What A Night!


Investors remain as uncertain this morning about who will be President of the United States as they were weeks ago.

Interestingly, we heard all of this talk the past many months from the media about all of the "social unrest" and massive change in the air, yet very little has changed. At the moment, only one state, Arizona looks to have flipped from Republican to Democrat, but even that vote is being somewhat contested.

The election appears to now hang in the balance with the remaining uncounted votes in five states, Georgia, Michigan, North Carolina, Pennsylvania, and Wisconsin to determine the winner. We have to keep in mind, "recounts" can be ordered if there are allegations of fraud or other controversies.

In other words, we might not know a clear winner for several weeks. One thing we do know for certain, and as many of us have argued for years, the so-called "polls" are a complete joke.

Obviously, the next few cards flipped over will make a winning hand for either the Republicans or Democrats. From what it looks like, the Democrats will keep control of the House and the Republicans will keep control of the Senate.

With little change in Congress some large investors are now looking past the election for hints and details on the next round of COVID-19 stimulus and how some local governments might start to reinforce corona restrictions if cases keeping moving higher.

Bulls are also anticipating upbeat news on Phase 3 vaccine trials that are expected soon from Pfizer and Moderna. AstraZeneca and Johnson & Johnson both anticipate having results to share before the end of the year. A big factor in the waiting game on the Phase 3 trials is the requirement that at least five trial participants contract severe cases of COVID-19.

Most cases have reportedly been mild. Each study also has a minimum number of infections overall that it must meet. There are scores of other vaccines in the pipeline and several that, if things go well, could possibly deliver positive results in the next few months.

Today, the U.S. Federal Reserve begins its two-day policy meeting which will wrap up tomorrow with a press conference from Fed Chairman Jerome Powell. ADP today releases its private Employment Report today as well, with consensus calling for a gain of around +600,000 jobs.

That's in-line with what's expected from the official October Employment Report due out Friday. Bottom line, all eyes are going to remain on the drama surrounding the U.S. election.

As of this morning, the stock market is stable to higher, crude oil is rallying, the dollar is slightly stronger, and gold is lower... but stay tuned, this situation is very fluid and all of this could change in the blink of an eye! I'm tossing on a few stock market hedges just in case the waters get extremely rough the next few days.

Good News... Share of Mortgages in Forbearance Declines: The Mortgage Bankers Association’s (MBA) latest Forbearance and Call Volume Survey revealed that the total number of loans now in forbearance decreased by -7 basis points from 5.90% of servicers’ portfolio volume in the prior week to 5.83% as of October 25, 2020. According to MBA’s estimate, 2.9 million homeowners are in forbearance plans. Almost half of forbearance exits to date have been from borrowers who remained current while in forbearance, or who were reinstated by paying back past-due amounts, according to Mike Fratantoni, MBA’s Senior Vice President and Chief Economist. (Source: MBA)

World Market Cap Shifts Since 2016: Bespoke Investment shows the standings of 35 global stock markets as a percentage of total world stock market cap. The U.S. is still by far the largest stock market, and it is not even close, accounting for over 40% of total world market cap. China is the only other country to make up a double-digit share of world market cap. For the U.S., its share of global market cap has grown +1.55 percentage points since the start of the year. Only China has gained a larger share in 2020, rising +2.78 percentage points. Bespoke also compared how this has changed during President Trump's tenure. As shown, since the last election, world market cap has consolidated into the U.S. and China. Back in November of 2016, the U.S. and China accounted for 36.53% and 10.21%, respectively, compared to 41.07% and 11.22% today. For the U.S., that +4.5 percentage point gain in share of world market cap is by far the largest, and China's gain was actually not the runner up. Saudi Arabia holds that spot with a share that has risen over +2 percentage points. (Source: Bespoke Investment)

Walmart Ditches Robots for Humans: Walmart has ended its longstanding push to have inventory-tracking robots roving around its store aisles, after learning that humans do just as good a job. It was also worried about customers' reactions to seeing robots in stores. The end of Walmart's five-year contract with Bossa Nova Robotics led the latter firm to lay off half its staff. Walmart had made the robots a frequent topic of conversation at media and investor events in recent years, hoping the technology could help reduce labor costs and increase sales by making sure products are kept in stock. Walmart ended the partnership because it found different, sometimes simpler solutions that proved just as useful, said people familiar with the situation. Walmart told Bossa Nova, “We see an improvement in stores with the robots, but we don’t see enough of an improvement” in revenue and other metrics, according to a person familiar with the situation Source WSJ

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