The One Thing That’s Really Going to Move Markets This Week

With both the Democratic and Republican conventions behind us, we’re now firmly in election season.

Polling suggests the Republican convention did not give President Trump as big of a boost as he may have wanted. To make up for that he may try making a big move – perhaps on China and trade, or on domestic law and order.

Any announcement like that could affect the markets, as worries over trade with China have in the past.

Big Media is already speculating about it, if only because there’s little else happening right now.

But the performance of the stock markets is too important to Trump’s reelection campaign to endanger it too much.

So in the absence of significant news, Big Media is going to give us a sleight of hand by rehashing the same old stuff: protests, unrest, and all the election posturing.

And while you’re distracted by this sleight of hand, you may miss the continuing strength of the markets, which are largely unaffected by what Big Media thinks is so important.

That’s the Reality Gap of the week. Big Media has us waiting for some huge, market-changing headline when the reality is that money continues to pour into stock markets and they keep heading up.

One market-mover Big Media isn’t emphasizing, however, is the official August unemployment report being released on Friday. That’s going to be a key indicator of the economy’s rebound, and the biggest market mover this week.

After July’s surprise fall in unemployment, expectations are high. The consensus estimate is for 1.4 million jobs having been added this month. If that happens, expect the Republicans to play it up as a sign of success. If not, you’ll be hearing from Democrats of what a failure it was.

Now, based on past administrations, we know the numbers can be massaged to suit the White House.

The biggest market-mover this week may well come if we see signs of that, whatever the number actually is.

Barring that, I expect markets will keep charging up, to Big Media’s chagrin.

Earnings movers that I’m watching:

  • Work-from-home stocks Zoom (ZM) and Docusign (DOCU): ZM announces after the close today and just flat blew out their last earnings report. I expect similar fireworks today, though beware results that are great-but-not-astronomical: that could lead to a “sell the news” moment. The same sell the news concern is up for DOCU (reporting after the close on Thursday) – but both are still stocks that are going to be post-Covid-19 winners.
  • Broadcom (AVGO) has been popping, and their report on Thursday after the close could give insight on how the chip stock has benefited from INTC’s technical flop and how it will continue to benefit in coming quarters. The slightest positive story here will keep AVGO on its upward trajectory.

Great trading, stay safe out there, and God bless you,

D.R. Barton, Jr.

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