Perhaps everyone is still watching the school playground debate footage from last night. Polls and betting odds shifting a little further in Biden’s way, but it would be hard to point him out as the clear victor. Layering on more uncertainty as we still await clarity on any potential stimulus agreement from Washington. Even the Europeans are saying there are doubts over the €1.8trl recovery fund being delivered on time.

 

 

 

On the macro front, we have inflation hunt voices growing again. NY Fed’s Williams last night saying the Fed needs to make sure it is purposefully overshooting inflation to get to 2% average and that they aren’t seeing obvious signs of market excess. Their track record of foreseeing excesses is hardly spot on though. Meanwhile, what’s good for the goose is good for the gander. Lagarde said it is worth examining an FOMC style strategy that allows inflation to temporarily rise above ECB targets. The BoE are back jaw-boning about negative rates. On the data front, worth noting the export orders in the China PMI’s were pointing to recovery which is a good sign for global demand recovery. Japan’s data was also less bad than expected. Factory output improved MoM, cars and electronics providing the boost.

 

Where’s the volume? In short, there isn’t any really – especially considering its month end. Perhaps the latter stages of the day will see  participation pick up. For the morning we’re running c.23% below the 20dma, leaving the listless feel to the indices. Only Utilities and Chemicals are seeing above average turnover, +23% and 17%, respectively, vs the norms. Notable lack of appetite for trading in Consumer Goods, Retail, Media, Insurance, Autos, Real Estate, Telecoms, Banks or Travel which are all running 20-35% below average.

 

Single stock movers on volume include: TP ICAP -14.5% on 8x adv following news they have approached Liquidnet in a deal to keep abreast of the electronic trading world… Suez +4.7% on 6.3x adv, Veolia raised offer for Engie’s stake…. Alstom -2.2% on 3.9x adv after Bouygues sold down some of their stake in a placing… DSM +4.4% on 2.9x adv, selling resins and functional materials division for €1.6bn to Covestro, -7.2% on 1.4x adv… Royal Unibrew -3% on 2.9x adv, negative read from Finnish bar closures… G4S +4.6% on 1.1x adv, Garda World makes 190p bid (stock @ 197.80)…. William Hill unch on 3.6x adv, Ceasers confirmed 272p cash bid (stock trading 274.1)… Worldline -3.4% on 1.6x adv (couldn’t find story).

 

At the Factor level, Value outperforming Growth (top vs bottom of the EU FTW screen) but the divergence is relatively minor at c.80bps. EU Value Cheap is a minor standout in the quant factors, trading slightly higher. Momentum and Quality baskets are stabilising but in the red (both in terms of winners and losers baskets).

 

 

Coming up we have ADP employment and Personal Consumption data along with Core PCE, which is the Fed’s preferred inflation reading.

 

 

 

 

 

 

 

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