(NBF)
AstraZeneca Pauses Covid-19 Vaccine Trial After Illness in a U.K. Subject AstraZeneca said it paused clinical trials of an experimental Covid-19 vaccine being developed by the University of Oxford after a participant in a U.K. study had an unexplained illness.
- For context PFE/BNTX’s Ph2/3 and MRNA’s Ph3 COVID-19 vaccine trials are ongoing and over 25k and 21k people, respectively, have been dosed as of Sept 5 and enrolled as of Sept 4. PFE/BNTX’s data are now expected in late Oct. We expect MRNA’s first interim (~53 events) data in late-Sept/Oct. (GS)
Small Business Optimism Rebounds, Exceeding Historical Average
The NFIB Optimism Index increased 1.4 points in August to 100.2, a reading slightly above the historical 46-year average. Seven of the 10 Index components improved, two declined, and one was unchanged. The NFIB Uncertainty Index increased two points in August to 90, the second-highest reading since 2017.
Small biz owners’ optimism is at its LT average but their sales hopes vs actual seem well above average.
These small biz owners don’t seem quite as optimistic as those polled above.
- 88% of small business owners say they have used all of their PPP loan funding and 32% of loan recipients have already been forced to lay off employees or cut wages.
- About 95% of the companies surveyed by Goldman said they had been approved for PPP funding.
THE INPUT GAP
Small businesses are important to help close this huge gap:
Brent Crude Tumbles Below $40 in Wake of Souring Demand Outlook
Investors Shun Risky Assets as Tech Trade Stalls The selloff in highflying technology shares has been accompanied by a broad retreat from other risky assets, raising questions about the foundation of the market recovery, as investors anticipate a potentially volatile autumn.
(…) But as tech shares have stumbled in recent days, so have stocks broadly. All 11 sectors of the S&P 500 fell in lockstep on Thursday and Tuesday, while three groups eked out gains Friday. Many investors had hoped the economically sensitive areas of the market, like the industrial and energy segments, would rally when the tech trade faded. (…)
The Russell 1000 Value index is down 4.1% since Sept. 2, while the Russell 1000 Growth index is down 9.9%. (…)
Gundlach Says High-Yield Bond Defaults May Almost Double
The investment grade corporate debt market has skewed toward lower quality BBB- rated debt, but if just 50% of that were to be downgraded it could fuel a near doubling of the high-yield market, Gundlach said Tuesday on a webcast for his firm’s flagship DoubleLine Total Return Bond Fund. (…)
Commenting on the recent selloff, Gundlach compared the big tech players within the S&P 500 index to generals on the battlefield, saying their leadership is starting to trail.
“One week ago today it seemed like stocks were going to infinity,” Gundlach said.The S&P 500 is in “nosebleed territory. This is not a cheap market,” he added. (…)
TECHNICALS WATCH
Yesterday was brutal for Lowry’s Buying Power/Selling Pressure data. The former was down 6 points, continuing its slide from mid-June but the latter was up 6 points. SP has been rising for 3 consecutive days and the spread between BP and SP is now 21 points still favoring BP but narrowing quickly.
The first resistance stop is always the 50dma. As Trump often says, we’ll see what happens.
World Markets Update: September 8, 2020
Biden Plan Sets Tax Penalties for Companies’ Offshore Profits
Democratic presidential nominee Joe Biden is proposing a 10% tax penalty on companies that move operations overseas and a 10% tax credit for companies that create jobs in the U.S. in a policy rollout Wednesday.
Biden, who is launching a renewed focus on economic issues with a speech in Michigan, also will promise to reverse Trump administration policies that his campaign said amount to “loopholes” that allow offshoring to take place.
The former vice president will also pledge to take executive action during his first week in office to direct the federal government to buy American goods and support American supply chains in their procurement processes, his campaign said. (…)
Biden will propose a 28% corporate tax rate plus a 10% penalty surtax on the profits from any production by a U.S. company overseas for sale on American soil, making the overall tax rate on those profits 30.8%. The penalty will also apply to call centers and services that a U.S. company locates overseas but that serve the U.S.
He also plans to implement what his campaign described as “strong anti-inversion regulations and penalties,” though it did not detail those plans. He will also “deny all deductions and expensing writeoffs for moving jobs or production overseas” for jobs that could “plausibly” be done by American workers. (…)
Biden would double the Trump tax rate to a minimum tax of 21% on all foreign earnings of U.S. companies overseas. He would also end the use of tax haven strategies by applying the minimum tax to each foreign country separately. (…)
Goldman Sachs’ view:
On net, President Trump has made up a modest amount of ground in the polls over the past couple of months. However, he still trails Vice President Biden by 7-8pp nationally and 5pp in the most likely tipping-point state (currently Wisconsin) and will need a strong performance in the presidential debates starting September 29 to put himself in a better position. We continue to think that the market implications of a Democratic sweep would be mixed relative to the status quo, with higher corporate taxes weighing on earnings but more expansionary fiscal policy and reduced risk of a renewed trade war escalation supporting short-term growth.