(Bloomberg) -- With Joe Biden’s lead widening in the polls and President Donald Trump’s campaign sidelined by the virus, investment strategists now say there’s less of a chance for a contested election.A clear-cut Democrat victory could avoid a long and messy legal battle and provide certainty to markets that have been nervous about election risks, according to strategists from Citigroup Inc. to JPMorgan Chase & Co.The S&P 500 was up about 1% as of 9:32 a.m. in New York, havens including bonds are seeing little demand and the greenback is down.“Polls are shifting from a close election and prolonged uncertainty to more a dominant Biden and clean succession,” said Peter Rosenstreich, head of market strategy at Swissquote Bank SA. “That is reducing uncertainty and increasing risk appetite.”JPMorgan Says a Biden Victory Could Mark a Shift in Stock MarketCross-asset traders are taking the newsflow in their stride, despite confusion over the president’s condition and more positive tests from Republican leaders.A poll released Sunday -- taken between Tuesday’s debate and Friday’s news of the president’s infection -- found that Biden’s national lead had leaped to 14 points, from 8 before the debate. Biden also has set two records for monthly fundraising in August and September, giving him enough money to dominate Trump on the airwaves.“Markets seem have lowered the chance of prolonged uncertainty post-November 3,” Barclays Plc strategists Ajay Rajadhyaksha and Shawn Golhar wrote in a note Sunday. “Given that Vice President Biden has been ahead in most polls, this suggests that markets are assigning a bit more probability to his win and a bit less to a close and contested outcome.”Barclays strategists point to a currency pair like the Aussie dollar versus the yen, a proxy for risk appetite. Its one-month implied volatility dropped to the lowest in weeks after the presidential debate. It has since rebounded, but remains below its 200-day average.The bank’s dollar-neutral Biden currency basket has also risen in recent days, a sign of rising confidence in the former vice-president’s prospects.The race is still closer in some of the states most needed to win the presidency. The unprecedented number of mail-in ballots being cast this year because of the pandemic means it likely won’t be possible in some battleground states to declare an unofficial winner on election night. Election officials say it could take days or even weeks in some cases to get a complete count, and a final determination could also be delayed by post-election lawsuits challenging the results.Still, volatility markets have been pricing in risks from the election for months now, raising the bar for bad news to hit trading.When it comes to futures tied to the Chicago Board Options Exchange Volatility Index, contracts for the coming three months are all trading above the one expiring in January, signaling investors are expecting wilder equity swings around the election.But a weekend of confusion over Trump’s state of health has not deepened such anxieties. October’s contracts, which cover the polling date, are down 2% on Monday after jumping nearly 5% on Friday.On the betting market PredictIt, the chance of a Biden win stands at 64%, a tiny drop from a peak of 66% the day before Trump’s positive test was announced. A long-short strategy betting on Biden’s triumph compiled by Nomura Holdings Inc. and Wolfe Research has hardly moved since reaching a record high on Thursday.Treasuries fell on Monday, with yields on long-maturity bonds rising more than those at the short end. The difference between five- and 30-year rates increased to almost 124 basis points, the widest in more than a month, as investors pared holdings of havens.That confidence, combined with a continued economic recovery, will help support equity markets -- and potentially even a rotation into riskier shares, according to Evercore ISI.“Passage of fiscal package 4 plus a Democratic sweep would be a significant support for value and cyclicals near term,” strategists led by Dennis Debusschere wrote in a note Sunday.If Trump’s condition deteriorates, investors might start to wonder if the election could be postponed or who would run for the presidency in his place. Yet judging from financial markets’ reaction so far, that remains far from traders’ radar.“Our baseline – of a risk-supportive macro outlook despite election uncertainty – will not change unless the president’s health unexpectedly takes a worse turn,” the Barclays strategists wrote.At the same time, there is still no shortage of debate over whether Democratic or Republican policies would be better for investors. While some pundits say the former would raise taxes and tighten regulations in a blow to corporate profits, others point out a Democratic sweep could boost government and consumer spending to add a fresh leg to the risk cycle.All told, between the disruption wrought by the pandemic and a volatile sitting president, a humdrum transfer of power is seen as providing investor solace.“We do have sympathy with the idea that a clean election outcome is likely a positive event from here given the “chaos” risk overhanging markets,” strategists at Jefferies wrote in a note.