Resolution Reaction – We do have a winner, but this feels far from over. No doubt there will continue to be a slew of headlines over the next few weeks, calling the results of the election into question as President Trump has offered little indication he is prepared to concede defeat. Further, Trump has also refused to commit to a peaceful transfer of power. Both moves would be historical firsts, but most likely not all that surprising to market participants. Whatever your political alliances, the markets are behaving in a way that suggests investors are quite happy that at least the bulk of uncertainty is behind us. However, the election results pale in comparison to the market’s reaction to Pfizer (+11.2%) and BioNTech’s (+14.6%) vaccine progress announcement this morning. The headlines gave the markets quite a jolt, reversing the fortunes of pandemic losers such as travel companies (Carnival +37%), retailers (Kohl’s +17%) and banks (JP Morgan Chase +13.5%). On the other hand, virus related beneficiaries are seeing a decent pullback. See: Zoom (-13%), Peloton (-15%), and of course, Netflix (-6.2%). Value is outperforming Growth by 4%+ and the Russell, with its broader contingency of US economic sensitive names, is making new YTD highs. Also, JNK is loving it. second best day in 10 yrs for JNK US. (New total return high last week already.) Further, the 10y has jumped to 0.954% from 0.821%, crude is up more than 8.5%, and the safety trades – Yen, Gold, and Bunds are all enduring the opposite of risk assets. Ain’t no stopping the bull run now…..except maybe a hefty dose of reality...
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