Tuesday Morning Reads
- The Opposite of Smart
- First Recession For Nearly 30 Years
- Running Out of Cash
- Worst Event Risk in VIX Futures History
- Barrage of Ads Promises Peace of Mind
- Looking Beyond the Obvious
- All Wrapped In One
- 2 Variables That Drive Stock Prices
The REIT sector is on watch after the Trump administration implemented a national moratorium on residential evictions through the end of the year. The new ban covers tenants who certify that they have lost "substantial" income; that they expect to make no more than $99,000 in 2020 or received a stimulus check; and that they are making their "best efforts" to pay as much of their rent as they can. When the moratorium expires at the end of 2020, renters who received protection will still need to make up missed payments to their landlords.
Dow and S&P 500 futures are up by 0.8%, while the Nasdaq powers ahead by 1.2% after another day of record highs. Tech has been a big driver of gains in recent sessions, and Apple (NASDAQ:AAPL) advanced another 2% in premarket trade as more people rely on internet-connected devices for work, home schooling and communication. The remainder of the week will be dominated by employment figures, with the ADP reporting on private sector hiring today and the biggest report of the month, non-farm payrolls for August, due on Friday morning.
Google (GOOG, GOOGL) and Apple (AAPL) are building a COVID-19 notification system straight into smartphones, eliminating the need for a separate app and ramping up a new weapon in the effort to track exposure to the novel coronavirus. Future versions of iOS and Android will feature the new system that previously required an app made by a public health authority. The system will use Bluetooth signals from phones that have opted in to find out how closely and for how long two phones were near each other, without collecting location or identity data.
2020 has been the year of questioning the traditional IPO process as companies look for cheaper ways to go public. There are only two other ways to get on an exchange: SPAC merger, which has seen outsized activity in recent months, or direct listing, where a company floats existing private shares. While a new plan by the SEC last week removed one of the last major incentives to conduct an IPO via the traditional methodology - by allowing capital raises for direct listings - a last-ditch effort was made to block it. The Council of Institutional Investors said it would file a petition for a review of the plan by the SEC's commissioners, citing concerns that companies could circumvent protections built into the IPO process.
It's now trending lower, but the euro briefly rose above $1.20 against the dollar on Tuesday for the first time in more than two years, rallying nearly 12% since late March. "The euro-dollar rate does matter," ECB chief economist Philip Lane said overnight, causing the currency to pare its gains. While the EU's rescue fund appears to have calmed any lingering fears of a euro breakup, Fed stimulus has weighed on the greenback and easy policies are being attributed to the downward cycle. For a long time, President Trump has also criticized dollar strength due to the trade deficit, though as the coronavirus crisis hit, he said it was "great time" to have a strong currency.
Australia has become the latest country to officially enter a recession, though the 7% GDP decline was a lot better than the coronavirus-induced devastation seen in other economies. For comparison, the U.S. economy contracted by a record 32.9% in Q2, while the United Kingdom's GDP dropped 20.4%. "Our record run of 28 consecutive years of economic growth has now officially come to an end," Australian Treasurer Josh Frydenberg told reporters. "COVID-19 has wreaked havoc on our economy and our lives like nothing we have ever experienced before. But there is hope and there is a road out."
Scotland is taking a new shot at breaking away from the United Kingdom as First Minister Nicola Sturgeon revived plans for a second independence referendum. "Brexit, and the way in which is it being implemented, immeasurably strengthens the case for Scotland becoming an independent country with the ability to shape our own destiny and contribute positively to the world," said the SNP leader. While Scotland voted to stay in the U.K. in 2014 by a 55% to 45% margin, that was before Brexit, as well as recent opinion polls that suggest a sustained majority of Scottish voters would now back the leave camp.
What else is happening...
Dating app Bumble to plan IPO above $6B - Bloomberg.
In Asia, Japan +0.5%. Hong Kong -0.3%. China -0.2%. India +0.5%.
In Europe, at midday, London +1.7%. Paris +2.4%. Frankfurt +2.4%.
Futures at 6:20, Dow +0.8%. S&P +0.8%. Nasdaq +1.2%. Crude +0.2% to $42.86. Gold -0.1% to $1976.10. Bitcoin -1.9% to $11720.
Ten-year Treasury Yield +2 bps to 0.69%
Today's Economic Calendar
7:00 MBA Mortgage Applications
8:15 ADP Jobs Report
10:00 Factory Orders
10:00 Fed's Williams Speech
10:30 EIA Petroleum Inventories
12:00 PM Fed's Mester: U.S. Outlook and Monetary Policy
2:00 PM Fed's Beige Book
3:00 PM Fed's Kashkari Speech
6:00 PM Fed's Daly: "An Economic Framework for the Future"