October 23, 2020

U.S. Elections, Stimulus Saga and Coronavirus

U.S. Elections, Stimulus Saga and Coronavirus

Stimulus Saga 

Traders are still concerned about the prospects of the stimulus deal in the U.S, and this is influencing the European and U.S. futures. There is no doubt that this has become a never-ending saga; however, every day, there is another glimmer of hope. 

Having said that, a full agreement on the second stimulus package still remains a challenging task; however, having an agreement on the framework is becoming a real possibility. 

The U.S. Elections

The U.S. presidential elections are only 11 days away, and last night we had the final debate between President Trump and Joe Biden. This time there was less drama, and the debate was much more disciplined. Both leaders kept their focus on the coronavirus situation, economic recovery, and green energy. 

The debate doesn’t have much influence on the markets, as this is more of a political drama than anything else. Nonetheless, we always get more clarity behind the policies of each leader and investors do pay attention to this. 

Nearly 55 million Americans have already voted ahead of this election, so it is safe to say that a large majority of them have already made their decision. 

Brexit Agreement 

The U.K. signed a trade agreement with Japan under the same terms, which it had when it was part of the E.U. This is certainly good news for the U.K. economy, and it may help the country to get more deals with other countries. But this particular event may not have any significant influence on the U.K.’s deal with the E.U. The Brexit talks have not made any progress yet, and a cliff edge is really close, given the fact that time is running out. 

Cruise Stocks 

Cruise stocks are back in demand as there is a lot of hope among investors that the ban will be lifted soon. There is no doubt that all cruise stocks have taken a massive beating, and some of them even sold their cruises for scrap just to cut down the cost. 

But this week, we have seen a decent turnaround in cruise stocks, and names like Royal Caribbean and Norwegian have bounced back up. If the White House lifts the bans, these stocks can really see some wild moves in the coming days, and that could be an opportunity for investors. 

Even if Donald Trump doesn’t open the cruises in the U.S. for another month, companies like Carnival have already volunteered to suspend the travel until the end of November.  

Coronavirus Update 

Investors are worried about the surge in coronavirus in Europe. France reported over 40,000 new cases for the first time yesterday. Overall, daily Covid-19 cases are reaching their record number in Europe. 

The situation is not getting out of control yet, but alarm bells have started ringing. That’s because curfews have now started to spread across Europe.

There are also rumours in the market that Italy, the third-largest economy in Europe, could very soon be implementing a national curfew—this will be a real blow to its economy. 

Overall, this may be a good strategy to circuit break the surge in coronavirus cases, but this is coming at a very high economic cost that most countries cannot afford to pay. 

Gilead‘s FDA Approval 

The U.S. Food and Drug Administration, FDA, gave the green light to Gilead Sciences antiviral therapy Remdesivir yesterday. We are expecting the stock to be highly volatile today.