عقود الفروقات هي أدوات مالية معقدة، وتنطوي على مخاطر عالية لخسارة الأموال بشكل سريع بسبب الرافعة المالية. 75.6% من حسابات مستثمري التجزئة يخسرون الأموال عند تداول عقود الفروقات مع هذا المزود. عليك الأخذ بعين الاعتبار ما إذا كنت تفهم طريقة عمل عقود الفروقات، وما إذا كان بوسعك تحمل المخاطر العالية لخسارة أموالك.
Joe Biden declared president-elect, stocks rally
Joe Biden has been declared president-elect, but Donald Trump is refusing to concede. Markets are not particularly fussed and see some clear light – relative clarity is providing a boost to risk assets.
Stocks enjoyed the best week since April, though there was some payback on Friday as traders consolidated gains.
The S&P 500 rallied 7% over the five sessions, but this did come after just about the worst pre-election week for stocks on record. Investors were shifting a lot of flow into lower volatility debt markets ahead of the election to reduce exposure to stock market volatility, and this is now unwinding back into equities.
In particular, the Biden White House and split Congress ought to mean lower rates, lower inflation and this benefits Growth stocks, and gold.
The dollar index has slumped to its weakest since September 1st put tried to rally early on Monday. A weaker dollar is supportive for gold, which broke out past $1,950. WTI (Dec) tracked sideways around the $38 mark.
Stocks in Asia rose, with the Nikkei up 2% and Hang Seng rising over 1%. Stocks opened firmer in Europe with the bullish trend asserting itself as Biden’s triumph seems all but assured.
The FTSE 100 rallied 1.5% to 6,000, whilst the DAX rose 1.7% to 12,700 and the Stoxx 50 returned to 3,250. US futures indicate Wall Street will open higher after a lacklustre session on Friday.
It would take a lot of big and unlikely legal victories for Trump to turn the result now. Recounts are likely as are multiple legal actions – but the lead for Biden is such that it would imply some enormous voter fraud in several states. Safe Harbor Day is Dec 8th, by which date all states need to have decided who’s won ahead of the Electoral College votes on Dec 14th.
The MSCI All Country World Index hit a record intra-day high this morning. A Biden win is seen to be much better for international cooperation, an end to the Trump-era isolation and critically, good for trade with the potential for a reset in transatlantic relations probably the most exciting aspect for investors. Whilst the Democrats won’t go easy on China, the relationship is expected to be steadier and escalation of tariffs seems less likely than under Trump.
According to weekend data Chinese exports jumped 11.4% in October, whilst imports rose 4.7% in USD terms. This was the best export performance since the pandemic and shows the recovery taking place outside of those countries where lockdowns linger.
It’s a good indicator that global demand is picking up in spite of pandemic restrictions in certain areas. This morning saw some decent German export numbers for September (+2.3%), but France’s economy is operating down 12% in November due to the lockdown.
After the relief rally, where next?
The Senate looks to be heading for Republican control, which removes a lot of the regulatory and tax overhang. Georgia run-offs will keep us unsure for a while longer, but the odds favour a very slim Republican majority in the upper house. Gridlock could be good for multiples and earnings longer term, but it’s not conducive to a large stimulus package right now.
And will Biden go for a more aggressive approach to containing coronavirus? We know that the greater the restrictions the greater the economic damage. Europe is enduring this reality again. A Biden win is probably good news for clean energy companies – the president-elect is committed to re-joining the Paris Climate Accord. Scottish Widows is offloading £440m in ESG unfriendly investments – the wind is blowing only one way.
Sterling was holding well above $1.31 but dollar weakness aside, the pound remains susceptible to a significant amount of Brexit headline risk.
Boris Johnson and Ursula von der Leyen said ‘significant differences remain’ in trade talks, citing fishing and the provisions for a level playing field. All the showboating and posturing should give way to pragmatism and the realpolitik of securing a deal before the New Year. The current ‘deadline’ is November 15th but talks could well extend beyond this. After tapping on 1.32 briefly early doors, GBPUSD dropped to 1.3140 by around 9am.
The FTSE 100 hit 6,000 and seems to have broken the downtrend. Next to 6,300, or will the downtrend reassert itself? The jump this morning marks a clear move off the 50-day simple moving average at 5,888 and the 100-day simple moving average at 6,011 offers resistance.
