Futures were hammered right off the start on Sunday evening amid what Bloomberg describes as “pessimism that a U.S. stimulus deal can be reached before the Nov. 3 election.” Which is great, only it’s dead wrong as the ridiculous “deal or no deal” narrative has been meaningless for weeks now and only 5-year-old Robinhooders still pretend it is a catalyst to asset prices.
What has, however, changed is a dramatic shift in online polling sentiment regarding what until just days ago was a certainty that a “Blue Sweep” would take place.
As a reminder, it is a Blue Sweep – not just a Biden victory – that is instrumental for the reflation trade, or what BofA called the “Bullish Elevation” scenario, as only unified governance will enable the continued CARES Act-style economic support that can return the US economy to the levels achieved at the end of 2019 (“a step-change to 3%+ GDP & higher productivity requires major new investments in R&D, capex, and a broader base of household demand; such policy shifts “require bold leadership and a governing majority, not tepid incrementalism”). Read more…..
Chart of the Day
Head of Market Analysis Anthony Cheung delivers a look ahead for the session.