After counting for nearly four full days, America got its answer as to who would be sworn in as president in January.
This week Wall Street will weigh the impact of President-elect Joe Biden’s new administration on the market. His presidency will instigate a drive for greater fiscal stimulus, a public health option, investment in sustainability and a more appropriate approach to foreign policy and trade, along with elected Vice President Kamala Harris, among other things.
Biden, who was elected in the midst of a crisis, will also set a more serious tone in the fight against the coronavirus pandemic, as the outbreak has already cost more than your life 230,000 Americans contracted more than 9.8 million and US economic activity dragged to an all-time low. Biden will announce a new 12-person coronavirus task force on Monday as one of his first major acts during his change of president Axios and CNN.
“Joe Biden won the White House competition – a result that marks a return to a short-term market environment dominated by low interest rates, a hunt for high yield and growth stocks,” analysts at the BlackRock Investment Institute said in a statement on Saturday . “A Democratic struggle – in which the Democrats also take control of the US Senate – is unlikely, although a runoff election for two seats in the Georgia Senate in January will keep the race alive.”
“A split government would limit the ability of the Biden government to implement plans for full fiscal incentives and public investment, taxes, health care and climate-related laws,” they added. “We see an increased focus on sustainability under a divided government, but more through regulatory measures than through tax policy or spending on green infrastructure. This would likely also mean a return to more predictable trade and foreign policies – although the rivalry between the US and China will continue to increase due to mutual support for a more competitive stance. “
Other analysts have even more questioned Biden’s ability to advance many of his larger election promises in the face of a divided government.
“Much of President-elect Joe Biden’s agenda will be dead by the time he arrives as Republicans retain control of the Senate,” said Paul Ashworth, North America’s chief economist, in a note on Saturday. “But there is still a chance that more fiscal stimulus will be enacted, albeit likely after Biden took office on Jan. 20.”
Meanwhile, President Donald Trump has still refused to admit. His campaign has filed at least a half-dozen lawsuits in battlefield states such as Michigan, Georgia, Nevada, and Pennsylvania, claiming without evidence that many ballots in these and other states were in question. Two of Trump’s lawsuits have already been dismissed in Michigan and Georgia, and a number of analysts have largely shaken off the short-term risks that Trump’s legal challenges could pose.
“Risks to earnings appear small and we prefer to study the market volatility that President Trump’s legal challenges can bring,” said BlackRock analysts.
Nikola, Disney, Palantir revenue
Another set of company results is due to be released later this week. Canadian cannabis stock companies such as Aurora Cannabis (ACB) and Canopy Growth Corporation (CGC) to blue chip companies like Disney (DIS) ready to report quarterly results. A number of newly listed companies including Nikola (NKLA), Lemonade (LMND) and Palantir (PLTR) are also set to report.
By Friday, around 89% of the S&P 500 companies had already reported third quarter results. According to FactSet, 86% of these said they had a positive surprise in terms of earnings per share. If that percentage moves through the remainder of the earnings season, it will be the highest percentage of earnings surprises for S&P 500 companies since FactSet began tracking the measure in 2008.
Nikola has a lot to prove to Wall Street in her third quarter results. In September, the stock suffered a major blow after short selling Hindenburg Research published a damning report Accused the company and its founder, Trevor Milton, of fraud and misleading investors. Nikola has denied the fraud allegations, but Milton resigned from his role as chairman and board member of Nikola shortly after the report was published. Nikola shares have fallen nearly 50% since Hidenburg’s report was released on September 10.
A billion dollar partnership with the old automaker General Motors (GM) also depends on equilibrium. The two companies announced a $ 2 billion manufacturing and licensing agreement in early September to see General Motors help manufacture Nikola’s Badger electric vehicle for a stake in the new public company. However, the deal was suspended after the Hindenburg report, though GM CEO Mary Barra said in an interview on Bloomberg TV last week that talks between the two companies to finalize the partnership are still ongoing.
“The main focus of the road is on updates to the GM partnership,” WedBush analyst Dan Ives said in a note last week. “With this fulcrum EV [electric-vehicle] After Trevor’s departure and the brief report, investors are left with uncertainty and hope for an update on the progress of the GM deal signing as we hit the road to profit. “
“With Nikola being essentially a pre-revenue company at this point, it’s all about the management team setting the execution, schedule and strategy for the EV / Hydrogen fuel cell roadmap,” he added. “We believe that at this point it is a question of regaining the credibility of investors step by step, and next Monday another building block on the way, although Nikola still has clear challenges ahead of her. Overall, we still believe the company’s ambitions for electric vehicles and hydrogen fuel cells are achievable in the tractor unit market, although we have serious concerns that the implementation and timing of these ambitious goals will remain on track in the years to come. “
Nikola, who has not yet sold a battery-electric truck, is expected to post an adjusted loss of 20 cents per share on sales of $ 50,000 in the third quarter. Last quarter, All of Nikola’s income came from solar panels for Trevor Milton.
