Why COVID-19 Whiplash will not work and S&P 500 will be 13% higher than UBS by June

With just five days of the US election and concerns about how the country’s epidemic battle will take shape in light of what is happening in Europe, some mistakes are justified.

but our Phone of the day A team of strategists at UBS, led by Chief Investment Officer Mark Heffel, urges investors to hold steady against COVID headlines, as the team predicts a “short-term” setback for equities.

“We continue to see the upside in the medium term, and target 3,700 on the S&P 500 as of June 2021, about 13% above today’s levels,” Haefel and team said, in a note to customers.

He added, “While local sanctions to control the epidemic will be a pressure on development, we see the impact expected to be more limited in the first half of this year.”

Reasons they:

1. Consumers and companies have so far adapted to the restrictions and must cope better with new ones, although there is little space left in the air travel and hospitality sectors. “For the economy as a whole, we believe the impact of sanctions is greater than the relative demand shock and less than the absolute demand shock over the first half.”

2. US third quarter results have been “solid” and fourth quarter estimates for most companies are rising, suggesting momentum in the fourth quarter. However, some tech stocks may be at risk of small earnings shortfall, as valuations are high. Microsoft’s MSFT,
   -4.95%
   This week’s results and feedback are an example of this.

3. Governments continue to support struggling economies, except in the US, where consumer spending may decline. That said, a US stimulus bill would pass soon after the election, regardless of the outcome.

4. “The general public has become less fearful. This is a mixed blessing because it reduces the likelihood of full compliance with the new rules, which may slow down the inclusion of the virus, but on the contrary means that the negative economic impact has been reduced, ”said Haffel and team.

UBS strategists believe that with the possibility of 10 vaccines in late-stage trials worldwide, the government will be able to ease restrictions by the second quarter of next year. This would help corporate results “recover pre-epidemic levels by the end of 2021.”

market

Stock futures ES00,
+ 0.01%

YM00,
-0.25%

NQ00,
+ 0.34%
S&P 500 rising after SPX,
-3.52%
Worst day after June. European Stock SXXP,
-0.38%
Struggling after five months of beating. Asia had a rough session. And oil prices CL.1,
-4.03%

BRN00,
-3.73%
Falling again:

The buzz

Beer veteran Molson Copts results of TAP
-2.66%
Those stocks are boosted. Drugmaker Modern mRNA,
-6.97%
Losses went up, but stock is up. Income from food groups Kraft-Heinz KHC,
-4.75%
And Kellogg’s,
-2.21%
Still to come Reporting will also stop after social-media group Twitter TWTR,
-5.34%
And coffee giant Starbucks SBUX,
-3.19%.

From Europe, Finnish handset maker Nokia shares Nokia,
-4.48%
Slipping on low guidance. Shares of social media group Pinterest PINS,
-6.22%
Blowouts are increasing after results.

The European Central Bank announced its policy decision 45 minutes later at 8:45 pm ET with a press conference. But the central bank cannot take action until next month.

The US GDP in the third quarter has probably increased by 30%, but what is going on right now will not tell us much. Further, weekly jobless claims and pending home sales.

Drugmaker Regineron REGN,
-2.65%
His experimental antibody cocktail stated “significantly lower” COVID-19 levels and the need for more hospitalizations and emergency-room visits.

Inphi IPHI shares,
-2.55%
Marvel Technologies are up 31% after MRVL,
-4.67%
Announced a cash and stock deal to buy out its rival. The shares of Marvel are down.

Two people were killed and several were injured in a knife attack in France.

Join Barone, Marketwatch, and special guests for a live discussion on how the 2020 election results will affect investors, business and policy on November 12 at 12 pm ET. register here.

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