The last week of the 2020 U.S. presidential election race will test the durability of the Biden trade — assets viewed as sensitive to the political fortunes of Democratic challenger Joe Biden, who has widened his lead over President Donald Trump in recent weeks.
Signs that Biden is cruising to a strong finish could benefit alternative energy, cyclical stocks and cannabis firms. The Invesco Solar ETF, for example, is up 10% this month on hopes of a potential Democratic sweep.
But a comeback in the polls by Trump could lift conventional energy companies and tech stocks, which would take an earnings hit from Biden’s proposed tax hikes.
– Biden tax increase might not be so bad for big banks
– Trump-Biden clash over climate change adds to cloud over oil stocks
Trump stocks vs Biden stocks:
China’s Communist Party leaders meet in Beijing Oct. 26-29 to settle on the next five-year economic plan. The conclave is a closed-door affair, but it is clear that shifts are afoot.
Sources suspect China is poised to lower its growth targets. Goldman Sachs says there may not be a target at all; China has already done away with one for 2020. Commodity traders reckon trade tensions might drive plans for stockpiling, especially on materials where China lacks local supply, such as copper.
Yet markets are priced for optimism, as investors bet that whatever China’s policy settings, they are unlikely to be as accommodative as the United States’. That means the yawning U.S.-China yield gap stays wide and the yuan remains strong.
– China’s blueprint to stockpile copper expected in 5-year plan
– China’s leaders to endorse lower 2021-2025 growth target at key meeting – sources
Policy differences drive yield-chasers to China:
3/ WHEN, NOT IF
The European Central Bank meets Thursday and there’s one key question for markets — will the ECB deliver more stimulus in December?
There’s no imminent pressure to act since emergency stimulus was ramped up not long ago. But the case for more action is getting stronger by the day as a second wave of COVID-19 inflicts new restrictions and economic pain.
Many economists expect the ECB to ramp up quantitative easing in December when its latest forecasts are due. Preliminary October euro zone inflation data next week may also guide investors. Any signals from the ECB that the outlook has deteriorated would reinforce the case for a December stimulus package – an early Christmas gift to markets perhaps.
– POLL-Euro zone recovery at serious risk as COVID-19 cases rise
– New virus-related restrictions heighten uncertainty, ECB’s Lagarde…