Disney is among the myriad of companies hard hit by the coronavirus pandemic as on-the-spot contracts and social distancing shaped the once lucrative theme park business into a money-losing operation.
However, Disney’s theme parks are expected to return to modest operating income in the fourth quarter of fiscal, as most of the company’s theme parks (outside of California and Paris) reopened with some capacity bottlenecks. Still, The company laid off 28,000 employees Especially in the parks at the end of September as visitor numbers remain below pre-pandemic levels. Further job cuts in the studio entertainment department and at ESPN are also planned. according to the deadline.
Amid the battles at many of its legacy companies, Disney recently announced that it would focus more on growing its year-long streaming service Disney +. In August, Disney + had around 60 million subscribers compared to Netflix (NFLX) almost 200 million. AT & T’s (T.) The services of HBO and HBO Max reached around 38 million subscribers at the end of September.
Under pressure from Third Point Capital activist Dan Loeb, Disney decided to do so in October reorganize the business to steer more money for Disney +. That extra investment is unlikely to pay off immediately, however: Wall Street expects Disney’s direct-to-consumer and international business, where Disney + is based, to have lost more than $ 1 billion in the fourth quarter.
Overall, Disney is expected to report quarterly. Adjusted loss of 72 cents per share on revenue of $ 14.2 billion, a year-over-year revenue decrease of 26%. Disney stocks are down roughly 12% since the start of the year, underperforming the S&P 500’s 8.6% gain.
The new listed company Palantir will present its first earnings report as a listed company on Thursday after the market closes. The Denver, Colorado-based big data company made its public debut via a direct listing in September.
Although it has existed for nearly two decades and has major government agencies including the Ministry of Defense as the main customerPalantir has not yet reported a win. Before his direct listing, Palantir said it was to be expected Reported non-GAAP operating income between $ 60 million and $ 62 million for the third quarter of fiscal year, though that metric excludes stock-based compensation and other direct listing costs. Revenue of up to $ 280 million was also expected, representing a 47% year-over-year growth.
In the first half of 2020, Palantir’s net loss was nearly $ 165 million, an improvement over the $ 281 million lost in the same period in 2019. However, excluding stock-based compensation, net income for the first half of 2020 was $ 17.2 million, it said.
Given Palantir’s engagement with the government, the company’s comment on the potential impact of the new administration on the business is likely to be closely monitored in its earnings report and call on Thursday. On Friday, Palantir’s shares rose 16% on the best day since direct listing. Bloomberg attributed this profit to speculation that a Biden win would result in lower defense spending, which enables Palantir to take advantage of it as its services are typically cheaper than what its competitors offer.
Palantir’s shares are up 91% since they were directly listed on September 29th.
Monday: MC Donalds (MCD), Aurora Cannabis (ACB), NewAge Beverage (NBEV), Canopy Growth Corporation (CGC), Cars.com (CARS), Plug Power (PLUG) before market opening; Occidental Petroleum (OXY), ZoomInfo Technologies (ZI), Nikola (NKLA), The RealReal (REAL), Beyond Meat (BYND), Novavax (NVAX), Norwegian Cruise Line Holdings (NCLH) after the market closes
Friday: DraftKings (DKNG) before market opening
Monday: N / A
Tuesday: NFIB Small Business Optimism, October (104.5 expected, 104.0 in September)
Wednesday: MBA Mortgage Applications, Week Ending Nov 6 (3.8%)
Thursday: CPI month by month, October (0.2% expected, 0.2% in September); Monthly CPI excluding food and energy October (0.2% expected, 0.2% September); YoY CPI, October (1.3% expected, 1.4% September); CPI excluding food and energy yoy (1.7% expected, 1.7% in September); First unemployment claims, week ending November 7 (725,000 expected, 751,000 in the previous week); Unemployment Claims Continuation, Week Ending October 31 (7.285 million expected); Real YoY Average Weekly Earnings, October (4.1% in September); Real YoY Average Hourly Wage, October (3.3% in September); Monthly Budget Statement, October (- $ 124.6 billion in September)
Friday: Month after month PPI final demand, October (0.2% expected, 0.4% in September); PPI excluding food and energy MoM, October (0.3% expected, 0.4% September); Final PPI Demand, October (0.4% expected, 0.4% September); PPI excluding food and energy in October year over year (1.2% expected, 1.2% in September); University of Michigan consumer sentiment, tentative in November (82.0 expected, 81.9 in October)
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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