Markets stocks

‘The Top’ Is Near And The World Is Changing

The top in asset prices will come between the election and inauguration, BofA's Michael Hartnett says, in the latest edition of the bank's popular weekly "Flow Show" series. Hartnett, who reiterates many of his recent talking points, writes that "peak policy" will be the "key driver" of the topping process, and calls it "curious" that a prospective blue wave election outcome has turned into a bullish catalyst for market participants over the past month or so. One explanation for the market's reassessment of the ramifications for risk assets of a Democratic sweep is that Donald Trump's refusal to commit to a peaceful transfer of power was a bridge too far for many market participants -- the prospect of a US president literally refusing to relinquish the keys to the castle following a lost election appears to be the one thing capable of overriding the allure of lower corporate taxes in the minds of some investors. The latest polling, which includes the time period following Trump's COVID-19 diagnosis, shows Biden extended his lead in the wake of Trump's hospitalization and recovery. Even Fox has Trump down double-digits. When it comes to equities front-running fiscal stimulus,
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5 comments on “‘The Top’ Is Near And The World Is Changing

  1. Sheldan says:

    “This green bubble is gaining momentum,” Kevin Muir, former head of equity derivatives at RBC, said this week.

    “The world is changing more quickly than I imagined. We’ve hit the tipping point, and it’s expanding at breakneck speed,” Kevin added, noting the same surge in the solar ETF flagged by Hartnett. “Whether it’s the move to electric cars, or the adoption of solar power, society is adapting quickly to the new reality.”

    A similarly rapid transition happened in photography in the late 1990’s ~ early 2000’s. Many experts, manufacturerers, photographers and film labs predicted a transition to digital would take 20 years. It happened so much faster that many film labs and photographers were left with antiquated equipment by 2010, gear worth pennies on the dollar.

    Remember Eastman Kodak? Early on it made digital sensors for Leica and others, but even they did not see what was coming.

    • dayjob says:

      I remember Eastman Kodak from such films as “The Little Bitcoin Miner That Could” and “Making Kodak Great Again: The Saga of a Film Company turned Pharmaceutical Manufacturer.”

  2. With energy via central solar trending below 1 cent per kwhr and new electric vehicle prices trending below gasoline. It is clear we are nearer to a tipping point than we are to a backpedal. The key technology to trend is energy storage. The key development to trend is nationwide electrical grid unification, effectively we have barriers to transmission that are impeding progress. Sideshows like hydrogen economy, fusion reactors, or small scale nuclear are important also.

  3. runamok says:

    I love the analysis.

    Maybe it’s just a great time to be overweight cash. Nice to have the optionality. The risk for equities is overweight to the downside with how much upside potential, a few percent?

    That last half hour before market closes on election day will be interesting.

    I’m fine with rates going up a bit more. A runaway in rates is no way in the offing. This is a good setup for stuff like EDV.

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