US Presidential Election: To Vote, or Not to Vote – That is the Question
As the 2020 US Presidential Election creeps into view, the United States is a country divided. With polarisation increasingly prominent, and ever-stronger partisan loyalty, the famed ‘floating voter’ is nearing extinction.
Whilst almost 40% of the electorate identify themselves as independents, these figures hide a residual bias which exists in most. Recent research has found that 93% of the electorate have some sort of partisan lean, with only 7% considered truly neutral. This illustrates the desire of many American voters to be considered independent, even if they are almost certainly going to vote for the same party in every instance.
And yet, conventional wisdom tells us that the most successful campaigns are those which reach out the middle ground and win over these floating voters. If the aforementioned research is correct, such a strategy may no longer be effective.
Instead, we suggest that turnout is the key to victory in modern US elections. The most important decision a voter can make is not who to vote for – for the vast majority this is a foregone conclusion. Rather, the voter choice that really matters is whether to vote at all.
One need only look back to 2016 to exemplify this point, where Hillary Clinton lost the election by less than 100,000 key swing state votes. By comparison, 4.4 million people who voted for Obama in 2012 didn’t vote in 2016, more than enough to overturn Trump’s wafer-thin victory.
Some research has even suggested that, had turnout remained at 2012 levels, Clinton would have won 323 electoral college votes – enough to deliver her the White House comfortably. In states such as Michigan, Wisconsin, Pennsylvania, Florida, and North Carolina, it was a failure to turn out their own voters which scuppered Clinton, not a failure to win over the centre.
Can Democrats recover African American vote?
The challenge for the Democrats in this election year, both at the Presidential and Congressional level, will be to recognise this as the root of their failure, and to take action in response. In particular, rebuilding African American turnout could prove decisive, after the 7% drop which occurred between 2012 and 2016.
Perhaps Biden’s choice of VP is a recognition of the importance of African American turnout. Although Kamala Harris is unlikely to provide an Obama-sized boost to African American enthusiasm, she may go some way to bridging that gap.
This is especially likely in the context of the Black Lives Matter movement, which could also help to increase turnout among minority demographics.
Which campaign will adapt best to mail-in ballots?
The prominence of mail-in ballots could throw a spanner in the works, though, with campaigns having to radically change their Get Out the Vote operations in response to the new circumstances.
Whereas previous elections have seen a focus on last-minute voter outreach, the early registration deadlines will mean that a longer-term strategy is required. The campaign which adapts to these changes most effectively will gain a critical edge come election day.
To vote, or not to vote: that is the question. The answer will decide who resides in 1600 Pennsylvania Avenue come 2021.
US election playbook: navigating the volatility with 40 days to go
- Temporary dislocation
- Too many variables
- Bigger risks ahead
Given the once-in-a-lifetime pandemic, the US election is being held in exceptional circumstances. All else being equal though, we can deduce something about how current polling might play out. The market consensus is that a Biden win and Democrat clean sweep will lead to higher taxes and regulatory risk for a large number of corporates, which will hurt equities.
There are however plenty of other ways in which the market might like a Blue-nami, from pragmatic trade policy to combined loose fiscal and monetary policy.
Could Biden open up trade with China again? The Democrat candidate is taking a hard line on China – which is playing well with both sets of voters – but will he become more emollient once in office?
Tony Blinken, a senior foreign policy adviser to Biden, said fully ‘decoupling’ with China as urged by Donald Trump is ‘unrealistic’ and ‘counter-productive’. Biden will instead reset ties with China while seeking to redress unfair practices on trade and IP. However, it will be difficult for Biden to withdraw Trump’s tariffs immediately, without gaining significant concessions.
Biden has to play the hand Trump dealt, but he might seek to drive greater consensus with China and work out a more pragmatic trade policy.
Biden may not have expressed much support for Modern Monetary Theory – in fact he was once a fiscal hawk in the old style – but under a Democrat Congress and White House there would be no rush to reduce the deficit.
In fact, Biden’s economic stimulus plans entail more borrowing. Whilst it is a stretch to suggest that Biden is a supporter of MMT, the economic and social backdrop has changed drastically in recent years and it is gaining traction in more corners of the Democrat machine.
