Why are markets up?

[AsleepInYorkshire]

Trump really has been his own worst enemy, particularly the silly way he behaved in the first debate.

It's funny how quickly people get used to such behaviour...

The biggest shock in the coming months is going to be listening to a US President that unites rather than divides -

The Biden rhetoric was actually fairly standard for presidents, who traditionally try to heal the country and bring everyone together in a time of crisis.

But it felt completely radical after four years of Trump.

Biden never mentioned Trump, aside from telling his supporters he knew they weren’t feeling great Saturday night. He never called to lock him up. He didn’t gloat about the size of his win, even though he received more votes than any other presidential candidate in history. Instead, he said he was “humbled by the trust and confidence” voters placed in him and promised to be a president “who seeks not to divide, but to unify.”

He didn’t make fun of anyone, instead saying the nation needed to make the “promise of the country real for everybody — no matter their race, their ethnicity, their faith, their identity, or their disability.”

He didn’t lie. He didn’t encourage conspiracy theories or white supremacists.

He promised to “marshal the forces of science and the forces of hope” to fight the coronavirus, instead of dismissing every piece of scientific advice he’s received.

https://www.huffingtonpost.co.uk/entry/joe-biden-speech-normal_n_5fa75323c5b623bfac509654

This man is going to be a massive, much-needed breath of fresh air for the United States of America...

Cheers,

Itsallaguess

I think his VP is an excellent choice

AiY

[dealtn]

I think his VP is an excellent choice

AiY

I think his VP is an interesting choice.

[dspp]

There is absolutely no evidence yet presented that the elections were 'rigged'

I expect this to be presented in court rather than to CNN or the BBC.

Anecdotally and circumstantially there is plenty of evidence. If you sat through the night and into the next day watching the coverage of the election closely as I did you couldn't help but notice that something irregular was happening. Trump was leading in most of the outstanding states and then unexpectedly it was announced that counting was being halted until the next day. Then in the dead of the night large blocks of votes were released into the numbers with a disproportinate bias towards Biden, Wisconsin being the one I remember in particular.

Anyhow lets wait and see how it plays out.

Surely you are not being serious ?

- dspp

[langley59]

There is absolutely no evidence yet presented that the elections were 'rigged'

I expect this to be presented in court rather than to CNN or the BBC.

Anecdotally and circumstantially there is plenty of evidence. If you sat through the night and into the next day watching the coverage of the election closely as I did you couldn't help but notice that something irregular was happening. Trump was leading in most of the outstanding states and then unexpectedly it was announced that counting was being halted until the next day. Then in the dead of the night large blocks of votes were released into the numbers with a disproportinate bias towards Biden, Wisconsin being the one I remember in particular.

Anyhow lets wait and see how it plays out.

Surely you are not being serious ?

- dspp

Indeed I am being serious, I find these events fascinating.

[csearle]

Moderator Message:
To quote Dod earlier, "The question was 'Why are markets up?" To avoid this becoming a political debate rather than attempt to stick - as best as one can - to the OP's question please could any political musings be directed to the (opt-in) Polite Discussions board. Thanks - Chris.

[langley59]

From a Bloomberg commentator this morning:

U.S. stocks find themselves in an almost Goldilocks position with a high likelihood of fiscal and monetary stimulus, an increased focus on infrastructure and a reduced risk of severe tax hikes and anti-trust concerns. That's going by the premise that Biden will be able to spend a little bit more than Trump but will be reined in elsewhere by the constraints of a split Congress.

Meanwhile, Asian shares will get a boost from a less-confrontational approach on trade -- in a "war" that is focused on their region -- as well as a rapidly recovering Chinese economy and better management of the coronavirus pandemic.

I suspect the markets feel the uncertainty of the election is over, perhaps but there remain legal challenges which could stir things up again.

[TheMotorcycleBoy]

Admittedly now my answer is a few days after the OP, but it seems bloody obvious why the markets up.

