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The markets today, Monday, viewed several hours before opening, appear poised to start on a positive note with all major American and European indicators strongly in the green at time of writing. Drivers include renewed stimulus hopes, strong government action in some countries to contain the COVID 19 virus and China’s reported recovery. The safe havens of gold and silver are also in the green.
In the current exceptionally volatile environment, dramatic changes can occur before the opening bell and can certainly occur afterwards.
As with any hard-fought election there will be winners and losers after Tuesday, November 3. Today I deal with one aspect of what could happen if former Vice President and challenger Joe Biden moves into the White House. I’ll deal with others in future editions.
Looking at the regulatory picture provides an easy contrast. Under the administration of President Barack Obama, the regulatory burden for companies increased substantially, recalls London-based analyst and media commentator Gavin Graham. President Donald Trump has sharply reduced the quantity and severity of government rules. Realistically a Biden administration can be expected to return to the pattern of the Obama administration, Graham says.
Financial institution reports made last week very busy and this week has quite a few reports coming up for market watchers including International Business Machines Corp., Logitech International, Halliburton, NetFlix, A T & T and others.
Some reports will telegraph positive or negative results of the COVID 19 pandemic. On the positive side, Proctor & Gamble’s first quarter report tomorrow may show a rise in earnings boosted by sales increases due to hoarding of bathroom products such as Charmin toilet paper and household cleaning products such as Tide detergent. It will be interesting to see whether Proctor & Gamble believes that the higher demand will continue. On the negative side, on Thursday, Coca-Cola may report a drop in profits due to reduced consumption resulting from closed restaurants, bars and other venues. Their outlook will also be interesting.
Also, this week and partially outside of the influence of the pandemic, TESLA appears poised to report on Wednesday. As well as profitability, Wall Street will be looking to see what analyst Dan Ives at Wedbush Securities in New York calls its ‘growth trajectory for the fourth quarter.’ Ives says that TESLA s improved manufacturing efficiency and success in China will be front and center and will lead to strong bottom-line performance.
However, looking over the horizon, when the election is over, the results counted, the occupants of the White House known, the COVID 19 crisis finally resolved, market watchers, corporate decision-makers and investors alike will have to grabble with the viability, financing and sustainability of renewed growth. When the smoke from these issues clears – and it will – many of the hard decisions that must be made will affect investment portfolios.
Disclosure: I do not own shares in any company mentioned in this article.
Related: The Mixed Outlook for the Market Parallels the Mixed Outlook for New Stimulus