“Happy days are here again” as the bank manipulation pushed tech higher with AAPL, AMZN & TWTR leading. Apparently, the goal is to have a higher market before the election. Perhaps, Trump isn’t as bad as getting Harris after hearing Biden ask his audience to vote for him for the Senate. Bankers are not looking forward to a Biden tax hike which would result in lower margins, lower lending, lower staffing and less investment.

There has been a shift in market breadth as the Buy:Sell ratio has recently been stronger. Much of this is HFTs moving mostly illiquid cheap stocks of companies at risk of bankruptcy. The DPs quit selling yesterday which gave room for a run up. This remains a narrow, tech led rally to support the appearance of healthy market. Fund flows are still negative for equities.

Whipsaw risk rises as the price move is partially driven by increased options trading requiring portfolio risk adjustments. Options focused on “low liquidity, over-bought markets, especially…tech & momentum” can create rapid reversal. The S&P closed at 2-STD above the BBand 20-SMA and pushed higher intra-day increasing pull-back risk.

Q3 reports start today before the open with JPM, C & JNJ. Tomorrow, with WFC, BAC & GS. Thursday is MS with SLB on Friday. These are all pre-open releases.

BOE is preparing CEOs for negative interest rates.

Hopes for a stimulus bill remain just that – hopes. Even the Senate does not like the Administration’s hiking the size. How much stimulus affect will impact economic growth is unknown as American’s have saved a third of prior largess for debt reduction or a “rainy day.” Savings and lower debt does generate potential future spending. Date unknown. More stimulus will create greater problems for banks possibly offsetting the consumer benefits.

Hemingway’s “For Whom the Bell Tolls” could be rewritten for Mall owners as the decision by Disney to shift movie production to streaming away from theaters is being replicated by other streamers. With theaters’ attempts to re-open failing, restructuring mall to entertainment and residential centers is done as collapsing ticket sales and rents seal their fate. Restructuring entertainment is confirmed with the scrapping of cruise ships. Not all have streaming revenue to offset the write downs.

WFH is a new unexpected societal change that is here to stay. Nearly 25% of surveyed workers expect to WFH 50% of their time. The shift damages the service businesses catering to people in office work due to reduced demand – restaurants, bars, dry cleaners, transit, car maintenance, etc.

Economic “gotcha” can take a long time. OPEC+ is reaping the downside of a nearly dying industry after its “gloating” days of the Embargo. IEA expects the oil market to suffer for a decade without a quick defeat of Covid.

Capitalism generates creativity. Singapore Airlines has opened up “restaurant” dining on two Airbus 380s to raise cash. Within 30 minutes of opening, they were booked up.

Regards,

Don Creech
2323 Alaska Ave. E.
Port Orchard, WA 98366
360-620-8635