Archives of “November 2020” month

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US October ADP employment change 365k vs 650k expected

  
  Analysis

Latest data released by ADP – 4 November 2020

  • Prior 749k; revised to 753k

The headline is weaker than estimated with the breakdown seeing goods-producing jobs up 17k with service-providing jobs up 348k. That’s a poor miss although the market is more distracted by the election focus at the moment. But yes, let’s not forget that there is still a Fed meeting and non-farm payrolls report this week.

Betting markets start to favour Biden again

  
  Analysis
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The shift in Wisconsin is changing the narrative

Smarkets have now pared Trump’s odds of winning to even i.e. 50%, after having it around 71% from about an hour ago. Elsewhere, Betfair is now seeing odds of a Biden win at 8/11 after having Trump as favourite at 2/5 earlier.

Meanwhile, the market is still keeping more choppy with European stocks having pared opening losses earlier to post modest gains, only to give that all away again now.
S&P 500 futures are still up by 0.3% for the time being but risk appetite is fragile.

Update (1032 GMT): Smarkets now give Biden a 55% chance of winning.

Eurozone October final services PMI 46.9 vs 46.2 prelim

  
Analysis, Economy

Latest data released by Markit – 4 November 2020

  • Composite PMI 50.0 vs 49.4 prelim
The preliminary report can be found here. Business activity in the euro area stagnated last month on the back of a two-paced economy, with the manufacturing sector holding up – largely due to Germany – while services activity slumped.
The resurgence of the virus in the region is the main detriment to start Q4 and amid tighter restrictions being introduced over the past two weeks, the economic outlook going into the year-end doesn’t look good.
All in all, this just builds more support for the ECB to ease further next month.
Markit notes that:

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Economic data coming up in the European session

  
  Analysis

Final services, composite PMI data for October offer some distraction

Trump Biden

And so the wait begins.

It is unlikely we’ll see a winner declared tonight in the US presidential election, with the likes of Pennsylvania, Michigan and Wisconsin seeing the count delayed.
Stock futures may have rallied but they may not quite like the uncertainty associated with such a scenario for long i.e. being kept in limbo.
That is the key risk to be mindful of in the session ahead, though we may only get a better feel of the action once Wall Street gets up and running again in the day ahead.
In Europe today, the market will be more heavily tuned in on the election and assessing what the possible results may mean. For now, the dollar is taking it all in stride and keeping modest gains following the beat down yesterday.
I’d argue that only a Trump victory will be able to keep the dollar in good stead in terms of a reaction to the election but even so, the bigger play in my book is to fade those gains unless stocks/risk fail to perk up amid any stimulus setback.

0815 GMT – Spain October services, composite PMI

0845 GMT – Italy October services, composite PMI
0850 GMT – France October final services, composite PMI
0855 GMT – Germany October final services, composite PMI
0900 GMT – Eurozone October final services, composite PMI
The focus is on the final readings from France, Germany and overall Eurozone. They are expected to reaffirm a two-paced economy towards the year-end with November set to see more dour figures amid tighter restrictions limiting economic activity.
0930 GMT – UK October final services, composite PMI
The preliminary release can be found here. The final readings here should reaffirm that the UK economy has lost some steam going into Q4 and with lockdown measures underway, the outlook for the remainder of the quarter looks bleak. But that sentiment has already been factored in since the weekend, or at least kept in view in light of the focus on the US election at the moment.
1000 GMT – Eurozone September PPI figures
Prior release can be found here. A lagging and proxy indicator of inflation pressures, not a major release by any means.
1200 GMT – US MBA mortgage applications w.e. 30 October
Weekly US housing data, measures the change in number of applications for mortgages backed by the MBA during the week. The focus will once again be on purchases as that has been one of the more bullish spots outlining that US economic conditions are not as dire as first suggested by the recent dip due to the coronavirus impact.
That’s all for the session ahead. I wish you all the best of days to come and good luck with your trading! Stay safe out there.

Final YouGov election forecast predicts Biden landslide

  
  Analysis

Model sees Texas turning blue

Model sees Texas turning blue
YouGov has released its final model for the US election and sees tipping point state Pennsylvania at 53-46% in what would be a big win for Biden. Beyond that, they have him winning Georgia, North Carolina and eking out Texas 49-48%.
They see Biden winning 382 electoral votes, far more than the the 270 needed to win the election.
Obviously, we’ve been down this road before in the 2016 election but the report details changes they have made since then. One thing they’re doing is relying on panelists to weight votes and they believe it’s worked.
“Contrary to some claims, it is pretty good and allows us to calibrate our samples to actual votes in the past election,” they write.
Importantly, they dismiss the ‘shy’ Trump supporter belief:
They weren’t shy then and they aren’t shy now, though 3% of them say they are voting for Joe Biden today, vs 1% of Clinton voters who are backing Trump today.

European shares enjoy their 2nd consecutive up day

  
Analysis, Global Indices

The recovery from last week’s rout continues

The major European indices are enjoying their 2nd consecutive up day and clawing back losses from last week. The German DAX fell -8.6% last week. Italy’s FTSE MIB fell by around -7%. France’s CAC and Spain’s Ibex fell by -6.4% in the UK FTSE fell by about -5%. It was ugly.

Lower this week has seen a nice rebound. The provisional closes are showing:
  • German DAX, +2.5%
  • France’s CAC, +2.4%
  • UK’s FTSE 100, +2.2%
  • Spain’s Ibex, +2.6%
  • Italy’s FTSE MIB, +3.0%
in the European debt market, the benchmark 10 year yields are mixed with investors pushing into the more risk year countries including Spain, Italy, and Portugal (rates are lower  in those countries), while selling Germany, France and the UK (rates are higher in those countries).
The recovery from last week's rout continues_In other markets as London/European traders exit for the day.
US stocks throwing caution to the wind ahead of the election:
  • S&P index is up 78 points or 2.36% 3388.30
  • NASDAQ index is up 244 points or 2.23% at 11200
  • Dow industrial average is up 680 points or 2.5% at 27603
In the US debt market, yields are higher with the yield curve steepening. The 2 – 10 year spread is up to 71.88 basis points from 68.89 basis points at the close yesterday:

Brexit: Trade negotiations fail to agree on level playing field, fisheries, state aid – report

  
  Analysis

Reuters reports, citing EU and UK sources familiar with talks

  • Negotiations on fisheries are “stuck”
  • No agreement on level playing field either
  • EU wants to prescribe joint standards in more detailed way, but UK is against it
  • Talks failed to overcome differences over state aid
  • Also failed to address EU demand for independent oversight body in the UK to police any agreement between both parties
  • But expect good progress on joint legal texts for other areas
The pound is not really budging to the news but the market may very well keep this in view until after the US election is out of the way. Nonetheless, the above reaffirms that despite all the political theater and talks that followed after, nothing has changed.
It looks like we may be going down to the December deadline before more shenanigans come into play. This is just about as Brexit as things can get.
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