US directory of national intelligence Ratcliffe announces the discovery
- US has identified Russia, Iran as countries who have attempted to interfere with the US election
- Has sent spoof emails designed to intimidate voters, incite unrest, damage Pres. Trump
- Aware that Russia has obtained some voter information
- intelligence community court threat, reacted swiftly
- This is not a partisan issue
- Prepared for actions by those hostile to democracy
The interference apparently came through emails threatening those who voted against Trump.
Radcliffe says that the email, apparently from The Proud Boys, is intended to hurt Pres. Trump. Of course, if a recipient was intimidated by the email, it might benefit Pres. Trump.
Regardless of the intentions, stopping interference in elections is certainly a prerogative. FBI’s Wray is on the wires saying:
- The FBI will not tolerate 4 interference elections
- Election infrastructure remains resilient
“Will there be a clear, uncontested and accepted winner?” is a better question
The betting odds of a Biden Presidency ticked higher after yesterday’s debate. I believe Trump’s constant interrupting was at least partly strategic in the hope of tripping up Biden and making him look more like the bumbling caricature he’s tried to construct. By and large that didn’t work and I doubt Trump won over many undecideds.
Given the polling lead, Biden should be a large favourite but he’s stuck at 60/40 because no one can forget Trump’s upset win over Hillary Clinton, or Brexit.
For markets, I think the outcome itself is less important in the short term than the question of whether or not their will be a clear winner; and whether Trump will ever concede.
BMO’s fixed income team writes today about the tail risk of a contested election but ponders the degree to which the consensus opinion is already fully incorporated into current valuations.
Let’s face it, very few in the market are anticipating a smooth election nor for any potential transition of power to be uneventful. The extent to which November serves to disrupt functioning of the federal government or fuel further civil unrest remains to be seen and, frankly, is the most significant tail risk as we ponder potential outcomes.
I’m open to the ‘sell the rumour, buy the fact trade’ but skeptical that it’s even possible to price in uncertainty in that way. Uncertainty is — by definition — something that persists for an indefinite amount of time. If Trump refuses to concede even on a clear loss, he will still have a strong political base and I expect him to use it to dog Biden for years. It’s a question of how far he’s willing to go and with Trump, the sky is the limit.
The ‘buy the fact’ trade relies on an eventual return to Obama-era levels of civility (which isn’t saying much) but I just don’t think that’s coming.
What is next for the dollar?
If one could describe the Dollar’s performance over the past few months in one word, the best fit would be vulnerable.
The once king of the FX space has weakened considerably in Q3, depreciating against every single G10, most Asian and emerging market currencies. This is despite its safe-haven status and the global reserve currency title. For those who are wondering why the Greenback remains depressed and unable to shake away the blues despite the general uncertainty, the first clues can be found in the US economy. (more…)
US Treasury yields climb ahead of auctions
It’s a big week in the Treasury market with record-high sales starting with three-year notes today.
With that, Treasury yields have jumped higher. US 10-year notes are up 6.4 bps to 0.6415% today. That’s after hitting a low of 0.5036% last week. The turn in the market came on the refunding announcement as coupon-issues were upsized and now we’re left to ponder what the latest move means.
The optimistic take is that this signals improvement on the virus and the economy. The other side of the argument is that a flood of bonds is going to push up rates.
I’m more sympathetic to the optimistic side, if only because Trump’s executive orders mean that more stimulus spending is less likely and will probably be lower. At the same time, a capital gains cut would blow another hole in the budget.
What does it mean for the US dollar? It’s positive.
BMO today highlights that even at 0.16%, US three-year notes are relatively attractive.
While the past few sessions’ concession will aid the takedown of this afternoon’s offering, at just 16 bp, 3-year yields are not abundantly cheap on an outright basis. However, when compared to overseas yields that have pushed to extremely negative territory, there is an argument to be made that the still-positive nominal rate on Treasuries will increasingly drive foreign interest.
At the same time, they see this latest move as more about supply than a ‘fundamental rethink’ of the econoy.
So the overall message from bonds right now is murky and it’s risky to take any big signals in mid-August.
That’s a big change
For all the people who were worried about Trump calling off the election, this is some hard evidence.
With Universal Mail-In Voting (not Absentee Voting, which is good), 2020 will be the most INACCURATE & FRAUDULENT Election in history. It will be a great embarrassment to the USA. Delay the Election until people can properly, securely and safely vote???
I’m not a constitutional expert but I believe the November 3 election date is locked in with virtually no flexibility. But he sure is laying the groundwork for questioning the results or refusing to leave if he loses.
The market can ignore a lot of talk from Trump but there’s a limit and this is getting closer to it.
FOX News reporter, Chad Pergram, reaffirms the earlier story
Senate majority leader, Mitch McConnell, and House GOP leader, Kevin McCarthy, will be headed to the White House later to discuss the next stimulus bill with Trump and Mnuchin. This adds to the story from earlier in the day here
The end of the month is going to be an interesting time, as the US approaches a fiscal cliff with stimulus money set to run out in the coming weeks/months.
Amid a surge in virus cases and the likelihood of the economy facing more dire consequences – not to mention election uncertainty, it will be interesting to see if the market can hold up in the way that it has over the past few months. A neat summary by Bloomberg:
Risk trades leg lower in a big way
Commodity currencies and stocks were caught in a quick downdraft after at least four headlines hit at virtually the same time:
- Florida virus cases spike
- Beijing moved to phase-2 containment on the latest virus outbreak, closing schools
- Texas virus hospitalizations rose 8.3% to hit a record
- Powell indicated that corporate bond buying probably won’t be aggressive and is more of a contingency
The S&P 500 is up just 0.45% after rising nearly 3% at the open.
Trump rant about Powell incoming…
The money is coming
Trump wouldn’t be saying that if Senate leaders weren’t on board. I don’t think Democrats are going to discover some fiscal discipline so it certainly looks likely.
The contours of it are another story and that could be a problem. Trump continues to talk about a payroll tax cut but I think that’s unrealistic. He might just be saying it as election fodder.
Strong as an ox
The White House physician is out saying that:
- Pres. Trump’s physical exam shows no significant changes
- He weighs 244 pounds
- Trump took 2 week course of hydroxychloroquine with the zinc and vitamin D
- EKG was closely monitored during coronavirus preventative treatment. Completed regiment safely and without side effects
- Trump continues to receive regular Covid 19 testing. To date all results have been negative
PS. A report of a study to be published in New England Journal of Medicine is saying that:
- Malaria drug hydroxychloroquine failed to cut infection rates
- The drug provides no Covid 19 protection
- 821 people were given drug in randomized controlled trial
The drug was of course the drug touted and taken by Pres. Trump to help prevent him from getting the Covid 19 virus. I wonder if he was part of the sample?