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Hedge fund manager Ackman says markets too complacent about the coronavirus

  
  Analysis
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Founder of Pershing Square, hedge fund manager Bill Ackman speaking on Tuesday at the Financial Times’ Dealmakers conference

  • markets once again have become too complacent about the coronavirus.
  • is hedging his equity exposure with insurance against corporate defaults
  • “We’re in a treacherous time generally and what’s fascinating is the same bet we put on eight months ago is available on the same terms as if there had never been a fire and on the probability that the world is going to be fine.”
(Ackman referring to his similar trade earlier in the year that paid off big time).
FT link is here for mote (may be gated)
(This pic for a while back)
Founder of Pershing Square, hedge fund manager Bill Ackman speaking on Tuesday at the Financial Times’ Dealmakers conference

What’s the trade if Trump steals the election this year?

  
  Analysis
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re we looking at a repeat of the dollar melt up in 2016?

Trump
As Biden leads in the polls, almost everyone has been talking up the case for a ‘blue wave’ and what scenarios may take place should that happen.

The straightforward one being “buy everything, sell the dollar” of course, but there are some risks associated with that once the euphoria begins to fade.

Over the past ten months, I grew from thinking Trump would easily win this election to thinking that Biden should have this in the bag, judging by the lead in the polls. But now, I’m less confident of that outcome as we approach the home stretch.
I would still argue that the base case remains for a ‘blue wave’ but Trump winning once again and stealing this election is not within the realms of being unworldly, if you ask me.
As a trader, it’s best to be prepared for all outcomes and eventualities, so what is the trade if we do see another four years of Trump in the White House after next week?
Is it going to be the total opposite of the reaction if we see a ‘blue wave’ outcome?

(more…)

“Who will win the election?” is the wrong question

  
Analysis, Politics
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“Will there be a clear, uncontested and accepted winner?” is a better question

"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.

Moody’s on UK banks outlook

  
  Analysis
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Via reuters

Via reuters
  • UK large domestic bank’s assets quality will take hit from COVID-19
  • UK’s bank capital to remain strong
  • UK domestic banks profitability to recover from 2021
  • Capiltilization will remain robust
  • Negative impact of COVID-19 will impact creditworthiness in line with duration and extent of crisis
  • Capital levels will remain stable over the 2020-2022 period broadly in line with end of 2019 levels.

AstraZeneca Covid-19 vaccine – study put on hold due to suspected adverse reaction in trial participant

  
  Analysis
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The Phase 3 study testing the AstraZeneca and the University of Oxford COVID-19 vaccine has been put on hold due to a suspected serious adverse reaction in a participant in the United Kingdom.

Spokesperson for AstraZeneca
  • standard review process triggered a pause to vaccination to allow review of safety data
  • “a routine action which has to happen whenever there is a potentially unexplained illness in one of the trials, while it is investigated, ensuring we maintain the integrity of the trials.”
Risk negative, but so far little response. Eyes on the tech rout still. Globex equity index future trade reopens at the top of this hour.
coronavirus

ICYMI: Scientists question results from a study of Russia’s coronavirus vaccine

  
  Analysis
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Taking a detour from the tech stock rout for just a moment, this on the much-touted Russian COVID-19 vaccine.

Via Bloomberg.
A group of international scientists say some of the published findings that appeared in the Lancet appeared improbable.
  • flagged concerns over seemingly identical levels of antibodies in a number of study participants who were inoculated with the experimental vaccine
  • This and other patterns in the data present “several different points of concern”
The link above has more. Is anyone surprised by this?
Taking a detour from the tech stock rout for just a moment, this on the much-touted Russian COVID-19 vaccine.

US stocks close on the lows. Nasdaq hits correction territory

  
Analysis, US Market
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Nasdaq takes a dive

A few attempts to bounce intraday fell flat and stocks finished near the lows of the day. The S&P 500 fell  while the Nasdaq’s 4% drop extended the decline since last Wednesday’s record high above 10% — an unofficial correction.
The Nasdaq is now just 1.0% away from wiping out the entire August-Sept gain. Tesla shares fell 21% on the day, its worst ever one-day loss.
Nasdaq:
Nasdaq takes a dive
  • S&P 500 -95 points to 3331
  • Nasdaq -465 to 10847
  • DJIA -632 to 27,500

ICYMI – Pompeo announced new restrictions on the movement of Chinese diplomats in the US

  
  Analysis
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US Secretary of State Mike Pompeo with the latest in the slowly escalating tit for tat deteriorating relations with China

  • “For years, the Chinese Communist Party has imposed significant barriers on American diplomats working inside the PRC [People’s Republic of China]”
Under the new restrictions
  • senior Chinese diplomats will need approval from the State Department to visit American university campuses and meet with local government officials
  • Approval will also be required for cultural events for more than 50 attendees happening outside the Chinese embassy or consular posts.
I expect more tit for tat ahead of the US election.
US Secretary of State Mike Pompeo with the latest in the slowly escalating tit for tat deteriorating relations with China

Has the dollar lost its grip on the iron throne?

  
  Analysis
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What is next for the dollar?

FXTM
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…)

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