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Happy Friday, Bull Sheeters. There’s still no progress on a stimulus deal, but there’s plenty of economic data, corporate and political news to focus on.
On that note, we’re a mere eleven days to the presidential election. More than 47 million Americans have already voted. That’s a record.
Meanwhile, U.S. futures have been trading sideways all morning. Stock gains have been muted for much of the past two weeks as investors brace for the likeliness there won’t be a stimulus deal before Election Day.
Let’s check in on the action.
Markets update
Asia
- The major Asia indexes were mostly higher in afternoon trading with Japan’s Nikkei up 0.2%.
- Not long ago Chinese startup Renrenche was a darling, fetching unicorn valuation status and a roster of bluechip investors, including Goldman Sachs. Now it may need to sell its core asset for little more than 1,200 bucks.
- Goldman Sachs is hoping to finally put the 1MDB bribery scandal behind it after agreeing to pay nearly $3 billion in fines to settle the affair that started a decade ago in Malaysia. The settlement “includes the highest penalty ever under the Foreign Corrupt Practices Act,” Bloomberg reports.
Europe
- The European bourses were flat at the open. And then Germany reported better than expected manufacturing data, lifting the euro and stocks. The Europe Stoxx 600 was up roughly 0.5% two hours into the trading session.
- Economists now predict the ECB will boost monetary stimulus by a further €500 billion—bringing the total to €1.85 trillion ($2.18 trillion)—as soon as next month to keep the COVID-stricken economy from falling into a deep recession.
- Daimler shares were up 1.7% in mid-morning trade after the carmaker revised upwards its full-year forecast thanks to solid growth in China.
U.S.
- U.S. futures are in the red. That’s after the three major indexes eked out gains yesterday in incredibly volatile trade.
- In premarket trading, Gilead Sciences shares were up as much as 7% after its remdesivir got FDA approval to treat COVID-19. As Fortune‘s Sy Mukherjee notes, remdesivir is “not a save-all” treatment, but the regulatory approval is significant.
- Shares in Tesla are flat in pre-market trading after a modest bump yesterday. Investors cheered the latest profit beat, but doubts linger over whether that will be enough to vault the EV maker into the S&P 500.
- Looking ahead: we get the latest batch of manufacturing data before the bell. Let’s see if it can match today’s rosy German numbers.
Elsewhere
- Gold is up, trading just above $1,910/ounce.
- The dollar is down.
- Crude is down. Brent continues to trade just above $42/barrel.
***
By the numbers
13K
We don’t talk often about Bitcoin and its ilk here on Bull Sheet, if only because there’s so much to say about equities and other asset classes. But cryptocurrencies are on a tear at the moment, and worth talking about today. Yesterday, Bitcoin hit a 16-month high, topping $13,100, after PayPal announced it would let users buy a handful of cryptocurrencies, including Ethereum and Bitcoin. As Fortune‘s Bitcoin specialist Jeff John Roberts notes, “Bitcoin is notoriously volatile (though considerably less so than during its early days), and it is often hard to identify single factors that explain price swings. While this week’s surge was almost certainly spurred in large part by the PayPal news, there may be other tailwinds driving the price up.” One theory is that investors are souring on the gold trade, and hopping on the crypto bull run.
-130.54
The Dow Jones Industrial Average closed yesterday at 28363.66—that’s a loss of 130.54 points (-0.4%) over the past five trading days. The stimulus rally continues to show signs of running out of gas. The three major exchanges have been trading in a tight range for much of the past two weeks—going sideways.
5 vs. 495
We’ve talked a lot here about the incredible 2020 bull run for the S&P Five, a.k.a., the FAAMG—Facebook, Apple, Amazon, Microsoft, Google—stocks. Their dominance appears locked in for quarters—and perhaps years—to come as they are not just out-growing the pack, they’re also out-investing the pack. According to Goldman Sachs, the cash-rich FAAMG quintet have a sizable edge in Capex and R&D spending, suggesting they’re sinking big sums into longterm bets while the laggards pull back. It also helps that FAAMG stocks are well ahead in plowing cash into buybacks and dividends, helping driving up their stock prices.
***
Have a nice weekend, everyone. I’ll see you here on Monday.
Bernhard Warner
@BernhardWarner
Bernhard.Warner@Fortune.com
As always, you can write to bullsheet@fortune.com or reply to this email with suggestions and feedback.
Today's read
Mind the Gap. "We're shrinking North American specialty stores and getting out of mall-based locations," Gap Global president Mark Breitbard told analysts yesterday. The retailing giant is exiting a total of 350 store locations in North America, leaving a giant hole in America's malls, reports Fortune's Phil Wahba.
A beat on labor. U.S. jobless claims fell to a level last seen in March when a wave of layoffs decimated the jobs market. After reporting 787,000 unemployment claims in the previous week—plus downward revisions in previous weeks—it appears as if the U.S. labor market is gaining important momentum leading into the end of the year. Let's hope the latest COVID wave doesn't derail this progress.
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Market candy
Quiz Time
President Trump again last night cited the stock market as a noteworthy example of his Econ bona fides. Out of the past four Republican presidents (including President Trump), which has seen stocks climb the highest during his presidency?
- A) Ronald Reagan
- B) George H.W. Bush
- C) George W. Bush
- D) Donald Trump
The answer is A, Ronald Reagan. According to LPL Research, the Dow's annualized return topped 11.3% during the Reagan years. George Herbert Walker Bush comes in second at 9.7%. Looking at all presidencies since World War II, the crown goes to Bill Clinton (by the same measure of Dow annualized return). Barack Obama would be No. 2.