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Market Morning: Brexit Finale, Microsoft Momentum Stall, $2.4 Trillion Spending On Tap

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ME Staff
·2 min read
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One More Week of Brexit Negotiations?

With three weeks to go until Brexit becomes final, we are now in the final weeks of negotiation between the European Union and the United Kingdom on a deal. The mood, apparently, is “downbeat”, but an unnamed UK government insider, in a fit of originality and inspiration from a 17th century quote, paraphrased, “Often the darkest hour comes just before dawn.” The issues of contention continue to be exactly what they’ve been for months, namely fishing rights, competition rules (meaning state subsidies of industry) and enforcement mechanisms. The BBC is speculating that a deal is out of reach at the moment, and that somebody has to budge in the next few days or there will be no deal. What no deal would do to the markets, nobody knows, but it would likely not add any stability.

Apple and Microsoft Losing Momentum?

It’s been 5 months since either Apple (NASDAQ:AAPL) or Microsoft (NASDAQ:MSFT) hit new highs. This has been the longest period of no new highs since October to March 2019. Normally this is no big deal but as both stocks are heavily owned on Robinhood by momentum chasers, it could be a bit more of a big deal this time due to the amount of speculative money involved. Plus, the call options trading craze, as CNBC calls it, has not abated at all, and call buyers continue to pump momentum stock prices higher as the sellers of these contracts must buy the underlying stock in order to take a short position.

Meanwhile, other tech stocks that aren’t direct beneficiaries of the call option buying craze are languishing by comparison. VMWare (NYSE:VMW) for one, which leads Microsoft handily in key niche areas like Hypervisor market share, hasn’t seen a new high since March. Microsoft’s Hyper-V product, which requires a hyper-v backup, commands only about 11% market share compared to VMWare’s 68%.

New Covid Bailout Circa $2.4 trillion?

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