But they are still peppered with questions from clients about the impact of the race between former Vice President Joe Biden and President Donald Trump, and many see the election as a major risk to the prospect.
“The US election is likely to be linked to a spike in volatility, as there is still a great deal of uncertainty about the turn in fiscal, tax and trade policy, depending on the outcome of the election and its impact on asset prices, “Bank of America’s Claudio Irigoyen and David Hauner said in a recent research note.
For now, Wall strategists are prepping clients for a wide range of possible outcomes.
“All the Trump / Biden scenarios are on the table,” Wells Fargo analyst Christopher Harvey said in a recent research note. That includes a rape of the Electoral College in both directions and a “Bush / Gore-style speaker,” a reference to the upcoming 2000 election.
That’s not all: “We can not rule out the possibility that one (or both) of the candidates will test Covid-positive for election day,” Harvey added.
What it means: History suggests that stock market returns will be suppressed during a U.S. presidential election and get a bounce once the results become clear, per Harvey, who analyzed S&P 500 returns over the last 23 U.S. races. There is no reason to think that the trend will not continue this year.
However, a lack of certainty in November due to pandemic-related logistics could handle a blow. In 2000, the market dropped 9% when the battle over Florida’s hanging chads went to court, Harvey noted.
Fixed business closures are not a big issue … yet
A string of high-profile bankruptcies and the closed shops that line city streets make it clear that the economic scars of the pandemic will continue for years to come.
But U.S. companies have been “surprisingly resilient,” according to new research from strategists at Goldman Sachs.
The breakthrough: largely thanks to substantial government support, including funding from the Paycheck Protection Program, only 6% of small businesses remained closed in July. That’s down from a quarter in April.
That 6% still has a large economic impact, and counts nearly 3 million jobs. However, there is evidence that many of these companies still see their shutdowns as temporary.
The monthly rate of permanent business closures on Yelp slowed by June, according to Goldman Sachs, and most small businesses report that they can avoid being unlucky for up to six months.
Large companies have been less able to withstand the shock, with bankruptcies rising near the peak hit by the recession following the 2008 financial crisis. This could slow job growth by 94,000 positions per month, the investment bank estimates.
Top: Goldman Sachs notes that most bankruptcies this year come from companies that went to insolvency, even before the pandemic, while “otherwise healthy” companies were spared.
The situation could worsen by the end of the year. “Closures are likely to rise in the coming months if business support ceases while the economy is still weak,” Goldman strategists said.
However, as long as the economy continues to recover, the effects of the pandemic’s business losses are likely to be in line with what we have historically seen during recessions, per the bank.
Home food: The new food and drink ecosystem
While food is taking a hit, big food and beverage brands are being forced to experiment with creative new ways to reach customers, reports my CNN Business colleague Michelle Toh.
The move to treat restaurants more than retailers is part of a broader shift as the industry scrambles to adapt to the fallout from the pandemic. And so far, companies have had some success.
Restaurants participating in the resale program in Singapore saw an average 88% increase in total sales in the first month, according to Nick Halla, former vice president of international company Impossible Foods. More than half of that impetus came from direct-to-consumer Impossible Burger sales, he added.
Other food and beverage companies are also trying to find customers in new places. Blue Bottle Coffee, the popular beverage brand owned by Nestle, has set up several vending machines in Tokyo to reach people more easily. And Shake Shack has launched meal kits in the United States, allowing customers to collect their own Shack burgers for the first time at home.
Look at this space: Euromonitor International predicts that the trend will only accelerate, as offering meal kits and other packaged goods “provides an important lifeline” in difficult times.
Next
.