Dems in the WH, and an evenly split (or slightly red) Senate mean stimulus but not as much as to generate enough inflation (and then require monetary tightening). Hence output grows but discount rates remain mega low. Furthermore Senate not being deep blue mean big tax rises won't happen. Also Kamaha Harris likes Tech (google for more info), so they won't be hit too hard.

And yes, less trade war friction.

But even without these pros, getting rid of DJT, is a big market boost, purely due to reduced uncertainty. The 4 years with DJT were inherently uncertain, he had no fixed plan, or policies, and *always* acted on his "gut", trying always to figure what would appear best to his base. (Read Bolton's "The room where it happened" to get clarity on this exposed by DJTs former NSA). Just having a normal, psychologically balanced POTUS, of any age is really helpful.

Matt

[GoSeigen]

Does anyone know. I thought the markets didn't like uncertainty. Was convinced footsie would drop on Monday cause of the lockdown, and US drop all week with uncertainty and today no winner yet as too close to call, but have three days of gains. Up across the board today??

Market reckons Biden's gonna take it outright.

People seem to be commenting on subsequent market pricing. It's simple: markets discount uncertainty. They figured pretty early Biden would win, so adjusted risk spreads accordingly. There is nothing to cast doubt on that view: no-one believes Trump's bluster will get him anywhere. He's achieved nothing except to break stuff during his presidency, so why would it be different now? He'll continue crying like a baby and throw a few more toys out the pram, then leave the White House claiming he was the best president ever and Biden should be grateful that he gave him a chance at playing King of the Castle.


GS

[JamesMuenchen]

Kamaha Harris

She's not a motorcycle

[odysseus2000]

Admittedly now my answer is a few days after the OP, but it seems bloody obvious why the markets up.

Dems in the WH, and an evenly split (or slightly red) Senate mean stimulus but not as much as to generate enough inflation (and then require monetary tightening). Hence output grows but discount rates remain mega low. Furthermore Senate not being deep blue mean big tax rises won't happen. Also Kamaha Harris likes Tech (google for more info), so they won't be hit too hard.

And yes, less trade war friction.

But even without these pros, getting rid of DJT, is a big market boost, purely due to reduced uncertainty. The 4 years with DJT were inherently uncertain, he had no fixed plan, or policies, and *always* acted on his "gut", trying always to figure what would appear best to his base. (Read Bolton's "The room where it happened" to get clarity on this exposed by DJTs former NSA). Just having a normal, psychologically balanced POTUS, of any age is really helpful.

Matt

I wish it was so simple and easy.

Before long Biden will be embroiled in corruption allegations over his son and other dealings leading to a potential impeachment over "High Crimes" That treatment nearly broke Trump, so I doubt Biden will enjoy it either.

Then there will be some foreign policy trouble, Syria Hong Kong, Taiwan, North Korea, Syria, ... plenty of possibilities as foreign powers test his resolve and see if the cognitive issues are real or just his way of lulling opponents into a false sense of confidence.

Then there will be conflicts over succession, many wanting Biden gone (He is past it, multiplied by various gaffs) Harris in, balanced by many wanting Biden staying, Harris never in. You have to have lived in the US to appreciate how much most of the US hates California and any policy or person from there.

Then Senate will block everything Biden wants. If Biden locks down due to Covid (no idea if he does) and can't get money for relief, US employment and GDP will suffer.

UK won't get a US trade deal boosting troubles here and adding fuel to the Brexit/Remain fault lines.

There is no obvious policy direction from Biden, the election was mostly about Biden not being Trump. Best we can guess is he will try and follow Obama's policies.

If so then big tech, pharma, solar, electric cars, batteries etc should do very well, whereas legacy auto, oil and gas will find more hurdles put in their way.

Regards,

[TheMotorcycleBoy]

Admittedly now my answer is a few days after the OP, but it seems bloody obvious why the markets up.

Dems in the WH, and an evenly split (or slightly red) Senate mean stimulus but not as much as to generate enough inflation (and then require monetary tightening). Hence output grows but discount rates remain mega low. Furthermore Senate not being deep blue mean big tax rises won't happen. Also Kamaha Harris likes Tech (google for more info), so they won't be hit too hard.