Moreover, the Fed’s recent average inflation targeting shift opens up a new front for MMT proponents in explicitly pushing full employment as the primary goal of monetary policy.
At Jackson Hole the Fed announced a policy shift that ought to have a material impact on expectations around rates and inflation. The Fed is taking a more practical approach than in the past when it has been guided by theories about maximum employment, the Philips Curve and inflation.
Instead of saying that the economic outcomes need to fit its models – which have always been nothing more than a best guess – it will let the outcomes drive the policy. Some would say this is a step towards fully embracing MMT, even if Powell has been against this approach in the past.
The fact is that the crisis has thrown MMT from economic theory to economic practice without any real debate. Powell has embraced a central tenet of MMT – why should millions of people be thrown on the economic scrapheap and left unemployed as the price to pay for low inflation.
Under a Democrat-led Congress and White House, MMT proponents will gain a louder voice, with implications for federal economic policy.
Overall, whilst Biden’s tax policy might be tougher on Wall Street, trade and monetary policy could be easier. But it is not quite so straightforward as that. With polls close in the key battleground states and huge uncertainty over the potential impact of postal votes, it is currently difficult to put a price on any outcome, which in turn makes it hard to trade the election per se.
Going long or short based on the outcome is far too simplistic and you could just as easily call it wrong as get it right. What we can say is that the pandemic, the economic recovery and the monetary policy response are longer term going to matter much more. And so, all else being equal is far too simplistic a view to take in what’s a very complex situation.
Will the election outcome be contested?
The only thing the market wants is to get the election out of the way – the only real danger would be a long period of legal disputes post-election, but again this ought only to create volatility at the time and would eventually be forgotten once it all shakes out.
Veiled threats by Trump to not accept a Biden win are probably over-analysed. The Supreme Court (and Secret Service) would see to that. It turns out the most antagonistic election in a generation for the people of America might well end up merely a short term ripple when it comes to markets, given everything else they have to contend with in the long term.
With 40 days to go, the race is tight and in the major battlegrounds it is too close to call. Markets will be volatile and dislocations will occur that present opportunities. The best approach is to be agile enough to contend with both outcomes and no clear winner on the morning of November 4th.
You can follow our election coverage here.
Congressional Elections: Why do they matter?
While the race for the White House has received outsized attention, developments such as the failure to reach a new coronavirus relief bill and the looming threat of a government shutdown have heightened the stakes in the battle for control of Congress.
The House of Representatives looks firmly in the hands of the Democrats after the inroads they made in the 2018 midterms. Control of the Senate is therefore crucial. It’s currently in Republican hands and the Democrats would need to win four seats of the twenty-three up for grabs in order to gain an overall majority.
With Biden ahead in the Presidential polls, can the Democrats feel confident about the Senate?
With party now trumping candidate, the general momentum towards the Democrats should give them some hope. 2016 was the first year on record where every single state holding Senate elections voted for the same party for Senate as for president.
It’s no longer the case that voters split their ticket when they go to the polls. For example in 1980, despite Republican Ronald Reagan winning the White House, 12 of 31 Senate seats went to the Democrats.
Now though, the electorate is so polarized that party dominates across elections. If you voted Trump, you vote Republican across your ballot paper.
This means state-wide elections have increasingly been nationalized: Senators struggle to separate themselves from their national parties. This has been exacerbated under President Trump, where almost every Republican Senator has embraced him of fear of losing his conservative base – this is especially the case for the Republican Senator in Arizona, Martha McSally, who has pivoted to the right and linked her fate inextricably to Trump’s.
Rare candidates, like Maine Senator Susan Collins, have been able to maintain an identity distinct to the national party’s and keep split-ticket voting alive – but even Collins’ long-time local reputation as an independent, in a centrist state with a history of electing moderate women, is under threat for her polarizing pro-Trump voting record. She backed Brett Kavanaugh for his confirmation to the Supreme Court, in support of her President – and saw her popularity with female voters plummet.
Replacement for Ruth Bader Ginsburg becomes key election issue
With any coronavirus relief unlikely to pass before the election, control of the Senate will be crucial to any alleviation of the recession. This has been exacerbated by the death of Supreme Court Justice Ruth Bader Ginsburg. Party politics will now be bogged down in finding her replacement, rather than finding a fiscal compromise.
