Hello everyone, with elections coming up shortly the markets are trading in a narrow range which will no doubt be broken….the main issues are which levels will be broken and how far will it run? Get our take below
WEEKLY SOUND BITES:
• The major benchmarks ended mixed, as investors reacted to stimulus negotiations while monitoring third-quarter corporate earnings reports. The technology-heavy Nasdaq Composite Index performed worst, dragged lower by weakness in bellwether Apple, while the S&P MidCap 400 and small-cap Russell 2000 indexes were flat…
• Market Risk vs Reward; Someone is entirely wrong about the market outlook…On one side we have institutional investors that, according to a recent Barron’s poll are mostly bullish equities which implies they believe the current market price is about right and there is little downside risk seeing more earnings growth in 2021…And on the other side is the option market where most investors seem to think that risk is so high (the current VIX at 30 is about double where it should be in a calm market) Volatility implies a 30% annualized move higher or lower from current prices to justify current market prices…
• Q3 Earnings reporting season got into full swing during the week, with 91 S&P 500 companies scheduled to report third-quarter results…as of the end of the week, analysts polled by FactSet were expecting overall earnings for the S&P 500 to have declined 16.5% in the quarter versus the year before…Of the 135 companies that had reported to date, however, 84% had beaten earnings estimates—the highest proportion since FactSet began tracking data in 2008…
• Overall housing starts in September missed expectations, but single-family construction and overall building permits reached new 13-year highs. Existing home sales also surprised on the upside, jumping 9.4% in September to their highest level since May 2006. Weekly jobless claims broke a streak of negative surprises and fell more than expected to 787,000, the lowest level since March. Continuing claims also continued to fall sharply, from a revised 9.4 million to 8.4 million, although observers noted that the expiration of unemployment benefits for some workers might be partly at work…
• Hopes for a near-term stimulus deal lifted Treasury yields through most of the week, with the yield on the benchmark 10-year Treasury note marking its highest level (0.87%) since June 9…the countervailing force comes from the FEDs which is likely to maintain its near-zero short-term interest-rate target out to 2023 while also buying $80 B Treasuries and $40 B of MBS per month…this in turn does tend to steepen the Yield curve which is so important to bank earrings which has steeped to about 70 BPS which is the most since 2018…
• Meanwhile, in Europe shares fell on signs that the economic recovery was stalling amid tighter restrictions to curb surging coronavirus infections…The German 10-year bund yield inched up on hopes that the U.S. government would pursue additional measures to stimulate its economy… Several countries tightened mobility restrictions to curb rising cases of coronavirus infections. Ireland announced a six-week full lockdown…France extended a curfew to cover almost 70% of its population and said the state of emergency could extend until February 2021…And of course with all of these lockdowns across Europe has forced the ECB Central Bank President Christine “Queen Bee” Lagarde to comment that the European recovery risked “losing momentum” as countries imposed new restrictions to curb the coronavirus pandemic.
Enjoy This Week’s Round-Up
Don’t Be A Rat Brain Trader – Be the Rede Stripe Zebra !!
Trade Smart !
hpb
