US presidential election in focus for financial markets, company news and geopolitics
Stock market news
• The election jitters have finally reached the market. Harris' chances have improved in recent days and uncertainty about who will win has returned to the market this morning. Recall that over the past few weeks, investors have been convinced that Trump will win, which was considered good for stocks and the USD and bad for bonds.
• Early moves on Monday were in currencies as the dollar took a hit from a new Iowa poll showing Democratic presidential candidate Kamala Harris ahead of Republican Donald Trump. That was enough to send the dollar down 0.9% against the yen and 0.6% against the euro, while the trade-sensitive Aussie jumped 0.8%. Analysts are inclined to believe Trump's policies on immigration, tariffs and tax cuts will put far more upward pressure on the greenback and yields than a Harris victory.
• Of particular note is the Des Moines Register/Mediacom Iowa Poll, which surprised everyone by showing Harris leading Trump by 3 points in the state, a major shift from a few weeks ago. The poll has a very good history and is considered an indicator of swing-state votes. “Harris has seen a surge in the polls since last week, supported by the Seltzer Iowa Poll, which some are using as a proxy for performance in the Blue Wall swing states of Michigan, Pennsylvania and Wisconsin,” JPMorgan said in a note.
• Betting site PredictIT has Harris at 53 cents to Trump at 51 cents — what investors are willing to bet on a chance to win $1 — up from 42 cents to 61 cents just a week ago. The polling average is still too close to call, and it’s possible the results won’t be known by Wednesday. In 2020, Pennsylvania, for example, didn’t announce results until the Saturday after the election. There could also be litigation over the results that could drag on for weeks.
• Markets are pricing in the Fed going ahead and cutting rates on Thursday regardless of the outcome, with futures pricing in a 98% chance of a 25 basis point cut. They also price in an 80% chance of another quarter point in December, though that could easily change depending on who is elected president.
• The Bank of England is also expected to cut rates by a quarter point on Thursday, while the Riksbank is expected to ease by 50 basis points. Norges Bank and the Reserve Bank of Australia (RBA) are expected to hold rates this week.
• Another market mover on Monday was oil, which jumped about 1.4% after OPEC+ said on Sunday it would delay its planned December output increase by one month. It was the second time they have extended the 2.2 million barrels per day cut, which only shows how concerned they are about global demand.
• The situation is particularly weak in Asia, with crude oil imports down 200,000 bpd in the first 10 months of the year compared with the same period in 2023, according to LSEG.
• The United States has fined a major chipmaker for shipping products to China - Reuters. New York-based GlobalFoundries (GFS.O), the world's third-largest contract chipmaker, was fined $500,000 for shipping chips without permission to an affiliate of blacklisted Chinese chipmaker SMIC.
• The UK is banning disposable vapes from June 2025. Around 5 million such e-cigarettes are thrown away in the UK every month.
• China's BYD ramps up production, hiring amid third-quarter growth BYD increased production by nearly 200,000 units from August to October while hiring about 200,000 new workers in its vehicle and component manufacturing business, executive vice president He Zhiqi said on Weibo on Saturday.
• Berkshire Hathaway reported earnings on Saturday. Operating profit fell 6% y/y, worse than expected, as USDJPY fell, pushing up the cost of non-dollar debt by more than $20 billion. Berkshire now trades at about 1.55 times its book value as of Sept. 30 and a P/E of 22x.
• Bets on the likelihood of a 25 basis point rate cut at next week's FOMC meeting have reached 99%. Friday's October jobs report is a sham, Marketwatch writes. The "fake" report, released less than a week before the election, was skewed by hurricanes and a strike at a Boeing plant. In reality, the U.S. economy added about 150,000 jobs, about the same as in recent months.
The Trump campaign has already called the report a "disaster" and said it was evidence of how poorly Harris is managing the economy.
Despite the weak October jobs report, most data points to a strong economy, albeit with a gradual slowdown.
Even sentiment is improving - WSJ.
• Founder Jeff Bezos will sell $3.05 billion worth of AMZN shares. He has already sold more than $10 billion worth of them this year.
