News and analysis

High spirits of clearly bullish excitement is afoot on Wall Street. U.S. stock futures, accompanied by Bitcoin, skyrocketed all night long to conquer historical peaks while Gold and Treasury bonds remained under selling pressure. This wave of an immediate market response came and quickly rose as soon as every national media outlet recognised Donald Trump as elected president after securing at least 279 electoral college votes, more than enough to come back, also beating his Democratic rival by nearly 5 million votes in the popular count. However, his political opponents just left their election headquarters and probably went home, without conceding defeat at that moment, many European and world leaders, as well as a NATO secretary general, were quick to congratulate the Republican leader on the victory, which actually included not only the presidential race but also the Senate majority. The investing community greeted the prospect of a Republican-controlled Congress to cut taxes and slash regulations for business.

Remember how relief on corporate taxes and deregulation measures formed a solid ground for a Trump rally in November 2016 when he just won his first term, so that the S&P 500 overcame a huge path from 2,100 to almost 3,400 in early 2020. A percentage increase in price surpassed 60% during this first Trump rally, with the further gains being postponed due to the corona crisis, but more bullish hopes being fulfilled during the reign of Trump's Democratic successors and after a two-year pause for correction. Inflation effect and money devaluation formed the major fuel for the ascending trend since 2023, but hopes for economic incentives provide a great chance for more healthy reasons for the second Trump rally, now based on higher growth projections.

The S&P 500 broad market barometer temporarily peaked at nearly 5,925 points, the Dow Jones Industrial Average stopped at 43,630 before the start of a regular session in New York. However, the next target area around 6,300-6,400 for the S&P 500, plus a very attractive psychological threshold of 50,000 for the Dow, may attract more stock purchases in various segments of the market. Renewable energy firms such as First Solar or NextEra may be sad exemptions. Both stocks already lost double-digits tonight as Trump repeatedly said about his intention to roll back on climate regulations passed under the sitting U.S. president Joe Biden. Chinese continental stock indexes and Hang Seng futures in Hong Kong slumped by 2.5% to 3.5% on fears of high trade tariffs, which could be promoted by Republicans, as it would be in line with Trump's policy during his first term. However, the presence of Elon Musk in Trump's current team could make the U.S. tariff policy may be less harsh this time, as Elon Musk is actually a person who cares much about his firm's sales in China.

In all other aspects, today's "Trump trades" may be extended and transformed into a midterm "Trump rally", especially as the Federal Reserve's dovish cycle with cutting interest rates will provide some fuel to add to the fire. The latter circumstance helped Wall Street lending banks like JPMorgan Chase, Bank of America and Wells Fargo to jump between 5% and 6%, while the market cap of the AI chip flagship NVIDIA exceeded $3.4 trillion to remove Apple from its leading position in the list of the most expensive companies in the world.

Besides, shares of Tesla shined after a more than 12% price gap well above $280 vs last day's close at $251.44, because the hyping EV maker's founder and top shareholder, Elon Musk, has openly and feverly supported and sponsored Donald Trump's electoral campaign. Shares of Trump Media and Technology Group opened a new session by surging 33% in the pre-market trading but later lost 2/3 of initial gains as commercial success of this rather political project is not so clear for investors.

BTCUSD briefly touched the area above $75,000 in early European hours and continued to consolidate gains surfing within a range between $72,500 and $74,800 later in the day. As we've written a couple of weeks before elections, Bitcoin may eventually develop its optimism up to $100,000 after reaching its nearest $80,000 target, upon breaking free beyond its previous technical borders. Bets on a much softer line on cryptocurrency regulation is moving BTCUSD ahead, taking into account Donald Trump's promise to go as far as consider using Bitcoin transactions to lighten the burden of U.S. debt in Dollars. However, investors also bought the Greenback, so that the U.S. Dollar Index added 1.5% to 2% after election results became clear.

Keeping a mind cold and distant from political preferences is one of the essential qualities to succeed in the market. And so, be it another revolutionary and boosting Trump rally or just a simple Kamala's "no major changes, continue to buy" trend, it's clear for me from every angle that most popular retail networks would form a kind of safe haven for a wary part of the crowd on Wall Street. Even if you don't, personally, visit budget shopping centres like Walmart (WMT) and Target (TGT) or you don't have family dinners at fast-food restaurants like McDonald's (MCD), then many other people will try to minimize their daily spending needs in this way. Life becomes more expensive to help discount stores in their business. Beside these considerations, big holiday savings with early Black Friday and Thanksgiving sales season to buy must-have gifts long before Christmas signify not a little.

As a good example, shares of Target (TGT) are now pricing with a double-digit discount even against their summer highs, which was a quick response to solid earnings on August 21. I guess this fundamental gap may be filled soon, even on bright expectations before the store chain's Q3 report, which is scheduled on November 20. Although Walmart (WMT) is currently trading with no discount but rather near its all-time highs, the bullish positioning in it still provides me with a dreamy smile because of refreshing historical records month by month. As I believe, the next pair of Walmart's announced quarterly earnings and its own updated forecasts on November 19 and in the middle of February 2025 is not going to disappoint the bulls. Improving profit based on more or less effective cost reductions in supply chains and growing AI assistance for online customers will accumulate much of the latest achievements of autumn and winter sales season. If so, I just keep my price target at $100 for Walmart (with more than 20% of an additional award to bless me), plus set $175 to $195 (16% to 30% vs the current price) as a midterm area to climb for Target shares.

