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The stock market is sending signals that a Biden-led blue wave is getting less certain, says one Wall Street strategist

The stock market is sending signals that a Biden-led blue wave is getting less certain, says one Wall Street strategist

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  • While the polls suggest a blue wave victory is in reach for Democrats this November, the stock market isn’t so sure, according to a note from Evercore ISI.
  • Wall Street strategists have been forecasting that a blue wave would likely be positive for stocks on hopes of a large stimulus deal shortly after the election, which would help spur a surge in value and cyclical stocks.
  • But this week’s rotation out of value and into tech suggests that chances of a blue wave in November are less likely, according to the note.
  • Visit Business Insider’s homepage for more stories.

Wall Street is increasingly expecting a blue wave victory for Democrats this November after the polls close, which would likely lead to the reflation trade: a surge in cyclical and value stocks at the expense of technology and growth stocks.

But recent trading activity in the stock market suggests odds of a blue wave are less likely, according to a Tuesday note from Evercore ISI. 

Specifically, this week’s rotation out of small cap and value and into large cap and growth could be chalked up to declining odds of a Democratic sweep, according to the note.

The firm pointed to the October surprise in North Carolina’s Senate race between Republican Thom Tillis and Democrat Cal Cunningham as evidence for declining chances of Democrats overtaking the Senate.

“The Democratic ‘dream fiscal program’ odds are lower,” Evercore said as explanation for what is driving the rotation back into tech.

Read more: Jeff James has crushed the market this year thanks to a stock pick that’s soared 1,155%. He shares another bet he expects to deliver similar returns – and lays out 3 additional opportunities in tech.

The firm did concede that other factors could be moving tech stocks, including excitement

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Column: How the Market Learned to Stop Worrying and Love the Blue Wave – Mike Dolan | Investing News

Column: How the Market Learned to Stop Worrying and Love the Blue Wave – Mike Dolan | Investing News

LONDON (Reuters) – Just about the only market consensus all year on next month’s U.S. election was that it would be volatile around the vote – but even that’s turning upside down three weeks before polling.

A narrow and disputed election result has been one of the main investor fears for months. Bank of America’s October global fund manager survey still had 60% of its respondents expecting the result to be contested – and three quarters said it was the outcome likely to cause most market disruption.

But with Democratic challenger Joe Biden’s consistent opinion poll lead since May widening into election day, bookmakers’ odds on a clearcut outcome and Democrat clean sweep of the White House and both Houses of Congress are narrowing.

Investment banks and asset managers, who have for decades argued markets would baulk at tax and spend policies and prefer congressional gridlock to curb any excesses, are now positively embracing the likelihood of a clean sweep for a Democratic Party expected to spend big and also raise wealth and corporate taxes.

With less than a month to go, Wall Street stocks are racing to record highs again and long-elevated implied volatilities of the S&P500 benchmark – the VIX ‘fear gauge’ and its November and December futures contracts – are draining to 6-week lows.

Opinion polls now put Biden’s lead over incumbent Donald Trump in double digits, almost twice September levels. Bookmakers in Europe put Trump as the 7/4 outsider, his longest odds of the campaign, and the Democrats are now favorite to take to take key swing states – Arizona, Florida, Michigan, North Carolina, Pennsylvania and Wisconsin.

Online market PredictIt puts the chance of a Biden White House as high as 66% and a Democrat clean sweep at 59%.

Far from running scared, the investment world

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Economic Damage of New Corona Wave Likely to Be Less Dramatic: ECB’s Knot | Investing News

Economic Damage of New Corona Wave Likely to Be Less Dramatic: ECB’s Knot | Investing News

AMSTERDAM (Reuters) – The new wave of coronavirus infections is slowing economic recovery in Europe but is likely to have less impact than the first phase, Dutch central bank President Klaas Knot said on Tuesday.

“We have reasons to believe the second wave will have a less dramatic impact than the first, for which we were totally unprepared”, Knot told reporters.

“We know a bit more about the virus now, and businesses have learned to adapt where possible, for instance through online retail.”

But new restrictions to fight the new wave of infections are starting to slow growth, the Dutch member of the European Central Bank’s governing council added.

“Early indicators point at slowing growth. It is clear the second wave will dent the recovery, but it is too early to say by how much.”

