US stimulus optimism and covid concerns

After a modestly firm handover from the US, Asian stocks moved higher and European bourses are seeing a mildly positive start amid renewed hopes for additional US fiscal stimulus.

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After a modestly firm handover from the US, Asian stocks moved higher and European bourses are seeing a mildly positive start amid renewed hopes for additional US fiscal stimulus. However, any gains remain capped by concerns over rising covid cases & tighter lockdown restrictions. 

As the White House and Congress move closer towards a new covid rescue package demand for riskier assets has picked up whilst the safe haven US Dollar is coming under pressure. With Trump saying that he is prepared to accept a larger bill, talks will continue past House Speaker Nancy Pelosi’s soft Tuesday deadline.

Google rises despite antitrust lawsuit
On Wall Street Google parent Alphabet ended the session over 1% higher despite an antitrust law suit against it by the US Department of Justice. Google is being accused of being the “gate keeper” to the internet, paying billions to hold a monopoly. Google meanwhile insists that people use Google because they want to The lawsuit comes following similar filings in Europe suggesting that the mood towards big Tech is turning, not just outside of the US but now on home soil as well. However, the fact that the share price finished higher reflects a lack of concern among investors. Any such case would be a very long drawn out process, not something which is really on investors radar just ahead of earnings.

Netflix misses
Netflix reported overnight. After 26 million subscribers were gained over the past two quarters, the lockdown quarters, just 2.2 million new subscribers were added in Q3, weaker than the 2.5 million forecasts. Netflix had warned that the elevated level of subscriber growth was unsustainable. Even so the drop off was a sharp pull back to reality. Q4 subscriber outlook was also slightly weaker than expected. The bottom line is as economies reopen subscriber growth can be expected to return to pre-covid levels.

Tesla earnings due later
Sticking with earnings Tesla is due to report Q3 earnings after the bell. After the stock has surged 425% year to date, to say expectations are high would be an understatement. We know that 139,000 vehicles were delivered in Q3, the big question is whether full year guidance of 500,000 remains intact? Profitability has always been a big theme for Tesla, mean expectations are for EPS of $0.56 a 51% jump from a year earlier.  

UK inflation misses GBP remains resilient
UK inflation rebounded from August’s disinflation; however, the rebound was less punchy than expected. Prices rose +0.4% month on month, less than the 0.5% increase forecast. Borrowing as also significantly higher than forecast. The Pound, however, is unfazed, advancing versus both the Euro and the weaker USD.

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