With Joe Biden elected President of the United States, what kind of transition period are the markets in for?
US: How rocky will the Trump/Biden transition be?
While, at the time of writing, last week’s agonising election is still ongoing, which the final counts in few key states still yet to be announced, the calling of Pennsylvania for the Democrats saw him collect more than the required 270 Electoral College votes to become the next POTUS.
However, the incumbent is Donald Trump. And he doesn’t like to lose. America is facing recounts, legal challenges and whatever other crooked shenanigans the former reality TV star’s team can cook up in order to undermine and overturn the result.
What is unclear is how much this will weigh on the markets. The extent to which it will play on investors’ minds will be tied to the aggressiveness of the challenges, their chances of succeeding, and, really, whether anything else can topple the election as the week’s headline story.
In the slightly longer-term, a covid-19 stimulus package could potentially arrive before December 11th – the deadline for more funding – though that would assumedly require a concession from Trump rather than the circus we’re in for. If not, federal aid would be delayed until January 2021. The size of the package, meanwhile, will be dictated by who holds the Senate, something complicated by the potential need for run-off votes in January.
For those wanting to look beyond the election this week, it’s slim-pickings stateside. The JOLTS job openings reading is on Tuesday, with inflation and unemployment claims on Thursday, and consumer sentiment on Friday.
Of course, there’s always covid-19. Though the election was obviously the focus, there were some ugly pandemic headlines out of the US last week, most notably that the country finally passed the 100,000 new daily cases mark for the first time.
If it keeps seeing record numbers every day, coronavirus could sooner rather than later return to the top of investors’ concerns.
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UK: Q3 GDP growth expected
It’s a big week for the UK data wise. Though its US and European peers have already taken a look at their respective third quarter performances, the UK gets it first peak at Q3 GDP this Thursday. Analysts are expecting growth between 15% and 17%, compared to the 19.8% collapse seen in Q2 (and the prospective contraction in Q4).
Ahead of that, on Tuesday, there is the latest jobs report, including an unemployment rate that could creep up from 4.5% to 4.7%.
Investors may also be anxiously scanning the papers for updates on the last gasp Brexit talks, with the deadline for a deal – November 15th – fast approaching.
The Eurozone indices are likely going to continue to follow the USA’s lead this week, with a dash of continental covid-19 anxiety thrown in for good measure.
In terms of numbers, the Sentix investor confidence figure is on Monday, with the ZEW economic sentiment numbers and Italian and French industrial production readings on Tuesday, region-wide industrial production on Thursday and a flash GDP figure on Friday.
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