Political discussions to cast defence and cyber security stocks into the spotlight. Watch for market bumps
Political discussions will cast defense and cybersecurity stocks into the spotlight. Watch for market bumps this week
The US House and Senate are back in session this week following a recess and will open up investigations into Trump's assassination attempt. This is while Biden has bowed out of the US election, and Israeli PM Benjamin Netanyahu is due to attend a joint session with the US Congress. So stay on your toes as the VIX $CBOE Volatility S&P 500 Index (.VIX.US)$ is at 16.52, its highest level in three months. With 30% of the S&P 500 companies reporting results and 2nd-quarter US economic growth out, if company results/outlooks disappoint or US GDP is hotter than expected (which could cause a Fed rate cut bet to be rubbed out), then market volatility could rise and cause markets to take a haircut.
However, should markets correct (fall 5-10%), we need to remember, the longer-term narrative is a feel-good one, much like the 2024 Olympics opening ceremony in Paris this week. A feel-good event. Markets are expecting two Fed rate cuts this year and see the S&P 500 company earnings growing at 10% this year and 13% next. This narrative is supportive of markets. So this means, if we see a pull back, it might be short lived. Here is what I am watching...
Company results - Companies I'm focused on this week include Tesla $Tesla (TSLA.US)$, Lockheed Martin $Lockheed Martin (LMT.US)$, and Newmont $Newmont (NEM.US)$ $Newmont Corp (NEM.AU)$, who are reporting results. Additionally, I am watching Crowdstrike as options volume suggests its shares could rebound to $360. Please see my detailed analysis on why CRWD $CrowdStrike (CRWD.US)$ could rally up in 4 weeks reflecting on what happened to Amazon's AWS $Amazon (AMZN.US)$ in 2017.
The defense sector - As mentioned above, eyes will be focused on the defense sector and stocks that are trading in record all-time high neighborhoods, spare Crowdstrike. No doubt the most used cybersecurity company will be a topic of discussion in the US House and Senate this week, and you may expect dip buying in Crowdstrike. Expect defense sector spending beneficiaries to be a focus after Trump’s assassination attempt, given the need for better defense training and expenditure.
Should the US' biggest defense contractor, Lockheed Martin $Lockheed Martin (LMT.US)$, give an upbeat earnings report and outlook this week, further life and momentum could be stoked into the entire defense sector, which is trading at record all-time highs, given the NATO push for countries to spend over 2% of GDP on defense (including cybersecurity). So keep an eye on iShares US Aerospace & Defense ETF $Ishares Trust U.S. Aerospace & Defense Etf (ITA.US)$, which trades at near record all-time highs.
Harris V Trump - Markets will await detail on Kamala Harris's policies after incumbent US President Biden endorsed her as the Democratic presidential nominee. While bettors seem focused on Trump 2.0 in the oval office, and consider potential stocks and sectors that could benefit, we must not discount Harris's potential popularity rising. If it does, expect market volatility to pick up.
Right now, SportsBet odds suggest punters would be paid out AUD $1.45 to $1 for a Trump win and AUD $3.10 to $1 for Harris. So it's obvious that Biden standing down did not surprise the markets, given what happened after the US Presidential debate. However, given the margins seem slim, if Harris pulls a rabbit out of a hat and odds for her to win increase, then you'd probably see investment banks reshuffle clients' money.
Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only.
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SPACELIGHT : Talking heads.
smoothshoe : Kamala will have the same policies because they are being set by Bernie Sanders. I'm staying away from Democrats and voting for Republicans. Right now, the Democrats can't be trusted.
151453268 witso : America cannot afford another four years of cackling Kamala. Tech has been propping up the economy saving the economy from dying a faster death by depreciation. Big genies need to be let out of the bottle to see where they fit ie Bitcoin . Trump as a business person steering the ship, will most likely use his tools such as protectionism to try and make America great again there is no doubt i think could be a lot worse
Jooooohn : We know who really runs the country. Started in the 1950s or earlier with Franz Ferdinand. Speaking of that you could do a 1950s day.
EZ_money Jooooohn : military industrial complex?