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Contents Click on the links below to get to the stuff you really really want. USA – Stocks rise on political clarity; Oil up, gold and bond prices nudge down (#USA) UK – Brexit deal of sorts looks more likely; Stocks up led by oil, miners and banks (#UK) Continental Europe – Lockdown extension in Germany failed to dampen enthusiasm over US clarity; Stocks up (#Europe) Elsewhere – Rally ran out of steam this morning (#Elsewhere) WTF – Trump pardons turkey (#WTF) Links (#Useful) Numbers (#Numbers) Ts & Cs (#Ts+Cs)
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USA
Political clarity in the US finally arrived as Trump was forced to acknowledge that Biden can have access to the bits of info that he should have had a couple of weeks ago. Biden is now officially the president-elect and, boy, has that given market participants something else to get excited about.
Stocks rose some more to add to recent vaccine-driven gains. The S&P 500 closed 1.6% higher, while the Dow Jones hit a record high during trading. As folk felt more optimistic about the future, money was moved out of low-risk rated investments such as government bonds, and into higher-risk rated ones such as stocks (generally speaking, the higher the risk, the higher the potential returns).
With the demand for and prices of bonds falling, their yields were rising (that’s how bonds work, their prices and yields always move in opposite direction). So the benchmark 10-year Treasury (US government bond) yield, which had been dragging along around 0.6% between April and August, has now clambered slowly back up to nearer 0.9%. It’s still way lower than the 1.9% levels it reached in December but, hey, we’re seeing record infection rates in the US, sky-high tech stock prices and the potential for increased lockdown measures as well as more shenanigans from Trump and co to make the transition as difficult as possible. So don’t be surprised if we see more turbulence in the coming weeks.
As the outlook for greater economic activity improves, the demand for oil is also expected to rise, hence the price of oil rose, pulling oil producers up some more. By contrast, the demand for and price of gold, the perceived “haven” asset that people buy when worried, fell.
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UK
In the UK, you can take the US summary and sprinkle on a lack of insults being hurled back and forth between UK and EU negotiators. Some sort of Brexit deal looks as though it might take place now, assuming that the local government of Bruges doesn’t object (similar to what happened with the EU-Canada deal a while back).
The pound was bouncing around yesterday, but the generally improved outlook and prospects for exports pushed the FTSE 100 to a 1.6% overall gain on the day. The more domestically focused FTSE 250 added a healthy 1.1%.
As had been the case a day earlier, oil prices pulled oil-producer stocks up the highest (BP up 8.4%) with basic materials (miners), telecoms and financial companies all posting solid gains. These are companies that have suffered more during the lockdown, so they have a good deal of catching up to do.
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Continental Europe
The likelihood of extended lockdowns in Germany and elsewhere continued to cast a shadow over the continent’s near-term economic outlook. Big companies such as Danone and Thyssenkrupp have announced big job cuts. But, as I’ve said before, stocks rise on rumour and fall on fact. Rumour was on top yesterday as folk reacted more to the political situation in the US and the growing news of promising vaccines.
So a tough few months ahead for Germany et al until the vaccine is produced, distributed and administered. But, beyond that, the outlook is better than it has been for a long time, so up went stock prices to leave both the Euro Stoxx 50 and German DAX 1.3% higher on the day.
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Elsewhere
The rally has run out of steam across much of Asia this morning, despite stocks in Japan and Australia posting gains. The pandemic rumbles on and that’s going to take its toll.
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WTF (What’s The Fact?)
Trump pardons turkey
In traditional fashion, the president “pardoned” a turkey yesterday.
So many opportunities for me in this one. What should I go for…
In a question-and-answer session after the ceremony, the turkey questioned why the president wasn’t wearing a mask. Not for health reasons, it’s just the first time that the turkey has been the second-ugliest person in a room.
OR
After the ceremony, Trump’s lawyers demanded a recount of the turkey.
OR
The turkey was heard making off-camera comments in a Ukrainian accent, after which Trump insisted that he barely knew the turkey, it was just one of many turkeys on the team, and he didn’t have any dealings with it.
OR
During the annual Thanksgiving pardoning ceremony yesterday, Trump noted his pleasure at his intellect and hair-style being adopted by the leader of Turkey.
OR
After noting how Trump and the turkey made eye contact, Trump’s lawyers denied that any hush money was paid to the turkey. They added that the turkey that had originally been chosen for the pardon was switched last minute “for security reasons”, adding that it was not unusual for turkeys to wear fish-net stockings an hour before the pardoning ceremony.
OR
Trump railed against “nasty” photographers and “fake nooz” following a before-and-after plastic surgery photo was released of Melania Trump on the White House lawn yesterday.
You can take it from there.
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Links
Investopedia (www.investopedia.com/dictionary/) – Loads of free explanations of financial terms including some helpful videos. Not 100% accurate, but a good starting point Guffipedia (ig.ft.com/sites/guffipedia/) – Lucy Kellaway of the FT has collected some painful examples of corporate people disappearing up their own analogies Guardian (www.theguardian.com) – Free to access website with a couple of decent columnists (e.g. Nils Pratley and Larry Elliott) Times of India (timesofindia.indiatimes.com) – Why use five words when 37 will do? Daily Mail (www.theatlantic.com/magazine/archive/2016/07/the-war-on-stupid-people/485618) – Click it. I dare you.
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———————————————————— IMPORTANT This is my opinion. Yes I read a lot and share what I’ve read with you, but this content remains my opinion. It’s NOT advice. If you take my advice – don’t take my advice. Any decisions you make about investments, your hairstyle or whether or not to eat marzipan are entirely at your own behest. If you’re unable to recognise the devil’s ear wax when you see it, then you’re on your own.
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