Breakfast on Wall Street: the great debate

The great debate

It’s showtime! Joe Biden and Donald Trump will face off tonight in an American television tradition that dates back to the 1960s. The presidential debate, hosted by CNN, a division of Warner Bros. Discovery (WBD), will begin at 9 p.m. ET and run for 90 minutes, including two commercial breaks. CNN’s Jake Tapper and Dana Bash will moderate, while new rules will be in place, including muted microphones except when it’s a candidate’s turn to speak and no live studio audience.

Big deal: More than half of the U.S. adult population will watch the showdown, with “57% of the public saying they are extremely or very likely to tune in to at least some of the debate or resulting commentary.” ”, according to a report. new poll from the AP and the NORC Center for Public Affairs Research. More than a third are also very likely to listen or watch live the first of two scheduled debates, demonstrating how important the platform is to gaining an edge in this high-stakes race.

Expect a range of topics, from immigration and foreign policy to suitability for a second term, but for investors, the main focus will be on the economy. That includes things like the labor market, taxes, the federal deficit, inflation and the overall cost of living, which have many Americans watching their bank accounts and wallets. It also includes sector-specific investments, such as environmental rules surrounding the oil and gas industry, or regulations surrounding the health care or real estate markets.

“Voters fondly remember the Trump-era economy before COVID-19 and are frustrated that price levels and interest rates remain high, even as the inflation rate has “To the extent that the debate is about the economy in his respective areas, Trump wins,” wrote Evercore ISI analysts Sarah Bianchi and Matthew Aks. “Biden’s job is to avoid spending too much time focusing on the macroeconomic defense of the economy and his record. He needs to steer the conversation toward two competing visions of the future. Voters tend to support his ideas that “corporations and the rich pay their taxes.” inflationary, he might be able to make progress.”

In summary : “When voters are so divided and polls so tight, even small movements can have big consequences.” In terms of stocks, the S&P 500 Index (SP500) increased by 58% since Trump’s election in 2016 through November 2020, compared to the 64% observed after Biden’s election (four months before the election). Looking at returns since they took office, the S&P 500 (SPY) (IVV) (VOO) climbed 67% with Trump in the White House, compared to 44% under Biden (to date).

Stay alive

Big banks are well-positioned to weather a severe recession, with all 31 banks subject to the Federal Reserve’s stress test this year remaining above their minimum capital requirements during this hypothetical situation. “Although the severity of this year’s stress test is similar to last year, the test resulted in higher losses because bank balance sheets are a bit riskier and expenses are higher,” said Michael Barr, vice chair of supervision at the Fed. In the hypothetical scenario, banks would have lost nearly $685 billion. The scenario assumed a 40% drop in commercial real estate prices, a 36% drop in real estate prices and a 10% unemployment rate. (24 comments)

More appetizing

Chipotle Mexican Grill (CMG) rose in its first trading session Wednesday following a 50-for-1 stock split, one of the largest in Wall Street history. Shareholders received an additional 49 shares for every share held in the stock split, while a one-off stock grant was offered to chief executives and long-serving employees. “We believe the stock split will make our shares more accessible to our employees as well as a broader range of investors,” Chipotle Chief Financial Officer Jack Hartung said when the move was first announced. times. Interestingly, the restaurant chain has never done a stock split since its IPO in 2006. (3 comments)

The final frontier

Elon Musk’s SpaceX (SPACE) has secured an $843 million contract to develop a spacecraft that will deorbit the aging International Space Station after the lab closes in 2030. NASA will take ownership after the spacecraft is built, and it is expected to destructively disintegrate over time. with the ISS burning in the Earth’s atmosphere. The United States, Japan, Canada and participating European countries will operate the station until the end of the decade, while Russia will remain in the program until 2028. Elsewhere, SpaceX has reportedly increased the price of its offering purchasing public in the face of strong investor demand, enhancing the offer. company to a record $210 billion. (18 comments)