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“If I had asked the public what they wanted, they would have said a faster horse.“ – Henry Ford
The conventions for both parties are done, and the race is officially on as President Trump and former Vice President Biden will take the next two months to make their case to the American people. What was looking like a runaway for Biden just a few weeks ago has become a bit closer. Biden still has the lead over Trump, but the gap has narrowed by close to two-thirds from its widest levels in July. It’s natural for candidates to see a bounce after their conventions, and this week alone Trump has seen his contract to win the election increase by three percentage points. We’ll know soon enough if that bounce was a sugar rush or something more lasting.
In other news this morning, futures are higher again as the S&P 500 looks to make it seven straight positive days in a row. In order to get there, though, the market will have to get through a busy slate of economic data with Personal Income (better than expected), Personal Spending (better than expected), Wholesale Inventories (better than expected), Chicago PMI, and Michigan Confidence all coming out between now and 10 AM. The dollar is also weaker today and gold is rallying following news that Japanese PM Abe will step down at the end of his term and that has the yen rallying.
Be sure to check out today’s Morning Lineup for a rundown of the latest stock-specific news of note, market performance in the US and Europe, trends related to the COVID-19 outbreak, and much more.
With the market at record highs, there are a number of conflicting signals concerning investor sentiment. While the AAII sentiment survey routinely shows negative sentiment, and the latest Consumer Confidence report showed a lack of enthusiasm for equities, other sentiment surveys like Investors Intelligence or put/call ratios show a more optimistic backdrop. Another indicator of sentiment showing optimism on the part of investors is the National Association of Active Investment Managers (NAAIM) Exposure Index Index.
The NAAIM Exposure Index tracks the exposure of its members to US equity markets. Each week members are asked to provide a number that represents their exposure to markets. A reading of -200 means they are leveraged short, -100 indicates fully short, 0 is neutral, 100% is fully invested, and 200% indicates leveraged long. This week’s reading of 106.56 indicates one of the highest readings in the history of the index.