(Updates market moves throughout, adds quote in fourth and additional election context)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Elusive cybersecurity pioneer John McAfee was arrested in Spain for tax evasion in the U.S., the Justice Department in Washington said.McAfee is accused of failing to file U.S. tax returns from 2014 to 2018 and hiding assets including real estate, a vehicle and a yacht in the name of others, prosecutors said. An indictment returned in June was unsealed on Tuesday after he was taken into custody. He’s being held pending extradition, the Justice Department said.Prosecutors claim McAfee earned millions of dollars through the promotion of cryptocurrencies, speaking engagements, consulting jobs and the sale of the rights to his life story for a documentary, but never filed tax returns. Instead, his income was paid into accounts held in the names of others, prosecutors claim. He faces as long as five years in prison if convicted of tax evasion and a year if found guilty of failing to file taxes.It’s the latest legal complication for the eccentric software mogul, who was a person of interest in a murder in Belize, though not charged with a crime, and last year he was detained in the Dominican Republic for entering the country with a cache of firearms and ammunition. He was also briefly a candidate for president in this year’s U.S. election, ending his run from abroad in March.The criminal charges were announced just hours after the U.S. Securities and Exchange Commission sued McAfee for promoting the sale of cryptocurrencies without disclosing that he was being paid to do so.The commission claims McAfee recommended at least seven initial coin offerings to his Twitter followers from at least November 2017 to February 2018 without revealing that he earned more than $23 million to boost them. He’s also accused of denying that he was being paid when asked by investors.Read more on McAfee fleeing BelizeThe SEC is seeking to force McAfee to disgorge all his ill-gotten gains, and to prohibit him from taking part in the issuance, purchase or sale of any digital asset securities and unspecified monetary penalties.McAfee didn’t immediately respond to a request for comment.The commission also accused McAfee of claiming to be an investor or technical advisor, “creating the impression that he had vetted these companies, that they were benefiting from his technical expertise, and that he was willing to invest in the ventures.”When a blogger exposed that he was being paid, McAfee was still holding “virtually worthless” securities from the offerings he promoted and encouraged investors to buy them -- without revealing that they were his own securities and he had paid a third party to recommend them, according to the complaint.McAfee also engaged in a practice called scalping, in which he accumulated large amounts of digital securities and promoted them on Twitter without disclosing his intention to sell, the SEC said.McAfee founded his epynonymous software firm in 1987. Intel Corp., seeking to build security features directly into its chips, bought the company for $7.7 billion in 2010, with TPG and Thoma Bravo taking stakes later. In 2016, Intel announced that it had signed a deal to transfer a 51% stake in the business to TPG for $1.1 billion. The company filed to go public last month.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Companies have been selling risky loans to fund payouts at the fastest pace in years. Harbor Freight Tools USA Inc., a discount tools retailer run by billionaire Eric Smidt, is the latest borrower looking to line its pockets.The company, which sells $7.99 wrenches and $8.99 plier sets, is seeking to borrow $3 billion in what will be its fifth such deal in the past decade, according to data compiled by Bloomberg.It plans to use some of the proceeds to refinance existing debt and the rest for a dividend, according to a person familiar with the matter. Credit Suisse Group AG, which is leading the seven-year deal, kicked off marketing on Monday and the offering may price as soon as Oct. 14, said the person, asking not to be identified discussing a private matter.Representatives for the Camarillo, California-based company didn’t immediately respond to a request for comment. A representative for Credit Suisse declined to comment.So-called dividend recapitalizations have soared in recent weeks amid low borrowing costs fueled in part by liquidity-boosting policies by the Federal Reserve and rising demand from yield-starved investors that have little else to buy. About $12.6 billion of loans funding payouts to shareholders were launched in September, the most for any month in about six years, data compiled by Bloomberg show.Read more: Private equity using loans for payouts at fastest pace in yearsSmidt, Harbor Freight’s chairman and chief executive officer, has been steadily raising debt against the closely held company since 2005, with dividend deals issued in 2010, 2012, 2013 and 2016, according to Bloomberg-compiled data. Smidt’s net worth is $5.1 billion, according to the Bloomberg Billionaires Index.Harbor Freight is offering investors a spread of 3.25 to 3.5 percentage points above the London interbank offered rate for the loan, according to the person. Like other recent deals of its kind, the debt is rated in the top tier of junk debt at Ba3 by Moody’s Investors Service, or three levels below investment grade.Its business has also fared relatively well during the pandemic, with stores deemed as essential and the vast majority of its premises remaining open with modified hours during the outbreak, according to Moody’s. The dividend deal will add about $850 million of additional debt to the company’s balance sheet but it could deleverage quickly, according to Moody’s.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
The stock market rebounded as President Trump leaves the Walter Reed hospital. Nvidia leads 5 chip stocks in buy zones.
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