While Trump has made this a key issue, going as far as releasing an unsurprisingly political list of possible appointees, Biden has in turn also made this a focus of his candidacy, promising to nominate a historic first: a black woman. Given the increasing frequency of constitutional hardball around Supreme Court confirmations, control of the Senate will be a prerequisite to a successful nominee.
Given that the states in the Senate up for re-election are very Republican, this development will energise the base, reducing the likelihood of a Democratic majority.
However, on the Presidential level, the blue wall which deserted Hillary Clinton in 2016 looks likely to be rebuilt, given the intensely partisan nature of the battle to come. Mitch McConnell should be pleased by this weekend’s news, Donald Trump should not.
With both sides becoming more entrenched the elections look set to deliver a split between the legislature and the executive. With a more polarized Congress, key platform items promised by both candidates will be tougher to achieve. Expect partisan investigations and tense hearings to persist no matter who wins.
Blue-nami or Red Wave? How the US election result could impact markets
How will the US Presidential Election impact markets? Will there be Democratic sweep of all three houses; the White House and both houses of Congress? Or can Donald Trump defy the pollsters and hold on for four more years?
Whatever the result, there is sure to be an impact on financial markets. We’ve put together all the potential outcomes and how these might impact the US dollar, S&P 500 and Treasury yields in a handy guide – you can find yours today in platform message centre.
Election2020 quick briefing: Trump catches up, markets price for pullback
- Trump catches Biden in betting markets
- Polls narrow further as race tightens
- Options markets show concern
September 2nd saw an important development as betting markets turned in favour of Donald Trump being re-elected. The RCP average showed Trump +0.1pt over Biden at 49.8 to 49.7. Whilst clearly too close to call, the speed at which Trump has narrowed the gap shows how quickly things can change.
Betting markets are not, however, the same as polls. They are only market participants’ best guess at what the outcome will be.
US Presidential Election polls tighten as Trump eats into Biden’s lead
But polls also show a tighter race. Our US election poll tracker, which is powered by data from Real Clear Politics, has come in sharply. On a national level Trump is polling better than at any time since May and has eaten into Biden’s clear lead, which remains strong.
However, looking into the key battlegrounds where we know the fight will be bitterest and where it really counts, the lead Biden has is also narrowing and now well within the margin for error area. The latest RCP data shows Biden at +2.6 in the top battlegrounds, having been more than +6pts in July. Trump currently stands on 45.4 vs Biden’s 48.
Vix signals heightened election nerves
The tighter race is being displayed by more implied volatility in options markets for the S&P 500 than the stock market itself is showing. We have talked in the last few days about the Vix moving steadily higher even as the SPX rises – futures again pointing higher today after Tuesday’s record close.
This is the first red flag. The second is the term structure of the Vix futures curve which shows significant increase in expected volatility come Oct and Nov with a sharp 20% contango between the front and back months. Compare for example the CBOE Volatility Index Oct 2020 close at 33.51 vs the front month (Sep) at 28.35. Nov traded at 31.80.
This contango in the Vix is at odds with the general grind higher we are seeing and signals genuine anxiety among investors that the election will create the conditions for pullback.
Our Trump20 Blend – comprised of stocks seen as being most exposed to changes to corporate tax rates – is up but has lagged the broad market in recent days, whilst the dollar has softened despite a decent recovery on Wednesday.
Funnily enough, whilst the implied volatility is elevated around the election, all else being equal Trump’s low-tax, low-regulation agenda ought to be more positive for the stock market than a Democrat clean sweep would be. What this increased volatility may represent more is in fact investor fears about a disputed election result, which would considerably dent risk appetite going into the end of the year.
Trump approval rating holds up as Republican convention draws to close, battlegrounds tighten
We know that the Presidential race will come down to a handful of key swing states. But national polls still tell us something about the direction of the campaigns.
As the Republican convention draws to a close this week, the latest polls indicate Donald Trump’s standing remains at least stable. NBC News|SurveyMonkey Weekly Tracking Poll shows that 45% of American adults strongly or somewhat approve Trump’s performance, 54% disapprove.
Meanwhile there has been evidence that the race is tightening. This should not come as a great surprise – national polls showing Biden with a double-digit lead were never going to hold once the campaign proper got underway.
