With Pfizer laying out the timeline on when we will hear news from them and their partner BioNTech, while saying it’s obvious we hope to hear good vaccine news, if we do, we need to start shifting our investment focus to not what has worked but to what has gotten hammered. I don’t believe in extrapolating that life over the past 6 months is forever and that if that vaccine news is good, it will be the leisure/hospitality/airline stocks that outperform tech over the next few years I argue. Also, I’ll repeat again, if the news proves effectiveness, long term interest rates will be spiking higher because it immediately shifts the focus to economic expansion again, higher inflation and central banks that will be forced to shift their attention from easing forever to not over staying their welcome and beginning the reversal of this. It’s not just the election that will be newsworthy in the coming month.
After weakness seen in August, EU car registrations rose 3.1% y/o/y. Daimler last night said they have “seen a faster than expected market recovery and a particularly strong September performance” and is up 3.7% today after falling by 3% yesterday.
Notwithstanding what Daimler said, quietly the German 10 yr bund yield is breaking lower again to further negative. This is likely in response to the covid flare up in the region. While the Euro STOXX 600 bank index is up today by .6%, it follows 5 days in a row of declines which has it just off the lowest level since 1988. Yes, 1988 and the ECB still calls their monetary policy stimulus for a region that is highly dependent on bank loans rather than the capital markets for financing business and households.
10 yr BUND YIELD
Euro STOXX 600 Bank Stock Index
Taking a step back, Singapore said its September no oil exports fell by 11.3% m/o/m, worse than the estimate of down 4.4% but still up 5.9% y/o/y. It does come after a 10.5% m/o/m increase in August. Pharma has been the swing factor with it strong in August and giving back some gains in September. Exports of electronic products remained strong. From last year, exports to China were little changed, up 3.7% to the US and higher by 61% to the EU (driven by machinery and PC’s). The Straits index was down by .4% overnight and is lower by 22% year to date. The index though is cheap, trading at 12.5x 2021 eps estimates and with a 4.5% dividend yield.
Peter is the Chief Investment Officer at Bleakley Advisory Group and is a CNBC contributor.