Daily Update: November 2, 2020

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Despite positive real GDP numbers coming out of the U.S. and the Eurozone last week, benchmark equity indices had their worst week since March. The reasons for the swoon were both general and specific.

Coronavirus cases in the U.S. and Europe climbed to record daily highs. Lockdowns have been reinstated in many European countries. Another round of fiscal stimulus has been stymied by Congressional partisanship leading into the bitterly contested U.S. elections. And earnings from key technology companies including Apple, Microsoft, and Amazon failed to impress investors.

In the U.S., it was a week of broken records for new coronavirus cases. On Oct. 29, the country saw a single-day high of 81,811 cases, but that record fell the next day with 91,834 cases. Friday, Oct. 30 saw 101,461 cases before that number dropped to 86,293 on Saturday. That means the U.S. had its worst days on record in the past week.

“After being up as much as 5% mid-month, the S&P 500® finished the month [of October] down 3%, plunging in the final week,” S&P Dow Jones Indices director of index investment strategy Chris Bennett said in a Nov. 2 note. “What is perhaps even more fascinating is that, despite the broader market ending in negative territory, the winners in October were not all defensive; in fact, for single factor indices of the S&P 500, the strategies holding the riskiest stocks actually outperformed.”

In Europe, the second wave of coronavirus infections has dwarfed the initial round from spring by orders of magnitude. France, Germany, and Belgium have already introduced harsh restrictions to try to get the virus rates to plateau, and the U.K. is joining them with another lockdown to take place starting on Thursday.

Director-General of the World Health Organization Dr. Tedros Adhanom Ghebreyesus attempted to sound the alarm on the increase in cases. “Allowing a dangerous virus that we don’t fully understand to run free is simply unethical. It’s not an option,” he said earlier in the month on Oct. 12.

With the long-awaited U.S. presidential election taking place tomorrow, the prospects for further fiscal stimulus in the near future seem bleak. Goldman Sachs Economist Alec Philips said in a note to clients that he doubted stimulus would be imminent even once the election has passed. “Congressional Democrats would have little incentive to pass a scaled-down bill when they could pass a much larger bill in early 2021,” he said.

The big tech companies, which play an increasingly important role in measures of overall market performance, also had challenging weeks. The shares of Twitter, Amazon, Apple, and Facebook all fell sharply after the companies reported disappointing user numbers, weak sales, or vague earnings guidance.

As the prospect of a V-shaped recovery appears less certain, market analysts warn of weak growth ahead.

"If you pull back on a rubber band and let go, it's going to snap back. But then it kind of goes limp after that," Nariman Behravesh, chief economist at the forecasting firm IHS Markit told NPR. "I think we're looking at a very lackluster growth rate" in the fourth quarter.

Today is Monday, November 2, 2020, and here is today’s essential intelligence.

The Future of Credit

U.S. Not-For-Profit Senior Living Sector Showed Pre-Pandemic Stability In 2019 But Rating Pressures Loom

The U.S. not-for-profit senior living sector demonstrated consistent occupancy, solid investment income, and improved balance sheet metrics in 2019 that allowed most of Ratings’ rated organizations to enter the pandemic in a position of strength.

—Read the full report from S&P Global Ratings

Banking Sector Under Pressure

Banks, Big Techs Plumbing Non-Card Payment Systems in APAC

The Asia-Pacific region is turning cashless at breakneck speed, according to a review of nine large APAC economies by S&P Global Market Intelligence. The rise of non-card payments, however, presents only modest revenue opportunities for banks and nonbanking intermediaries.

—Read the full article from S&P Global Market Intelligence

Spain's BBVA Sees Cost of Risk Outlook Improve, Credit Card Spending Normalize 

Banco Bilbao Vizcaya Argentaria SA on Oct. 30 provided an improved outlook for loan loss provisions and said it was seeing a return to normal levels of credit card spending despite the prolonged nature of the coronavirus crisis.

—Read the full article from S&P Global Market Intelligence

Technology & Innovation

Amazon E-Commerce Sales Soar Amid COVID-19

As COVID-19 shook the global economy, Amazon.com Inc.'s e-commerce revenue saw gains of 47.0% year over year for second quarter 2020.

—Read the full article from S&P Global Market Intelligence

ESG in the Time of COVID-19

U.S. ELECTIONS: Much At Stake Across The Commodity Spectrum For Energy Sectors

The winner of the race to the White House between incumbent President Donald Trump and challenger Joe Biden, along with a potential shift in the balance of power in the US Senate, clearly are the highest-profile contests on the docket in the ongoing election. Results there hold enormous implications for energy commodities and markets ranging from global trade flows for oil and LNG, to climate change, to the very nature of energy regulation.

—Read the full article from S&P Global Platts

Biden Victory Could Usher in New Era of Environmental Justice Policies

Environmental justice policies could be prioritized like never before if presidential candidate Joe Biden wins the White House next month, which could have widespread ramifications for infrastructure permitting and climate policy.

—Read the full article from S&P Global Market Intelligence

Xcel Energy to Invest $1.4 Billion in Renewables Projects, Retire Minnesota Coal: Company

Xcel Energy plans to invest nearly $1.4 billion in additional wind and solar projects totaling roughly 5 GW between the end of 2020 and the second quarter of 2021, officials said Oct. 29.

—Read the full article from S&P Global Platts

CMS Looks to Add 6 GW of Renewables by 2040 as it Pursues a Net Zero Carbon Emissions Target

CMS Energy has a "growth strategy" that calls for net zero carbon emissions by 2040 and net zero methane emissions by 2030 and plans an investment of approximately $6 billion in installing 6 GW of renewables by 2040, the company told analysts in an earnings call Oct. 29.

—Read the full article from S&P Global Platts

The Future of Energy & Commodities

Consequences of Trump’s Steel Tariffs Hurt Two Pennsylvania Mills

That “same fire” in Western Pennsylvania, the birthplace of American steel, was President Trump’s Section 232 tariffs. They hardened the barrier against steel imports while melting the aspirations of steelmakers who were relying on imports.

—Read the full article from S&P Global Platts

U.S. Gulf Oil and Gas Production, Louisiana Refineries Returning After Hurricane Zeta

The US Gulf of Mexico's oil and gas volumes and some New Orleans-area refineries are returning after Hurricane Zeta ripped through the region and knocked out power in much of southeastern Louisiana

—Read the full article from S&P Global Platts

August Coal Deliveries to U.S. Power Plants Jump to Seven-Month High: EIA

Coal deliveries to U.S. power plants rose to a seven-month high 40.53 million st in August, up 8.3% from the previous month, but 20.6% lower than the year-ago month, data from the U.S. Energy Information Administration data showed Oct. 30.

—Read the full article from S&P Global Platts

Total's Production Slammed By OPEC+ Cuts, but Finances Show 'Resilience' in Q3

Total's oil and gas production dropped 11% on the year in the third quarter, to 2.72 million b/d of oil equivalent and it forecast full-year output below 2.9 million boe/d on the back of OPEC+ cuts, as its third-quarter results showed financial improvement Oct. 30.

—Read the full article from S&P Global Platts

Written and compiled by Molly Mintz.