What’s interesting is the direction of travel in Trump’s favour in some key battleground states.
According to a recent CNN poll, the national split was 50% for Biden-Harris and 46% for Trump-Pence. That is within margin-of-error territory.
But drill down to the most important states for the Electoral College and it’s even tighter. In 15 battleground states the poll showed Biden with just a single percentage point lead – with the Democrat on 49% and Trump on 48%. The latest poll for Wisconsin shows Trump edging it for the first time in months.
According to RealClearPolitics, which powers our Election Coverage, Trump trails on 42.4% to Biden’s 50% nationally. But in the battlegrounds the gap is narrowing, and Trump leads in some.
And as can be seen by the electoral map, it looks like a toss up as to who will win in November.
US Presidential Election: Step Forward, Kamala
After months of deliberation and internal conflict, the Biden campaign announced this week that Kamala Harris would join his ticket this November. Praised for her articulate dynamism during the primaries, and famed for her debating acumen, this choice will inject some much-needed energy into the Democratic ticket
In the short term, this announcement will afford the Biden campaign a flurry of positive press coverage, likely leading to a bump in the polls. However, with almost three months to go until election day, this short-term hype is largely irrelevant. She won’t be able to move the dial where it counts: the swing states.
Harris’ well-spoken nature will help to keep the attention away from Biden as much as possible, reducing the risk of a race-ending gaffe. He can stay in his bunker while she takes centre stage. Whilst the presence of such a dynamic running mate will likely make Sleepy Joe look like Even Sleepier Joe, this will not impact the race in a meaningful fashion – voters have already made up their minds one way or the other on Biden: endearingly gaffe-prone or scarily senile.
Senator Harris brings with her two strategic benefits:
- Law and Order
- Criticised in the primaries for her overly harsh sentencing decisions as California’s Attorney General, this record will become an asset in winning over the centre, given the current climate of unrest. Although such a record upsets the left wing of the Democratic party, their votes can be relied upon as they are so keen to dispose of Trump
- Campaign funding
- Harris has deep roots in California politics – first as Attorney General and then as Senator. Her home state is notorious for its heavyweight fundraising capacity, particularly from Hollywood and Silicon Valley. Having built a decade long relationship with these donors, Senator Harris’ presence on the ticket will open up a huge reservoir of campaign funding. However, this flood of cash comes at a price. The Republicans will be eager to capitalise on this Hollywood connection by levelling accusations of ‘Liberal Elitism’ at the Biden-Harris ticket, which could be potentially damaging in the crucial rust belt states. Luckily for Biden, he has a long-established reputation as ‘middle class Joe’ which can neutralise this line of attack.
So, nationally it would appear that Senator Harris brings with her an injection of energy and a mountain of cash – both extremely useful on the national level. However, as Hillary Clinton discovered in 2016, the national vote means nothing without an electoral college majority. It is the swing states who will decide this election one way or the other, and it is in those states where the Harris pick is likely to resonate least.
Many have predicted that Harris, as a black woman, will help to achieve a surge in minority turnout. However, it should be noted that polling indicates only 6% of African American voters thought race should be a factor in the selection of a VP. And in any case, it was Senator Warren, not Senator Harris, who African Americans preferred for VP prior to this announcement. Therefore, if a surge in minority voting is to occur in November, it will not be as a result of Harris’ VP candidacy.
And a side note, if Biden does win this November, Harris will leave a vacant California Senate seat in her wake – one of the most liberal states in the country. The left vs centre battle that played out in the Presidential primary will be replayed in that race too, reopening old wounds and worsening Democratic divisions.
President Trump will be keen as always to profit from divisions wherever he can find them. He has already attacked Harris as being of the ‘radical left’ and ‘phony’. Being a woman of colour from California, Harris hits all of the Trumpian flash points – a chance for Trump to roll out his favourite electoral strategy of inflaming tensions and forcing the electorate to take sides.
Overall, Senator Harris will provide the Biden campaign with a much-needed sense of energy and a near-limitless supply of campaign cash. This will boost Biden’s chances of winning the popular vote but is likely to be less effective in the crucial rust belt states where she will simply play into Trump’s strategy of provoking disagreement between the haves and have-nots.