• Warren Buffett sold another $14.3 billion worth of Apple shares in the third quarter. That means Warren Buffett's Berkshire Hathaway has sold about $100 billion worth of AAPL shares over the past two quarters. Overall, Berkshire Hathaway's cash hit $325.2 billion in the third quarter, a record for the conglomerate. Warren Buffett continued to hold off on major acquisitions while trimming some of his most significant stock holdings.
• House Speaker Johnson said the Republican Party could try to repeal the CHIPS Act and then bring it back,
legislation that boosted semiconductor chip manufacturing in the United States.
• U.S. energy regulators have rejected an amended agreement to connect an Amazon data center directly to a nuclear power plant in Pennsylvania. The agreement to increase the capacity of the data center, located on the site of Talen Energy's Susquehanna nuclear power plant, could lead to higher electricity bills for residents and impact the reliability of the power grid.
• Trump said Friday that if elected, he would impose a 100% tariff on Stellantis if the automaker tries to move U.S. jobs to Mexico.
• Lyft pays $2.1 million to settle driver fraud case, a lawsuit that accused the ride-hailing service of inflating driver earnings as the company struggled to recover from a sharp drop in demand during the pandemic.
• Hedge funds and other speculative traders are betting on further gains for the dollar as demand for safe-haven assets grows ahead of the US presidential election.
• Restaurant chain TGI Fridays filed for bankruptcy protection on Saturday. Founded in 1965, TGI Fridays' popularity peaked in 2008 with 601 U.S. locations and a $2 billion business. U.S. sales in 2023 were $728 million, down 15% year-on-year. There are now 163 U.S. locations, down from 269 last year. It closed 36 in January and dozens more last week.
Key events that could impact markets on Monday:
- ECB President Christine Lagarde and ECB Executive Board member Piero Cipollone attend the Eurogroup meeting.
- ECB members Elizabeth McCaul, Frank Alderson, Christodoulos Patsalides and Claudia Buch attend.
- Final EZ manufacturing PMIs for October.
- US durable goods, factory orders for September.
Fundamental news
• Russia plans to disrupt overseas voting in Sunday's elections in Moldova - Reuters. Moldovan police have recorded the organized transportation of voters to polling stations. The country's authorities are investigating and collecting evidence in connection with the transportation of voters by air from Russia to Belarus, Azerbaijan and Turkey. Moldova: After counting 99% of the ballots, Maia Sandu wins with 54.7% of the vote. The turnout was 54%. In Gagauzia, Sandu gained 3%. In Moldova itself, she gained 49%, and won thanks to the diaspora with 82%.
Of the 1.68 million voters, the diaspora made up almost 20% (325 thousand).
• More than 69 million Americans have voted early, accounting for nearly 44% of the total number of people who cast their ballots in the 2020 presidential election - The Washington Post. Harris leads Trump in four of the seven swing states. According to the poll, Harris has edged out Trump in Wisconsin (49% to 45%), Pennsylvania (49% to 46%), Michigan (48% to 45%) and Nevada (48% to 47%).
At the same time, Trump maintains his lead in North Carolina (49% to Harris's 48%) and Georgia (48% to 47%).
If her lead in those states holds and the rest of the states vote as they did in 2020, Harris will win the election by a narrow margin.
• Reeves says she was wrong about UK tax needs ahead of election Chancellor of the Exchequer Rachel Reeves has said she was wrong to tell British voters ahead of the election that Labour would not announce new tax rises.
• Trump promised to introduce duties of 100-200% on goods from EU countries. “EU countries are as bad as China, they don’t accept our goods, but they sell theirs to us.”
• Iran to launch new strike on Israel in coming days - The Washington Post. Iran's Supreme National Security Council has ordered a military response to Israel's October 26 attack.
• “China rightly fears an uncontrolled escalation of tensions and the threat of a nuclear conflict in connection with the war in Ukraine,” - Slovak Prime Minister Robert Fico after talks with Chinese President Xi Jinping.
• Kemi Badenoch, a black woman (the first in British history), has been elected as the new leader of the British Conservative Party to replace Rishi Sunak. She previously held the posts of Minister for International Trade and Minister for Equalities.
• Democrats have a plan if Trump prematurely declares victory in the election - Reuters. The agency wrote that Democrats are "preparing for a lightning-fast response." The first step will be a media response. On social networks and in the media, they will call for calm and patience during the vote count.