As for McDonald's, the best-ever numbers of profit only a week ago corresponded to a 8.7% surplus QoQ on record three-month revenue of $6.87 billion. And only the impact of temporary negative effects from the E. coli outbreak, which had been revealed several days before that, prompted MCD share price to retrace further from its recent highs around $318 to around $290. This formed an 8.5% discount on MCD shares. I believe that the E.coli story would be short-lived. It was reportedly linked to Quarter Pounder burgers that killed one person and sickened nearly 50 others. The menu item was "rather quickly" (according to the U.S. Centers for Disease Control and Prevention) excluded from a fifth of 14,000 restaurants across a dozen U.S. states. The onion used was blamed later. Many expect fast rebuilding for consumer trust with further progress in capturing a wider market share. Therefore, the price may not only recover back to $318 but climb further to $325 at least, in my humble opinion. Meanwhile, some large investment funds are keeping their price goals for McDonald's even in a higher range up to $340.

In the past, two notable E. coli outbreaks at Chipotle Mexican Grill in 2015 and Jack in the Box in 1993 had hurt sales at those chains. Chipotle needed about a year-and-a-half to stabilize the number of its visitors, while Jack in the Box sales declined for four straight quarters. Chipotle shares kept the negative mood until 2018, but due to some more cases of norovirus infections after the initial E. coli outbreak in 2015. To estimate possible damage for the market dynamics in MCD shares, most analysts now expect that the Christmas quarter sales of McDonald's could experience some pressure, but it probably would not be as hard as the previous two E. coli cases that I mentioned here. Therefore, my personal conclusion was to buy some stocks of MCD in the current range from $290 to $295, with an intention to add more if the price may go to retest the levels around $275 or a bit lower. I do not believe seriously in larger damage to the stock.

Instead of worse expectations, I bet on McDonald's ability to introduce a comprehensive and attractive value platform, plus new limited-time offerings (LTOs), already in the first quarter of 2025 to boost customers' visits. Analysts at Goldman Sachs follow the same strategy, saying that "subdued international consumer demand" might pressure sales, but McDonald's is expected to emerge as a "winner" by gaining its market share "compared to its quick service restaurant (QSR) peers", supported by "the growth of its loyalty program and increased digital engagement". Their ratings for MCD now reflects an approximately 10% potential upside to the stock, based exactly on my $325 price target, but over "the next 12 months", while I expect MCD will hit before the end of winter of in the beginning of spring maybe, helped by lower interest rates environment and price conscious consumers. By the way, MCD price added more than one percentage point today, despite all odds. I would not be surprised if all the assets listed above, including MCD, would perform a rapid surge in share prices very soon after the election fever will be over.

My best regards to all of you, folks, have a good weekend. I'll not waste much of your time with a long read today. I just came to say ... I love you, like Stevie Wonder... of course, that's true, but... I also came to say that I have my personal shortlist of stocks, which I feel comfortable to purchase as soon as this Wall Street's rough and nervous mood will ultimately disappear. I mean, I am going to buy stocks from the list when more or less clarity on the U.S. elections outcome would finally replace currently increased levels of market volatility. In case of already existing trades, I mean an opportunity to seize the right moment to add more to my volume of stakes in particular stocks at better prices. Today, I share the first point from the list - to be continued next week...

Advanced Micro Devices (AMD) justifiably gathered its bullish momentum to climb by nearly 18% for the last two months, but wasted all of the gains in the couple of days after its quarterly report at the end of October. Today's price is well below $145 vs AMD's summer high at $187.28. Some accidental touching of September's low at $132.11 or even a re-test of annual dips below $122 cannot be ruled out. A profit/risk ratio is better than 2:1 even nominally, if we count it based on the current annual range. Yet, any kind of a bearish turn in the mid-terms is not demanded by logic. Now I'll tell you why. The second most important chipmaker after the AI darling NVIDIA actually posted its nearly record EPS (earnings per share) of $0.92 for Q3, and a full measure of AMD's sin in this context was being in line with consensus projections, with the excited crowd being clearly hungry for more. Again, the Data Centre segment of AMD's business more than doubled YoY to achieve $3.5 billion, but another fault was that AMD previously provided a too rosy forecast of selling more than $4.5 billion worth of AI processors in 2024, which would not be the case anymore.

The firm's own Q4 revenue forecast of $7.5 billion, plus or minus $0.3 billion, should not trail investing hopes as the midpoint of AMD's guidance range was only $0.05 billion below the analyst estimates of $7.55 billion on average, while Q3 revenue came in at $6.82 billion. The number beat the same analyst pool's prediction of $6.71 billion to set a new historical high, providing a 22% increase YoY. Therefore, AMD sees "significant growth opportunities across our data centre, client and embedded businesses driven by the insatiable demand for more computing," according to AMD Chair Dr. Lisa Su. She noted that it was mostly supply chain constraints that hampered the manufacturer's ability to grow faster, while demand for AI chips is still growing strongly. So, investors have no reason for a bitter cry.

I would describe a few more ideas from my shortlist in a few more days. We have enough time for this as the votes counting on the other side of the pond is going to be long. Right now your "Scheherazade" is going to take a rest in this All Hallows' Eve of Friday and wishes you to do the same.

VeChain (VET) is down 4.7% this week, trading at $0.02100, underperforming the broader crypto market as Bitcoin (BTC) continues to rally with a 3.2% gain to over $70,000. VET has remained within a tight trading range of $0.02000-$0.02500 over the past three months, and it is currently nearing the lower support of this range. A rebound from this level could occur if buying interest strengthens.

The recent launch of VeChain's Blockchain-Powered Digital Passport has bolstered security, a positive development for long-term utility. However, this feature also introduced additional complexity for users, potentially impacting adoption and putting pressure on VET's price.