Markets
Politics
Partisan divide following the death of SCOTUS Justice Ruth Bater Ginsburg
The news of Justice Ruth Bater Ginsburg’s passing and the subsequent partisan disagreement over appointing a new judge to the supreme court has taken light away from the issue of another fiscal relief package. This gridlock between Democrats and Republicans has put a hold on the issue of a stimulus package, and it is causing investors to react negatively. Without swift action, the track to economic recovery could be delayed even longer. Justice Ginsburg’s death also clouds the security of the 2020 General Election. President Donald J. Trump has criticized the legitimacy of the election numerous times, and now the Trump administration will attempt to appoint Amy Coney Barrett. Judge Barrett’s nomination would tip the court’s judgement further to the right, as well as make the SCOTUS primarily conservative. If Judge Barrett is confirmed, five of the nine members of the SCOTUS would be right leaning, three left leaning, and one moderate.
Tech
Technology stocks rebound after a tough week
After a rally since March lows due to Covid-19, technology stocks have experienced a large scale sell off for much of the month of September. On Thursday and Friday, many technology stocks showed signs of life and rallied to break the NASDAQ’s three week downward streak. However, the rally in the tech sector was not enough to lift the Dow Jones Industrial Average, which finished the week down 1.75%, and down 5.16% for the past month in the markets. The success of the tech sector helped the S&P 500 Tech sector rise .6% on Thursday alone, helping to recover some losses which were incurred during the week.
Energy
The energy sector faces an immense challenge in taming climate change
According to the latest Wood Mackenzie Energy Transition Outlook, the world is on pace to increase global warming by up to 3°C. Usually, rising temperatures are safe if the increase ranges between 1.5°C to 2°C. Coupled with the recent economic struggles presented by COVID-19, energy companies will see massive amounts of uncertainty. As the world returns to a normal economy, energy companies will face the “Darwinian Challenge” to adapt to the future. Although some of these energy companies are working on ways to increase the amount of renewable energy available, there has been no action taken regarding the reduction of carbon emissions. Without greater policy action from governments, the task to contain rising global temperatures will be tough, a consequence acted upon the energy industry.
Cruise Lines
Barclays upgrades stock ratings for major cruise lines
In light of the Center for Disease Control and Prevention “no-sail” order on cruise ships until September 30th end date coming up, large cruise line stocks are expected to have hit an inflection point after their devastating losses as a result of Covid-19. Analysts at Barclays have upgraded their stock ratings for Royal Carribean (RCL), Carnival Corp. (CCL), and Norwegian Cruise Line Holdings (NCLH) to now be classified as “overweight”. Still, much weight depends upon if the Center for Disease Control and Prevention order is extended, which is why some have criticized the projection of cruise line stocks as being low-risk high-reward right now. Regardless of when the ban is lifted, it is certain that this will act as a catalyst to bounce cruise line stocks back up. Cruise lines anticipate high demand upon their return after a summer with travel and tourism spending down 45% from last year. This buy-up in cruise stocks can already be seen to have started with NCLH ending Friday up 13.7%, the best individual performer in the S&P 500.
Covid-19 Update
Fears of another wave of Covid-19 worrying investors
Recently, around the world, case counts of Covid-19 have risen at. In the United States, places such as New Jersey and New York saw some of the highest upticks in case numbers per day during the week.
This uptick could be the result of new reopening procedures, and the public is waiting to see how the State Government reacts to the new data shown. In Europe, countries such Spain and France have seen cases sharply increase. After containing the first wave, some countries relaxed too quickly, and the result will be another economic downturn (if countries decide to put another lockdown in place). Putting another lockdown in place does not look likely, as many countries (including the united states) are simply putting more restrictions in place to continue a safe reopening, but rising case counts are causing uncertainty among investors.
Gold
Despite high feelings of uncertainty and poor markets, gold still left in an awkward position
Gold saw continued sell-offs this week, dropping by nearly 5%, the largest drop in the past 6 weeks. Despite exposed weaknesses in the markets, a boosted confidence in the dollar index continues to drive gold downwards. With Covid-19 fears and uncertainty in federal monetary policies related to interest rates, gold remains a high-risk investment. Optimistic analysts point towards the upcoming election, covid-19 resurgence waves in Europe and potentially the U.S., and the chance of a second stimulus package as signs of gold making a comeback as investors seek security in their portfolios.
Written By: Pledges Abhay Puri, Abhiraj Neti, Adina Ichilov, Thaddeus Kvietok
Works Cited
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