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The market limped into the weekend grappling for a spark that didn’t happen despite fantastic earnings results and most economic data coming in substantially above Wall Street consensus.
This morning, there is a fair amount of panic porn (and there are no chance social media companies will hide the headlines) over the spike in Covid19 cases, particularly in Europe, and the lack of a fiscal stimulus agreement. Both are old “news,” but headline writers have to make headlines, even if they are re-threading.
For me, I am not 100% sure what’s moving the market. I think the message is the good news was baked into share prices, hence, the selling when it seemed everything was perfect. It's not panic selling but taking chips off the table with a little over a week before the election.
There are distinct differences in the economic polices of the candidates, and despite efforts from billionaire hedge fund managers about the markets rallying in a Biden victory, none of them have to worry about the special tax breaks.
There has to be another round of stimulus, and early selling this morning is in part messaging to Congress.
Angst Ahead of the Big Boys
Earnings season shifts into something akin to the playoffs, as the biggest movers in the market report financial results this week. Thus far, even record positive guidance has not moved the needle, and the biggest names seems to have come up short.
One thing we are seeing especially in technology is the changing of the guard. Keep that in mind.
Using that analogy, Thursday will be the Super Bowl with the most important names in the market scheduled to report:
- Microsoft (MSFT)
- Apple (AAPL)
- Amazon (AMZZN)
- Google (GOOG/GOOGL)
- Facebook (FB)
These names report, as Congress moves closer toward efforts to reel in the power of these so-called digital gatekeepers. But even where there is rare bipartisanship, the ways and reasons to give these companies their comeuppances differ.
Hotline Model Portfolio Approach
There are no changes to the Hotline Portfolio Approach.
Today’s Session
European stocks are lower and old tech is at the center of selling after SAP came up short. I get a little nervous whenever SAP is in the news, as I remember when the company listed on the New York Stock Exchange. They had a big block party on the block (our office was at 50 Broad) featuring Kool and the Gang. The music was great, and it was a fun party, but a few days later the market was hammered.
So, I just get the hibbie jibbies when SAP is making news.
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