And yes, less trade war friction.

But even without these pros, getting rid of DJT, is a big market boost, purely due to reduced uncertainty. The 4 years with DJT were inherently uncertain, he had no fixed plan, or policies, and *always* acted on his "gut", trying always to figure what would appear best to his base. (Read Bolton's "The room where it happened" to get clarity on this exposed by DJTs former NSA). Just having a normal, psychologically balanced POTUS, of any age is really helpful.

Matt

I wish it was so simple and easy.

Before long Biden will be embroiled in corruption allegations over his son and other dealings leading to a potential impeachment over "High Crimes"

Rubbish. Even if DJTs smear on Hunter has any remote truth in it, Hunter and Joe are two separate individuals.

EDIT: How any potential legal proceedings against Hunter could effect macro-economic forecasts really is beyond me.

Matt

[odysseus2000]

Admittedly now my answer is a few days after the OP, but it seems bloody obvious why the markets up.

Dems in the WH, and an evenly split (or slightly red) Senate mean stimulus but not as much as to generate enough inflation (and then require monetary tightening). Hence output grows but discount rates remain mega low. Furthermore Senate not being deep blue mean big tax rises won't happen. Also Kamaha Harris likes Tech (google for more info), so they won't be hit too hard.

And yes, less trade war friction.

But even without these pros, getting rid of DJT, is a big market boost, purely due to reduced uncertainty. The 4 years with DJT were inherently uncertain, he had no fixed plan, or policies, and *always* acted on his "gut", trying always to figure what would appear best to his base. (Read Bolton's "The room where it happened" to get clarity on this exposed by DJTs former NSA). Just having a normal, psychologically balanced POTUS, of any age is really helpful.

Matt

I wish it was so simple and easy.

Before long Biden will be embroiled in corruption allegations over his son and other dealings leading to a potential impeachment over "High Crimes"

Rubbish. Even if DJTs smear on Hunter has any remote truth in it, Hunter and Joe are two separate individuals.

EDIT: How any potential legal proceedings against Hunter could effect macro-economic forecasts really is beyond me.

Matt

Biden has been in politics for a long time. He has made a lot of enemies.

Very few, if any congress people are saints. They all do shady and dodgy stuff, pay very little tax and mostly end up rich. This gives enemies multitudes of ways in. Every hound the GOP can muster will be set upon Biden to bring him down.

While Biden is dealing with such troubles he isn't going to have his mind on anything else, certainly not the economy or foreign policy.

Re Hunter, the allegations are that Biden got him his well paid job while working for the US government, a serious conflict of interest that if there is any shred of evidence will lead to troubles.

I have no idea what will happen other than the GOP will try and get him and that will dog his presidency as Monica dogged Clintons.

I don't really care that much as I will trade the technicals. I would much prefer that the US politicians worked to improve their country and their voters lives, but they won't and the whole idea that a Biden presidency will lead to the US smelling of roses is imho way off the very likely reality.

Regards,

[Mike88]

The market was up initially this morning resulting from the weekend certainty that Biden had won. However, the market rocketed later after Pfizer announced a 91% success rate for their COVID vaccine.

[TheMotorcycleBoy]

https://uk.reuters.com/article/uk-healt ... KKBN27P1DE

It's really interesting to see which UK stocks have rocketed, and which have actually fallen in the past hour or so. BOWL, DGE, CPG, look to have skyrocketed. But the more "safe haven" / not covid-effected stocks e.g. GAW, SPX have fallen - ever so slightly. Along of course with gold falling.

Presumably shares like Disney and Maccies will levitate in half an hour!

[zico]

Having been a real market pessimist on the pandemic, I'm astonished to see the markets have only gone up by a measly 5.5% on the news from Pfizer/BioNTech of a vaccine with a success rate of over 90%. This is basically announcing the end of the pandemic, and there will be a return to virtually normal life by summer 2021, so businesses currently struggling are much less likely to go under, and governments don't have to worry about writing endless cheques to subsidise the business world.

