International Airlines Share News (IAG)

* Major averages hit record highs, but have pared gains
* All major S&P 500 sectors green: energy leads
* Euro STOXX 600 rallies around 4%
* Dollar up; gold slides, NYMEX crude up
* U.S. 10-Yr T-Note yield ~0.96%; hit highest since March

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READING THE BIDEN TEA LEAVES: LIKELY POLICY SHIFT SCENARIOS
(1343 EST/1843 GMT)
With Joe Biden declared winner of the presidential election
along with the growing likelihood of a split Congress, market
participants have begun ruminating on how this new apparent
configuration of leadership will be translated into policy.
In a memorandum released on Monday by international law firm
Cleary Gottlieb Steen & Hamilton, various scenarios are
discussed regarding appointments and regulations in a newly
reconfigured Washington environment.
Regarding Wall Street oversight, a split congress could make
it "challenging for President-elect Biden to appoint a
Securities and Exchange Commission Chair from the far left wing
of the Democratic Party," according to the memo's contributors.
Nevertheless, "more muscular regulatory enforcement" and the
implementation of "broad social policy goals" in the form of
"new disclosure requirements" could be in the offing, they
write.
Other contributors point out that Biden has called for "an
end to the era of shareholder capitalism - the idea the
only responsibility a corporation has is to its shareholders."
To that end, the memo suggests both the SEC and ERISA could
embrace ESG (environment, social, governance) reporting in order
to support the battle against climate change, among other goals.
New leadership at the Justice Department will likely shift
priorities to focus on pandemic- and recession-related financial
crimes such as fraud and false claims, according to the note,
which also reminds us of Biden's intention to create an
Environment and Climate Justice division in the DOJ as part of
his larger aims to tackle climate change.
Other considerations covered by the memo include:
** A potential uptick in merger and conduct enforcement,
even as the divided congress could prove "fertile ground" for
M&A activity
** A normalization of cross-border M&A activity
** Shifting focus regarding international sanctions,
** A "clawback" of executive compensation rules mandated
under Dodd Frank
** A renewed focus on employee rights
** Potential lack of significant tax law changes amid
partisan gridlock
** State and local tax changes to raise revenue for pandemic
relief

(Stephen Culp)
*****

MAJOR AVERAGES FIGHT TO HOLD FRESH RECORD HIGHS (1249
EST/1749 GMT)
The major averages have hit fresh record intraday highs on
Monday amid vaccine optimism.
Indeed, the Dow Industrial Average has vaulted above
its February peak, while the S&P 500 and Nasdaq Composite
have surpassed their September highs.
The small-cap Russell 2000 has also set a new
intraday record, finally thrusting above its August 2018 peak.
However, these indexes have since pared gains, with only the
S&P 500 and Dow now on track to register new closing highs. With
the Dow currently trading around 0.3% above its 29,551.42
record-high close, it may come down to the wire. The SPX has
more breathing room with it now around 1% above its 3,580.84
record-high close.
Of note, the large-cap tech Nasdaq 100 has not set a
new intraday high, and is last down more than 2% from its
closing peak.
Here is where markets stand around the halfway mark of the
trading day:



(Terence Gabriel)
*****


GUN MAKERS TUMBLE AFTER VACCINE NEWS, LACK OF SOCIAL UNREST
(1231 EST/1731 GMT)
Shares of gun makers are plummeting on Monday as data from a
COVID-19 vaccine trial knocked stay-at-home stocks, and as
social unrest failed to materialize after Democrat Joe Biden
emerged as the winner of last week's presidential election.
Smith & Wesson Brands dropped almost 11%, Sturm
Ruger & Co lost 9% and Vista Outdoor, which
sells ammunition and sporting goods, fell over 12%.
Those and other stay-at-home stocks fell after Pfizer
said its experimental vaccine was more than 90%
effective in preventing COVID-19.
An end to the pandemic would likely lead a surge in sales of
hunting-related products to normalize, said Aegis capital
analyst Rommel Dionisio.
An absence of social unrest following the election, with
store owners removing boards from windows in New York, may also
be hurting sentiment for gun stocks.
Sporting goods products sales, including those for hunting,
have increased this year as consumers spend more time socially
distancing outdoors due to the coronavirus pandemic.
Fears that Joe Biden and his Democratic party would win the
presidency and take control of the Senate from the Republicans
also sent firearms sales surging this year, as did social unrest
in several cities and fears of additional social unrest related
to Tuesday's presidential election.
Analysts view having a Democratic president favoring gun
control as bullish for firearms stocks, with consumers buying
more guns in anticipation of regulation. However, with Democrats
unlikely to gain control of Congress, Biden would be less likely
to make good on campaign promises such as banning the sale of
military style rifles.
With Monday's selloff, Smith & Wesson and Sturm Ruger are
both down 11% since Tuesday's election.

