Good morning,

Markets are very much dancing to the beat of the Trump at the moment: Having rallied on news that he was out of hospital, they sold-off sharply when he put a pin in the stimulus talks, telling his administration to hold off until after the election. Phase four of the stimulus was by no means a done deal before this instruction, but it was something that investors (and we’re sure, the wider American public) were holding onto as something that had a real chance of materializing. The market move lower was ‘only’ around 1.5%, which shows there wasn’t too much hope of a deal already built into the value of the market. Given Trump’s sensitivity to a share price and the value he puts on them as a sign of his good work, it will be interesting to see whether we get some kind of reversal from the White House on their position. We’ve already seen a Trump tweet in the aftermath saying that “The House and Senate should IMMEDIATELY Approve 25 Billion dollars for the Airline Payroll Support, & 135 Billion Dollars for Paycheck Protection Program for Small Business. Both of these will be fully paid for with unused funds from the Cares Act. Have this money. I will sign now!” – let’s see if there’s more rolling back to come in the days ahead.

Other big news from the US was a Democrat led investigation into big tech, that’s been published. The report runs to 449 pages, but the summary is that “companies that were once scrappy, underdog startups that challenged the status quo have become the kinds of monopiles we last saw in the era of oil barons and railroad tycoons”. The report makes a number of suggestions, some of them that would be seen as quite extreme, in how to start to manage the risk that these monopolies present, such as preventing them from operating in closely aligned businesses – an example being Google not being allowed to run ad space auctions and at the same time bid in the auctions for their own companies, or that Amazon couldn’t sell its own product lines alongside other retailers on their site. The recommendations also include a major overhaul of antitrust laws to make them fit for purpose, particularly around making it more difficult for these titans to purchase startups and would-be challengers.
Up until very recently, big tech and the fear of it was something that crossed the aisle in US politics, and it was hoped that this report would be something that both sides could get around and take action on. However, things have changed and most Republicans have distanced themselves from the ‘extreme recommendations’ for the time being. We’ll see how this develops in coming weeks – though an election outcome with a Democrat sweep would surely signal massive changes to these businesses.

The FT runs a story today talking about the US yield curve and the recent steepening we’re seeing in it possibly being driven over sentiment that we could see Democrats take control of the White House as well as the House and the Senate, a so called “blue wave”. The logic underlying that is that if Democrats got full control then there would almost certainly be more stimulus. Markets have seen a change in the odds of this blue wave increase from 61% last week to 66% in the last couple of days and are reacting accordingly.

On this side of the Atlantic: Boris’ speech was long on vision, but a little light on details yesterday. That’s not unexpected when you’ve got a lot of ground to cover and you don’t really want to focus on the immediate challenges you’re facing, but a welcome follow up of policy actions on the subjects he covered would be nice. Those subjects include: 95% mortgages for first time buyers, reforming the care system and expanding one to one tuition for children falling behind. The green agenda was pivotal to his words and we covered the wind farm flagship project yesterday – though it was quickly pointed out by a couple of clients in the renewables space, that household energy consumption is around a third of UK energy usage, so where are the extra pledges to fuel industry and transport with renewables?! We also received a request for him to start the infrastructure projects by fixing Hammersmith bridge!

Nicola Sturgeon is likely to get back to beating the government to the punch when it comes to new covid measures, when she announces some more restrictions for Scotland later today. Ms. Sturgeon has said Scotland isn’t going back into lockdown, but it is likely that there will be travel restrictions in high infection areas and also further restrictions n pubs and restaurants. Meanwhile, Sadiq Khan has said that London is at a tipping point and the number of cities where cases are north of 50 per 100k is rising rapidly. As such we could see further curbs on activity being introduced by the government in short order. That’s not to say that it’s a done deal: Local and regional leaders have written to Matt Hancock to say that current restrictions are confusing and ineffective and from within government there are calls for plans to be thought through thoroughly, with equal arguments for more an less stringent measures.

Rishi Sunak is said to be preparing more support measures for businesses that get hit with local restrictions. He’s said to be putting together plans that would allow the government to move at pace and scale to help those hardest hit. These measures could be run alongside the traffic light system, that means government support would kick in as and when the area affected goes into a different level of severity. The FT has some more on it.

Today we’ll eagerly await Nicola Sturgeon, but more eagerly await Kamala Harris, who will be debating incumbent VP Mike Pence in Salt Lake City tonight. This, we hope, will be the antithesis of the Trump – Biden debate, with Mike Pence a very articulate politician and Kamala Harris having a reputation for being an excellent cross examiner. The bar is low, let’s hope they sail over it. There’s also Federal Reserve minutes to pore over in the afternoon session.

Have a great day

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