Knot said the ECB would monitor the need to extend its own emergency support measures but would need more information on the economic outlook to make a decision.

But as new lockdowns and other measures spread throughout Europe, governments and central banks need to keep up their support for businesses and workers who are at risk of losing their jobs, he stressed.

“The costs of ending measures too soon are higher than the costs of maintaining them longer than necessary. And we must avoid ending them all at once. When the time comes, the exit must be gradual and predictable.”

The Dutch central bank on Tuesday said it would continue to give the largest Dutch banks extra room to keep credit flowing by lowering capital demands until at least the end of next year.

(Reporting by Bart Meijer, editing by Larry King)

Copyright 2020 Thomson Reuters.

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Second Wave of Coronavirus Wallops Canadian Consumer Confidence

Second Wave of Coronavirus Wallops Canadian Consumer Confidence

(Bloomberg) — Canadian consumer confidence recorded its largest one-week decline in five months as the nation gets hit by a second wave of Covid-19 cases.

The Bloomberg Nanos Canadian Confidence Index, a composite measure of financial health and economic expectations derived from telephone polling, dropped more than half a point to 52.4 for the week ended Oct. 9. That’s the biggest weekly decline since April, bringing the gauge to the lowest since mid-August.

The sharp decline in sentiment coincides with new lockdowns on activity in the country’s two largest provinces, Ontario and Quebec, which are experiencing a sharp rebound in cases. On Friday, Ontario’s government announced closures of businesses and restrictions on family gatherings, in three regions, including Toronto. That comes after similar restrictions in Quebec in recent weeks.



chart: Canadian consumer confidence takes second-wave hit


© Bloomberg
Canadian consumer confidence takes second-wave hit

Every week, Nanos Research surveys 250 Canadians for their views on personal finances, job security and their outlook for the economy and real estate prices. Bloomberg publishes four-week rolling averages of the 1,000 responses.

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The slide in confidence last week was the first major move for the index since mid-August, when Canadian household sentiment began to plateau after recouping more than four-fifths of pandemic-related losses.

The drop reflects declining sentiment around the broader economic outlook, despite relatively robust indicators in recent weeks including a surprise jobs gain in September. The share of households that expect the economy will strengthen over the next six months dropped to 16%, its eighth weekly decline since hitting a post-pandemic high of 25% in mid August.

Canadians, however, remain bullish on housing. About 44% of respondents expect the value of real estate in their neighborhood will go up over the next six months. That’s unchanged from last week, with the reading for that question hovering at

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Economic damage of new corona wave likely to be less dramatic: ECB’s Knot

Economic damage of new corona wave likely to be less dramatic: ECB’s Knot

AMSTERDAM (Reuters) – The new wave of coronavirus infections is slowing economic recovery in Europe but is likely to have less impact than the first phase, Dutch central bank President Klaas Knot said on Tuesday.



a man wearing a suit and tie: ECB board member Knot appears at a Dutch parliamentary hearing in The Hague


© Reuters/EVA PLEVIER
ECB board member Knot appears at a Dutch parliamentary hearing in The Hague

“We have reasons to believe the second wave will have a less dramatic impact than the first, for which we were totally unprepared”, Knot told reporters.

“We know a bit more about the virus now, and businesses have learned to adapt where possible, for instance through online retail.”

But new restrictions to fight the new wave of infections are starting to slow growth, the Dutch member of the European Central Bank’s governing council added.

Gallery: Why the US Economy Isn’t Ready for a Second Wave of Coronavirus (GOBankingRates)

“Early indicators point at slowing growth. It is clear the second wave will dent the recovery, but it is too early to say by how much.”

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Knot said the ECB would monitor the need to extend its own emergency support measures but would need more information on the economic outlook to make a decision.

But as new lockdowns and other measures spread throughout Europe, governments and central banks need to keep up their support for businesses and workers who are at risk of losing their jobs, he stressed.

“The costs of ending measures too soon are higher than the costs of maintaining them longer than necessary. And we must avoid ending them all at once. When the time comes, the exit must be gradual and predictable.”

The Dutch central bank on Tuesday said it would continue to give the largest Dutch banks extra room to keep credit flowing by lowering capital demands until at least the end of next

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