(Noel Randewich)
*****


AFTER ELECTION, EARNINGS, VACCINE NEWS, TRADERS PLOT NEXT
MOVES (1124 EST/1624 GMT)
Chris Larkin, Managing Director, Trading and Investment
Product at E*TRADE Financial, is out this morning with some
upbeat comments on the market.
Larkin says that last week was "stellar for the markets and
while pullbacks are typical after such momentum, the bull market
has a ton of ammunition to keep going."
He adds that with greater certainty around the election, a
strong quarterly earnings across many sectors, and now,
extremely positive news on the vaccine front, there is "little
to hold us back."
Larkin believes that when you remove the virus from the
equation, there is a strong setup for growth given the Fed's
unprecedented easy money policies.
He adds "traders are no doubt plotting their next move, and
while gridlock in Washington could mean more of the same, they
may see opportunity in industries effected by Biden’s
initiatives, like energy and health care."

(Terence Gabriel)
*****


S&P 500 BLASTS HIGHER, BUT BARRIER AHEAD (1025 EST/1525 GMT)
The S&P 500 index vaulted nearly 4% in early trade
before paring gains slightly.
With its 3,645.99 high, the benchmark index has surpassed
its 3,588.11 intraday high set on September 2. It now remains to
be seen if the SPX will end above its 3,580.84 record-high close
also set on September 2.
Meanwhile, the index faces a log-scale resistance line from
its late 2018 high, which now comes in at about 3,660. This line
capped strength in early September.
Of note, daily momentum studies are rising, but lagging the
index's push. Despite the new high, the MACD has yet to even
surpass its mid-October high. Of concern, this can set the stage
for an even more protracted divergence in the event the momentum
study rolls under the resistance line from its June high.



(Terence Gabriel)
*****


WHAT A DAY: IS THAT A ROTATION? (0930 EST/1430 GMT)
Investors were taking the view that only a vaccine could
cause a market rotation in Europe.
It is too soon to call it a rotation but clearly today was a
day of huge swings in the European stock markets after
drugmakers Pfizer and BioNTech said they've made strong progress
in their COVID-19 vaccine. The news came while some investors
were already cheering Joe Biden's presidential victory as it
raised hopes for a better trade environment.
Here are some milestones:
- European banks are on track for their best day since 2010,
up a whopping 11.4%
- The travel and leisure sector is having its best day since
April, last up 7%, while British Airways owner IAG is
having its best day since listing in 2011.
On the other hand, some lockdown winners are facing a
selloff:
-Ocado is on track for its worst day ever, down
15%; and Logitech shares slide almost 10%, in its worst
day in two years.
"Investors will recognize that they've been overly exuberant
or overly pessimistic for the last six months," says Nikesh
Patel, head of investment strategy at Kempen Capital Management
in London.
Karen Ward, chief market strategist EMEA at J.P. Morgan
Asset Management says “news on the efficacy of a Covid-19
vaccine is an important piece of the puzzle needed for the
global economy and markets to put the COVID-19 recession behind
it. But hurdles still remain".
She says "we need to find out more about production
capabilities, rollout and take-up. But for now this is shifting
the winners and losers sectoral narrative that was created by
COVID-19 and leading to a revival in value sectors such as
energy and financials".
Even if now governments have more visibility on the future
and can start planning ahead to when economies can properly
start to reopen from lockdowns, let's not get ahead of
ourselves, Patel also says.
"This is not a quick process, so even if you have a vaccine
you still have a substantial period of time to actually deploy
the vaccine around the world, not just in the U.S. and not just
in Europe, but around the world if you really want to get a grip
of the virus," he adds.

(Joice Alves and Tom Arnold)
*****

U.S. STOCK FUTURES PUMP UP ON VACCINE NEWS (0855 EST/1355
GMT)
U.S. stock futures are jumping on Monday as news of the
first successful late stage COVID-19 vaccine trial stirred hopes
of the economy emerging from a year of pandemic-driven crisis.

Drugmaker Pfizer and German partner BioNTech SE said
their experimental COVID-19 vaccine was more than 90% effective.

That said, with this, there are cross currents under the
market's surface. While S&P 500 and Dow Jones
e-minis are suggesting the S&P 500 and Dow Jones
Industrial Average are poised to pop around 4%-6% at the
open, Nasdaq futures are implying that the Nasdaq 100
is likely to rally less than 1%. This as stay-at-home
tech plays may unwind recent gains, while re-opening plays look
to surge.
For example, stocks such as Amazon.com, and Netflix
are trading down. Zoom Video is off more than
13%. This as the Global Jets ETF is climbing more than
20%. Thus, value looks set to outperform
growth. Small caps are also poised to outperform.
In any event, with the implied gains, the SPX and DJI both
appear poised to hit new record highs above 3,588.11 and
29,568.57 in early trade.
Meanwhile, spot gold is down sharply, NYMEX crude
futures are up strongly, and the U.S. 10-Year Treasury
Yield is back over 0.90%.
Here is your U.S. premarket snapshot:




(Terence Gabriel)
*****


FOR MONDAY'S LIVE MARKETS' POST PRIOR TO 0855 EST/1355 GMT
CLICK HERE:








(Terence Gabriel is a Reuters market analyst. The views
expressed are his own)