UK enters worst recession, European stocks steady after Wall St slips on stimulus doubts
What did I miss? Stimulus measures keep being debated, vaccine hopes are at first raised then more sensibly assessed, and stocks in the US keep going up; the S&P 500 has risen about 5%, whilst European markets are flat over the period. I seem to recall in July a lot of chatter about European equities outperforming, but there has been little to show from that trade so far. Gold has smashed a new all-time high and profits been taken, an easy win for most, whilst oil prices have barely moved.
UK economy posts worst decline since records began
So, what has changed? Britain’s economy is on the ropes, but we knew this already. UK GDP fell by 20.4% in the second quarter, which was largely in line with expectations. Economic activity is bouncing back – the economy grew 8.7% in June but remains well below the levels seen in February. Having been out and about over the last three weeks, I can safely say there will be more recovery recorded in July and August.
But getting back to 2019 levels of activity is going to take a very long time as we see permanent impairment in certain sectors of the economy, as well as behavioural and social changes. Cable recovered off the 1.3020 horizontal support formed by the low on Monday on the update to continue to trade its August range. With the dollar turning around and seemingly finding its near-term support, GBPUSD may struggled to hold its 1.30 level.
Gridlocked US stimulus talks weigh on stocks
The Democrats and Republicans can’t agree anything. Stocks on Wall Street slipped after gridlock in Washington left investors wary of pinning their hopes on a bipartisan stimulus package, but the S&P 500 was at one point just a few points from its all-time high at one point and could still take it out this week. Senate majority leader Mitch McConnell naturally blamed the Democrats for this but revealed the two sides had not spoken since Friday.
The Dow and S&P 500 both snapped a 7-day winning streak, whist European markets rose a touch on Wednesday’s open after a strong run-up on Tuesday. The FTSE 100 continues to trade the narrow range of the June pullback without any signs of breaking out.
Gold tumbles on profit-taking
The lack of fresh stimulus left gold bulls wary and profits were taken but we have seen a big bounce off some important technical support this morning. Spot dropped under $1900 but found support on the old resistance at $1865 and the 200-period SMA on the 4hr charts may offer some technical support. More important is the trend support offered by the line drawn from the lows made since the March trough.
Gold’s rally has been all about stimulus and inflation and so doubts about whether there will be more stimulus saw investors recast inflation expectations a little and the technical exhaustion of the move needed to be factored in. US real rates rose, with 10yr TIPS back to –0.99%, having struck a low of –1.08% last week. Benchmark 10yr yields rose to 0.66% but whilst real rates are so deeply negative gold will have support.
Chart: Gold recovers $1,927 after finding support at $1,865
Biden picks Harriss as running mate
Joe Biden named Kamala Harris his running mate for the race to the White House. Two points about this really stand out. The duo needs to get the vote out, and Harris should energise many who may not otherwise vote, but they cannot risk losing the centre in the rust belt where the issue is the economy.
But the problem for Trump is that accusations that Biden’s VP pick was too zealous a prosecutor when acting as California attorney general make it difficult for Republicans to say the Democrats won’t be tough on crime. Her appointment will somewhat blunt Republican attacks on law & order.
The key question for investors is who wins in November and whilst details like VP picks are important, they are just a small part of the story. Trump still wins in my opinion whatever the polls are saying.
Kiwi weakens after RBNZ extends QE, opens door to negative interest rates
New Zealand is in full panic mode, locking down Auckland amid a mystery outbreak of Covid. The RBNZ duly announced it would expand the Large Scale Asset Purchase programme to $100bn, which just nudged the kiwi lower. But the real focus is on negative rates – a full four mentions of the committee looking at a negative OCR were in the release. Lower and negative rates is increasingly the path of least resistance for the RBNZ, which makes the NZD open to further downside risk.
Oil prices were up a touch, with WTI (Sep) taking a $42 handle this morning ahead of the inventory figures from the US Energy Information Administration, which are expected to show a draw of 2.9m barrels. API data yesterday showed stockpiles fell 4.4m barrels last week.
Elsewhere in FX land, watch the double top on the EURUSD pair with the rejection of 1.19 looking more convincing we look for neckline support around the 1.17 level to hold for bulls to make a fresh drive higher. However, the pullback in US Treasuries and uptick in yields may offer support for the dollar to push back hard.