Blue Wave Failure, Ma's Challenge, and ADP Data

5 nov 2020

The results of the US elections, in fact, multiplied by zero all the forecasts and poll results, according to which the "blue wave" was supposed to cover the country. In real life, we have essentially a fiasco of the Democrats. According to some analysts, the credit for this is the record data on US GDP for the third quarter and a comb of macroeconomic statistics for the third quarter. This explanation, in our opinion, is more than doubtful, because the GDP figures for the third quarter were published too late to radically change the balance of power in the election race.

The most obvious explanation for what is happening is the theory of the silent voter. That is, those who vote for the Democrats openly and actively talk about it (which creates the illusion of the total superiority of their party); Trump voters prefer to keep quiet, but at the same time they go to polling stations and vote for their leader.

What do the current results mean for the financial markets? To begin with, it's uncertainty. Trump has already announced that he will legally challenge the election results at least in Wisconsin. This means that the outcome of the elections will not be obvious for quite a long time. Asa result, stock markets might change their current upward direction, the same is true for the commodity markets and other risky assets. Dollar has chances for recovery.

The last days have been very difficult for one of the richest people in China and the world, Jack Ma. The IPO of his brainchild Ant was postponed, and Alibaba shares in just one day (Tuesday) fell more than 8%. The China Banking and Insurance Regulatory Commission plans to discourage lenders from using the Ant platform, which has recently become a full-fledged replacement for small bank lending.

In terms of macroeconomic statistics, yesterday is interesting primarily with data on employment in the US from the ADP. The figures came out much worse than forecasts, which, against the backdrop of fears of the second wave of the economic crisis, cannot but cause heightened fears.

As a reminder, this Friday official statistics on the US labor market will be published.

The sharp increase in US oil inventories very well coincided with the local weakness of the dollar and the general increase in optimism in the financial markets, provoking a significant increase in oil quotes this week. Well, this is a great opportunity to sell an asset at a higher price.

Today promises to be very eventful. In addition to the topic of the US elections, participants in financial markets will closely follow the decisions and comments of the Bank of England, as well as the Fed. Well, traditionally, in recent months, data on jobless claims in the United States will be an object of increased interest.