Week of Nov 6, 2020 Weekly Recap & The Week Ahead
“Investing is a popularity contest, and the most dangerous thing is to buy something at the peak of its popularity. At that point, all favorable facts and opinions are already factored into its price, and no new buyers are left to emerge.”
― Howard Marks
1. Biden Wins U.S. Presidential Election — America has chosen Democrat Joe Biden as its 46th president with 290 electoral votes versus Trump at 214. However, Republicans escalated their efforts to overturn Joe Biden’s victory in the 2020 election, refusing to acknowledge Donald Trump’s defeat, as the president-elect moved more forcefully to make the transition to the White House.The most significant move came from Attorney General William Barr, who on Monday authorized Justice Department officials to open inquiries into potential irregularities in the presidential election, though he acknowledged there’s no conclusive evidence.
2. The Travel Industry Is Still in Serious Trouble — Norwegian Cruise Line Holdings extended its suspension of cruise voyages on Monday through Dec. 31 despite the Centers for Disease Control and Prevention saying on Friday that its no-sail order was being lifted as of Oct. 31. Meanwhile, Royal Caribbean Group said Friday that it too has “a lot of work to do between now and then,” referring to when its ships will return to service. It did not provide a date for when it might begin voyages again. The CDC move came with stringent requirements. Before sailing again, cruise lines would have to ensure testing for crew members, simulate voyages to test response and mitigation practices, and receive certification by the CDC that passengers are allowed to return. Airlines stocks have also been under pressure as Covid-19 cases continue to rise and prospects fade for another stimulus bill soon. New aid is unlikely to be approved at least until the next Congress begins in late January.
3. McConnell Says Senate Will Start Working on a New Stimulus Bill — Majority Leader Mitch McConnell said that the upper chamber will start work on another round of stimulus when it returns. McConnell added that “it’s a possibility we will do more for state and local governments,” a key stumbling block in pre-election talks.
Tossing out the possibility of additional state and local aid could be McConnell’s way of showing he’s open to a deal—if House Speaker Nancy Pelosi goes along with one of his asks, such as a liability shield for employers. Such liability shield language has been anathema to Democrats, but Pelosi might be willing to concede it given that the GOP currently appears on track to hold a slightly slimmed-down Senate majority.
4. Qualcomm Jumps on Outlook for Booming 5G Chip Demand — the company said it was going to sell millions of chips for 5G mobile devices as people upgrade their phones. The chip maker, known for its wireless communication chips for smartphones, reported fiscal fourth-quarter net income of $2.96 billion, which amounts to $2.58 a share, compared with a net profit of $506 million. CEO Mollenkopf was keen to highlight the progress he has made diversifying Qualcomm beyond the phone market. Revenue from chips sold to makers of vehicles and internet-connected gadgets totaled $3.67 billion in fiscal 2020, Qualcomm reported.
Last month, a U.S. appeals court said it won’t reconsider an earlier decision that threw out antitrust claims against Qualcomm in a case brought by U.S. Federal Trade Commission. That decision ends years of major legal fights and regulatory actions against the company.Apple Inc. and China’s Huawei Technologies Co. became the last major handset suppliers to sign new licensing agreements with Qualcomm. Apple has also returned to using Qualcomm silicon in the iPhone.
5. Control of Senate Hinges on Georgia Runoffs — two January runoff races in Georgia could determine which party controls the Senate if Biden wins the White House. Democrats have picked up just one Senate seat overall. With the chamber split 53 to 47 in favor of the GOP, they need two more seats to split the Senate 50-50. If Biden wins the White House, then-Vice President Kamala Harris would break the tie. As votes continue to be counted in Georgia, the state’s two Senate contests are headed to runoffs. Candidates there must get more than 50% to be declared the winner. If Biden wins, a GOP-controlled Senate would almost certainly take progressive policies like a Green New Deal, increased taxes on high-earners and corporations, or a public health insurance option off the table.
The week ahead — Economic data from Econoday.com:
