TRACKRECORD DAILY
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TRACKRECORD DAILY

The Wall of Worry

Stimulus talks stalemate, Trump refusing to concede, and surging virus infection cases which will lead to harsher social distancing measures — these are just some of the worries plaguing the market at the moment.

WHAT HAPPENED YESTERDAY

Market Movements as of New York Close 19Nov 2020
  • The Dollar slid for a sixth straight session on Thursday, after trading higher for most of the day, on reports that U.S. Senate Republican leaders have agreed to resume negotiations on another coronavirus stimulus package. CNBC reported that top Senate Democrat Chuck Schumer said on Thursday that Republican Majority Leader Mitch McConnell has agreed to resume COVID-19 relief talks as cases surge across the country.
  • The S&P 500 increased 0.4% on Thursday and overcame a sluggish start (-0.43%, lows, 3543.84) as buyers quietly eased their way back into the market. The Nasdaq Composite (+0.9%) and Russell 2000 (+0.8%) outperformed while the Dow Jones Industrial Average increased just 0.2%.
  • In other positive developments, Phase 2 vaccine trial data from the AstraZeneca (AZN 54.03, +0.04, +0.1%)/Oxford collaboration showed encouraging immune responses in older patients, and October existing home sales increased at a faster-than-expected, seasonally adjusted annual rate of 6.85 million (expected 6.49 million). Market reactions were muted, but these were good for the market sentiment.
  • The Philadelphia Semiconductor Index (+1.6%) was another pocket of strength today. NVIDIA (NVDA 537.61, +0.46, +0.1%) beat top and bottom-line estimates and issued upside Q4 revenue guidance; Cree (CREE 81.00, +8.39, +11.6%) was upgraded to Overweight from Neutral at JP Morgan with a $90 price target.
  • While the U.S. economy came back stronger than expected in the third quarter, the rise in coronavirus infections is concerning and small businesses and households need more support from fiscal aid, Cleveland Federal Reserve Bank President Loretta Mester said Thursday. “The fact that we don’t have a fiscal package is very concerning,” Mester said during an interview with Bloomberg TV. “With the disparate impact of this pandemic that’s where fiscal policy plays a role because fiscal policy can be really targeted to the households and small businesses that really need the aid.” Asked if she would be in favor of increasing the scale of the Fed’s asset purchases or changing the maturity of those purchases, Mester said she didn’t want to “prejudge” the Fed’s December policy meeting. She said it would also be helpful for the Fed to clarify its forward guidance for future purchases.
  • Atlanta Federal Reserve Bank President Raphael Bostic said on Thursday it would be “prudent” to keep open the Fed’s emergency lending and backstop programs created to help stabilize financial markets and the broader economy. Bostic, in an interview with Bloomberg TV, said he was “a bit surprised” by the decision by the Treasury to end some of the programs on Dec. 31.
  • Treasury Secretary Steven Mnuchin on Thursday asked the Federal Reserve to return more than $400 billion in unused funds from the massive March pandemic relief package so that Congress can reappropriate it to deliver economic stimulus. “I am requesting that the Federal Reserve return the unused funds to the Treasury,” Mnuchin said in a letter to Fed Chair Jerome Powell. “This will allow Congress to re-appropriate $455 billion, consisting of $429 billion in excess Treasury funds for the Federal Reserve facilities and $26 billion in unused Treasury direct loan funds.”

HEADLINES:

OPTIONS DWINDLING, TRUMP FACES LIKELY SETBACK IN GEORGIA RECOUNT

DAY AHEAD

UK Retail Sales figures due on Friday are expected to flag more trouble for the recovery. Sales m/m are forecast to come in at -0.3% (prev -1.5%). The projected slowdown would have come just before tighter virus restrictions were enforced in November and would add to fears of a double-dip recession.

SENTIMENT

FX

Trading Tip

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Best,
Phan Vee Leung
CIO & Founder, TrackRecord

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