Stock bulls are celebrating the strongest post-election day rally ever! Wall Street sees the gridlock in Washington as perhaps the best of all scenarios with a forecasted Republican Senate and Democratic House.
Regardless of who's President, Wall Street appears more comfortable thinking the Republicans will keep control of the Senate and should be able to keep a lid on any aggressive tax-hikes for corporate America and the most wealthy individuals.
The Republican held Senate should also help to hold back more stringent business regulations especially for health care and big tech.
On the flip side, Democratic leadership holding the House could help get a bit more stimulus and infrastructure spending. But most of all I suspect this political setup helps keep interest rates lower for longer and creates a tailwind for U.S. stocks as investment money around the world looks for the best home.
It feels like the powers-that-be on Wall Street are most happy with the government "agreeing to disagree", at least for them moment, meaning no one party is in total control, so probably not a lot of extreme change or movement in either direction for the next couple of years.
As I've been saying for many weeks, big tech looked to be in position to be the largest post-election beneficiary.
Most traders I talk with think a Biden victory could push more money flow into industrial type stocks on increased infrastructure and perhaps the financials on increased spending and lending programs.
A Trump victory should make Wall Street happy longer term because they feel they will be getting another four years of the same which was great job growth, tax incentives, and low rates.
There is some worry however that a Trump victory might bring some nearby pressure as both parties will be hard pressed to find common ground on the next stimulus package.
Any further delay in the next round of "easy money" will cause Wall Street to worry about Consumer Confidence and spending. The Presidential battle seems as if will remain up in the air for several more days.
I suspect if President Trump can find the votes to reverse Arizona and get a clear victory in Pennsylvania there's a chance he remains President for another four years.
From my perspective, anything is still possible, especially considering how crazy this year has been. Let's also not forget, the few days after Obama's victory in 2008, the market first rallied then got hammered.
While the election outcome remains top of mind, today brings the latest U.S. Federal Reserve monetary policy decision along with a follow-up press conference from Chairman Jerome Powell.
No changes are expected and it's also unlikely the central bank will announce any new programs. Some analysts believe the Fed will eventually step up its bond buying but will save it for a future meeting in anticipation of more fiscal support from Congress once the election is wrapped up.
Flying under the radar yesterday was ADP's private Employment Report which showed a gain of +365,000 jobs, which was much less than forecast and down substantially from +753,000 new jobs created last month.
Friday we get the official October Employment Report.
Today is a fairly big day for earnings with notable drug companies AstraZeneca, Bristol Myers Squibb, and Regeneron all reporting. Uber numbers should also be of interest after a big ballot win that preserves its business model in California. Other key releases include Alibaba, Barrick Gold, Electronic Arts, General Motors, Monster Beverage, Nintendo, Peloton, Roku, Siemens, Square, TMobile, Zillow, and Zoetis.
Record Breaking M&A Rush: Dealmakers were in a record-breaking rush to get transactions done before the U.S. presidential election. Companies announced $143.1 billion of mergers and acquisitions globally in the past seven days through yesterday, the highest for any week preceding a U.S. presidential vote since Bloomberg started collecting data. It’s more than double the tally for the lead-up to the 2016 election. Bankers were allegedly scrambling to get things done, fearful that further volatility in the days after the election could scuttle carefully-laid plans for the next blockbuster merger. The flurry of deals has been across industries. Dealmaking volumes have also been buoyed by liquidity injections from the U.S. and European central banks. The recent run of acquisitions is helping extend a nascent recovery in global dealmaking, with activity starting to pick up after volumes plunged the second quarter. The year-to-date tally is now down just -16% to $2.6 trillion. (Source: Bloomberg)
Stink Bugs Threaten Missouri, Midwest: Kevin Rice, University of Missouri assistant entomology professor, tells Brownfield Ag News that when the stink bug was unintentionally released in the United States, it first made a huge pest of itself in the mid-Atlantic states, in fruits and vegetables. “But what we are seeing now is it’s having this large population increase. And we’re noticing them in peoples’ homes and we expect them to spill over into agriculture causing damage in the next few years." Rice says they are piercing and sucking pests that attack field crops, damaging corn kernels and reducing yields while going after soybean pods and plants. Rice says the good news is they’ve been studying the stink bug for 10 years. “We know which pesticides to use and we’ve even worked out thresholds for most of our field crops.” And, Rice says the Samurai Wasp has been detected in 12 states, including Ohio, and is a natural predator of the stink bug. Rice hopes they’ll establish here as the Brown Marmorated Stink Bug populations increase. Rice says the Samurai Wasps kill 90% of the pest's eggs in their native Asia
Google Searches for Coffee and Liquor Stores Set Records: Google searches for “coffee” hit an all-time high in the U.S. on Election Night, the search-engine giant reported Wednesday. But people weren’t just chasing a caffeine buzz to follow the contested presidential election between incumbent President Donald Trump and Democratic challenger Joe Biden. Search interest for “alcoholic drink” has also never been higher in the U.S. Also setting record highs were searches for nearby liquor stores and fries. (Source: MarketWatch)