The FTSE 100 was around 7,000 before the pandemic, and even after today's rise, it's only at 6,200. Allowing for a very tough pandemic year and the dislocation, it would seem to me that "fair value" was in excess of 6,500 for the FTSE.
The Dow appears to have already leapt beyond pre-pandemic levels, but FTSE is much more heavily exposed to "traditional" industries which have been more affected by the pandemic.

[GrahamPlatt]

While this is indeed wonderful news, I’m a bit surprised at the elation shown by the markets. I suppose it’s just the fact that there now seems to be an end in sight.

Per the Beeb

The two companies say they will be able to supply 50 million doses by the end of this year and around 1.3 billion by the end of 2021. Each person needs two doses.

The UK should get 10 million doses by the end of the year, with a further 30 million doses already ordered.

So we should be able to vaccinate ~8% of our population sometime early next year; the game’s far from over, and meanwhile the economic devastation continues.

[TheMotorcycleBoy]

Having been a real market pessimist on the pandemic, I'm astonished to see the markets have only gone up by a measly 5.5% on the news from Pfizer/BioNTech of a vaccine with a success rate of over 90%.

I guess it's because some of the stocks were already sky high (low discount rates having forced the money there), and we still have all the WFH changes which I claim the pandemic has helped to force now meaning that oil, catering service etc. stocks are not going to make it back to previous levels for a long while. Plus low rates will continue to make it hard for banks to profit. And finally, the pharma also-rans like AZN are marked down. And finally finally firms still have huge debts, redundancy bills, and for some diluted equity. Does that cover it?

[zico]

Having been a real market pessimist on the pandemic, I'm astonished to see the markets have only gone up by a measly 5.5% on the news from Pfizer/BioNTech of a vaccine with a success rate of over 90%.

I guess it's because some of the stocks were already sky high (low discount rates having forced the money there), and we still have all the WFH changes which I claim the pandemic has helped to force now meaning that oil, catering service etc. stocks are not going to make it back to previous levels for a long while. Plus low rates will continue to make it hard for banks to profit. And finally, the pharma also-rans like AZN are marked down. And finally finally firms still have huge debts, redundancy bills, and for some diluted equity. Does that cover it?

Thanks - some interesting points there. Plenty of reasons the FTSE won't be back to 7,000ish, but I'd have thought it would have risen by more. Will be interesting to see what movements there are in the next few days.

[Lootman]

Having been a real market pessimist on the pandemic, I'm astonished to see the markets have only gone up by a measly 5.5% on the news from Pfizer/BioNTech of a vaccine with a success rate of over 90%.

I guess it's because some of the stocks were already sky high (low discount rates having forced the money there), and we still have all the WFH changes which I claim the pandemic has helped to force now meaning that oil, catering service etc. stocks are not going to make it back to previous levels for a long while. Plus low rates will continue to make it hard for banks to profit. And finally, the pharma also-rans like AZN are marked down. And finally finally firms still have huge debts, redundancy bills, and for some diluted equity. Does that cover it?

Thanks - some interesting points there. Plenty of reasons the FTSE won't be back to 7,000ish, but I'd have thought it would have risen by more. Will be interesting to see what movements there are in the next few days.

The US markets are all at record highs now. The DJIA today beat its previous record high set in February, and the Russell 2000 today took out its previous record high of August 2018. S&P 500 and the Nasdaq are also at records.

The real problem is with the UK which is still wallowing well below both its highs from a year ago and for that matter from 21 years ago. The UK has been a horrible place to invest because it is heavily weighted in all the wrong sectors, like banks and oil. And because of high payout ratios for dividends. Why would that change now?

[scrumpyjack]

Our initial order for the Pfizer vaccine may only treat 8% of the population but there are I think at least 6 other vaccines in development and hopefully some of them will also be effective. Boris has ordered hundreds of millions of them too.

Interesting to see if the Pfizer announcement stimulates an early update on the Astrazeneca vaccine.

It is clear there is light at the end of the tunnel and if those at most risk from CV can be vaccinated soon, it hugely reduces the risk of death from the virus.