
Preliminary September Eurozone inflation data is out Wednesday and, rest assured, the ECB will be watching closely.
August inflation turned negative for the first time since May 2016. With the economy showing signs of weakening amid the coronavirus resurgence, concern is growing. ECB board member Fabio Panetta warned that inflation remains “uncomfortably” below its near-2% target.
Market-based inflation expectations, closely tracked by rate-setters, are also flashing warnings, having fallen to two-month lows. No wonder that speculation about another round of ECB stimulus before year-end is building, as are expectations for a rate cut in 2021.
(5) Will Europe’s Struggling Banks Consolidate?
European policymakers have stopped worrying that the region’s banks are too big to fail, and instead fret they are too small to survive.
Average return on equity — a measure of profitability — at European banks is around 7%, half that of their American peers. The STOXX Europe 600 bank index has fallen back below levels hit during the 2008 crisis and hovers off record lows.
For regulators, deals may be the only way out of the malaise. They are trying to make tie-ups easier — helping drive mergers of domestic retail lenders in Italy and Spain this year.
Now focus is on banking giants, with sources saying UBS examined a tie-up with Credit Suisse earlier this year. Deutsche Bank hinted this week it could join the fray once it finishes its latest overhaul.
Muted share price reaction suggest investors have limited confidence mega deals can be pulled off just yet. But with losses caused by COVID-19 set to crystalize in the coming months, some may soon have no other option.
Top Zacks #1 Rank Stocks
Let’s take a look at the “Belle of the Ball” – remote-working driven stocks.
Intuit (INTU - Free Report) : This is a $318 per share Computer-Software stock, making for a whopping $106B market cap stock. I see a poor Zacks Value score of F, a good Zacks Growth score of B, and a lousy Zacks Momentum score of F.
FedEx Corp. (FDX - Free Report) : This is a $250 a share Air Transportation-Cargo stock, making for a $64B market cap stock. I see an average Zacks Value score of C, a great Zacks Growth score of A, and a good Zacks Momentum score of B.
NetEase (NTES - Free Report) : This stock takes the prize for most overvalued Zacks #1 Rank tech stock. At a stunning $472 a share, making for a $60B market cap. Scarily, there is a Zacks Value score of F, a Zacks Growth score of F, and a Zacks Momentum score of F.
To no surprise, we are seeing Nasdaq weakness the last few weeks.
Tech momentum traders are taking profits off the table on overvalued stocks like these.
Key Global Macro
The U.S. nonfarm payroll report on Friday is the big macro indicator out this week.
On Monday, Mexico’s household unemployment rate comes out. The latest reading was 5.4%.
China’s Caixin manufacturing PMI comes out. 53.1 is expected. 53.1 was the prior reading.
On Tuesday, the first U.S. presidential debates will be held Tuesday night at 9 pm ET. The second debate will be October 15th. The third and final one will be October 22nd. VP candidates duke it out October 7th.
A Conference Board measure of consumer confidence will include consumers’ assessment of whether jobs are plentiful or harder to get. 89.8 is consensus, with the prior at 84.8.
On Wednesday, ADP Private Payrolls for September come out. +650K is consensus. +428 is the prior reading.
Japan’s Tankan survey comes out. Look for a 0.5 lift in the All Industries index, down from 3.2 in the prior reading.
On Thursday, the U.S. ISM report on manufacturing comes out. 56.2 is the consensus. 56.0 is the prior reading.
Brazil’s PMI for manufacturing was 64.7 in the prior reading. We get an update.
The Reserve Bank of India should stay pat at a repo rate of 4.0%.
On Friday, the Eurozone’s inflation reading arrives for September. -0.1% m/m is expected. -0.2% m/m was the prior reading.
U.S. nonfarm payrolls for September should be +900K, with +1,371M the prior reading.
Conclusion
Will I be watching the first Presidential debate?
I think so.
Will a strong performance by either candidate matter to me?
No!
My mind is made up. Like so many others out there.
Polls haven’t moved more in favor of Biden since early June. Trump gained back some minimal lost ground since bottoming in early July.
Even looking back to before the virus pandemic hit in early March in the USA, the polls don’t move much, really. Over 2020, Biden gets no better than 50% across polls. And no worse than 47%. Trump goes from 45% at the high end in national polls, to 41% at the low end.
Regardless, it is voting at the U.S. state level that matters the most. Poll moves there are what I will be watching in the weeks ahead.
Here is how Nate Silver at polling firm FiveThirtyEight summed it up the backdrop—
“Add it all up, and the state polls are a tiny bit better for Biden than his national polls show — but only a tiny bit.
“The results from red, purple and blue states combined imply that Biden is ahead by 8.0 percentage points nationally (you get the same results whether using 2012 or 2016 as a baseline) as compared with his current 7.3-point lead in national polls.
“Perhaps the broader lesson here is that we don’t really need national polls for all that much.
“In fact, our model uses them fairly sparingly. The election is contested at the state level.
“Although it can be useful to know where the national popular vote stands for various reasons, you don’t actually need national polls to forecast it — you can come up with pretty good (indeed, often better) estimates of the national popular vote by using state polls instead.”
Have a Great Trading Week!
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 >>