Home https://server7.kproxy.com/servlet/redirect.srv/sruj/smyrwpoii/p2/ Business https://server7.kproxy.com/servlet/redirect.srv/sruj/smyrwpoii/p2/ The vaccine trade still has a place to work, says UBS. Here’s how to play it

The vaccine trade still has a place to work, says UBS. Here’s how to play it



US stocks are again ready to rise cautiously earlier in the week, despite the lack of progress on a new stimulus package.

US futures for ES00 shares,
+ 0.56%

NQ00,
+ 1.62%
pointed out higher, although on Saturday the new proposal for a bill on financial aid for coronavirus in the White House was met with opposition from both Republicans in the Senate and Democrats in the House of Representatives.

Coronavirus cases continue to rise in the United States, with Sunday being the fourth day of more than 50,000 daily infections, according to Johns Hopkins University. Efforts to develop treatments and vaccines are growing behind the scenes, but have been on the radar in recent weeks with the US election on the horizon.

In our call of the dayUBS strategists, led by Bhanu Baweja, said the vaccine trade was not over and there was room to start.

Vaccine hopes are only 4% of the S&P 500̵

7;s SPX,
+ 0.87%
Growth of 20% over the past five months, the bank’s global strategy team said in a note late last week, with the rest of it being liquidity and increased mobility. They concluded that the hope for vaccines is only 55-60%, based on how much resistance the current limited levels of mobility in society still have on the market.

“Given that the approved vaccine should (possibly) help to raise mobility to normal, the cumulative mobility resistance of 4% in February can be used as a proxy for further gains that can be derived from vaccine, ”they said.

In an earlier note in late September, UBS strategists said it was time to position themselves for vaccine approval.

“While mobility and economic data will improve slowly even after vaccine approval, market returns are very likely to be pre-loaded. We believe that this will be a tactical, one-time rise in the market and now is the time to position ourselves for it. “

They recommended tactical positioning in cyclical sectors and called for a one-month-three-month rotation spell away from the United States, especially for emerging market stocks. As for the sectors, the bank said it has additional opportunities to turn them into cyclical ones, including entertainment, cars, beverages, housing and airlines.

The team, which reiterated its position last week, said: “Vaccines hope the US administration, potentially less focused on tariffs, can revive flows to EM [emerging markets] assets more widely. “

The diagram

Deutsche Bank

This chart from Deutsche Bank DB,
-0.85%
shows that the futures curve of the volatility index has shifted downwards in the last two weeks. Bank strategist Parag Tat said the expansion of polls, with Democratic candidate Joe Biden increasing his lead, has led to the pricing of some of the election fluctuations. But the analyst added that the potential uncertainty surrounding next month’s elections “remains significant”, with polls in key countries on the battlefield.

The markets

US stock futures rose early on Monday due to heightened hopes for a second stimulus package. After a 3.8% profit for the S&P 500 SPX,
+ 0.87%
last week, S&P 500 futures ES00,
+ 0.56%
and Nasdaq COMP,
+ 1.39%
futures both rose, while Dow futures YM00,
+ 0.10%
were flat, which meant a loss of 2 points for the Dow Jones Industrial Average DJIA,
+ 0.56%.
European stocks also rose, despite the deteriorating situation of COVID-19 on the continent – the pan-European index Stoxx 600 SXXP,
+ 0.76%
increased by 0.5%.

The buzzing

President Donald Trump said on Sunday that he was ready to return on the trail of the election campaign despite health issues. Trump will hold a rally in Florida later Monday, his first rally since a positive COVID-19 test earlier this month.

Shares on Twitter TWTR,
-0.23%
jumped 4.4% in trading markets on Monday after shares were modernized by Deutsche Bank, which cites a “convincing bull case” for 2021.

Regeneron REGN,
+ 0.36%
CEO Leonard Schleifer warned against jumping to conclusions after the company’s antibody cocktail apparently helped Trump repel the SARS-CoV-2 coronavirus, which causes COVID-19. Schleifer said this was a “case of one” and more tests were needed.

British Airways CEO Alex Cruz will step down immediately, the owner of IAG IAG,
+ 0.29%
he said on Monday as he navigated the “worst crisis” facing the industry.

The National Commercial Bank of Saudi Arabia said on Sunday it would buy rival lender Samba Financial Group in a $ 14.8 billion deal, creating what would become the kingdom’s largest bank.

Americans Paul R. Milgrom and Robert B. Wilson won the Nobel Prize in Economics for “improvements in auction theory and the invention of new auction formats.”

The Los Angeles Lakers defeated the Miami Heath on Sunday night to win the 17th championship of the National Basketball Association of the franchise.

Liverpool and Manchester United have angered the English Premier League and the UK government over plans to restructure English football with power that would also reduce the league’s size from 20 teams to 18.

Random reading

Hollywood actor Chris Pratt solves the Rubik’s Cube in less than 60 seconds

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