Episode 46: Pre-election day market rally.
Happy November. We kick off the week with the markets up today!
The bull market hopefuls are looking forward to the election being over, resuming stimulus talks, furthering the support of the central bank as well as the release of preliminary vaccine data. The bear market narrative includes no near term stimulus, overestimating on 2021 earnings and reversing on the reopening. Regardless of which side you support, I think the one thing all investors can agree on is that tomorrow will be a defining day.
This year’s election uncertainty is also compounded by the double threat of the coronavirus pandemic and a global economic slowdown. We are seeing a bit of financial scrambling while everyone adjusts their portfolios, based on different election outcomes. Though the outcome of Nov. 3 is anything but certain, strategists say that a re-election for President Donald Trump would on average favor growth stocks while a win for Democrat Joe Biden could be a positive for cyclical value equities. For the past 19 election years since 1944, the S&P 500 has gained an average 1.7% in the 10-day period after Election Day, according to CFRA Research.
On the bright side, shares of Taiwan Semiconductor (TSMC) traded higher during the quarter on signs that its total addressable market was poised to expand. Intel announced that it was facing delays in the manufacture of its next-generation chips and may subcontract out the work to third parties, opening the door for a large-scale chip “foundry” like TSMC to pick up some of the business. Foundries make chips designed and named by other companies; TSMC already produces certain chips for Intel.
IPOs
There are no IPOs scheduled to go on the US markets because of the election. On a global note, Ant, the biggest IPO in the world, will price on Wednesday, and expects $3 trillion in orders for its dual listing in Hong Kong and Shanghai ahead of its trading.
We look forward to sharing how things shape up after the election on our Friday market recap!
Enjoy the week and remember to Vote with Love!