DAILY MORNING CHAI REPORT

Global markets rally as Biden heads for White House.The global equity markets are flying high after it was confirmed that Joe Biden will be the 46th President of the United States. The positive vibes have reverberated across the equity landscape.

The S&P 500 futures are rallying by more than 3% after Pfizer (PFE 40.95, +4.55, +12.5%) announced that its COVID-19 vaccine candidate achieved efficacy above 90%. Currently, the S&P 500 futures trade 127 points, or 3.6%, above fair value after already trading higher on news that Joe Biden was projected the winner of the U.S. presidential race. Conversely, the tech-heavy Nasdaq 100 have given up their knee-jerk pre-market gains and now trade 0.6% below fair value, as investors sell their technology winners that benefited from a reclusive economy. The prospect of a vaccine, however, has catapulted cyclical stocks and oil prices ($40.22, +3.09, +8.3%) and has fueled selling in the Treasury market, as investors rejoice that the economy can hopefully reopen and get back to normal. Note, the vaccine was this effective for people without evidence of prior infection and is being developed in collaboration with BioNTech (BNTX 111.77, +19.77, +21.5%). The selling in Treasuries, particularly longer-dated maturities, has sent yields noticeably higher in a curve-steepening trade that should disproportionately benefit the financial stocks. The 2-yr yield is up two basis points to 0.17%, while the 10-yr yield is up 11 basis points to 0.93%. The U.S. Dollar Index is up 0.1% to 92.29. As previously mentioned, the uplifting news strengthened a futures market that was already in good shape prior to the update. Presumably, the market was reacting positively to news that Joe Biden will be the 46th U.S. president, eliminating any election uncertainty and providing hope that Mr. Biden will advocate for less restrictive trade policy. Right now, the market is taking the vaccine news in stride and at face value since it bodes well for the earnings prospects of many cyclical companies. There is some talk, though, that a vaccine this early might convince Congress to hold off on stimulus or pass a smaller stimulus deal. Traders who held off on buying last week due to the political uncertainty appear to be triggering a new wave of buying this morning as they unwind positions amid reduced odds of a drawn-out election fight. Dow and S&P 500 futures are ahead by 1.6%, contracts tied to the Nasdaq are up 2%, while equities jumped across the globe. Markets have strongly reacted to the likelihood of a split Congress, meaning less drastic policy changes like tax hikes and increased regulation. With the fiscal response uncertain, it also means the Fed will have to do more to bolster the world's largest economy, which has weakened the dollar in recent days. "The consensus is that Biden will be easier on trade and foreign policy, unlike Trump who is more erratic and aggressive," added Colin Low, senior macro analyst at FSMOne.com in Singapore.Transition of power While Biden is preparing his transition team, he cannot shift into high gear until the U.S. General Services Administration, which oversees federal property, certifies the winner. Over the weekend, the GSA said "an ascertainment [of the presidential election] has not yet been made. GSA and its administrator will continue to abide by, and fulfill, all requirements under the law." While some office space has been allocated at the Commerce Department's headquarters in Washington, additional resources like salaries for administrative support and government email addresses won't be given over until the agency has formally identified Biden as the winner. Global markets have rallied in response to Saturday's declaration that Joe Biden has won the US election.Joe Biden’s pandemic plan: mandatory masks, paid sick leave, restoring Obamacare and free COVID-19 tests The end of uncertainty about the race's outcome saw London's FTSE 100 rise 1.5% to 5,994.58 points in early trade, with similar gains seen across Europe.Pfizer's vaccine is the first to show wide-scale success. The shot being developed with BioNTech prevented more than 90% of infections in a study of tens of thousands of volunteers. Results are preliminary but pave the way for the companies to seek emergency-use authorization if replicated in further research. Two-month safety data is expected next week Asian shares also jumped, with Japan's Nikkei 225 climbing 2.1% to 24,839.84 - it's highest level since 1991. There were similar gains in Australia, China and Hong Kong while oil and currency markets also climbed. Donald Trump has yet to concede and Mr Biden's win remains a projection as key states are still counting votes. However, the Democrat is forging ahead with his plans for assuming power in January after major US networks called the election in his favour on Saturday. Randeep Somel, director of global equities at M&G, told the BBC: "First and foremost it looks as if the uncertainty of who is going to be the president is going away, with world leaders coming out and openly congratulating Joe Biden and Kamala Harris. "I think the markets can focus now on the policies that Joe Biden is likely to enact going forward as opposed to this constant, 'is it going to be litigious? Are we looking at another potential Bush-Gore event like we saw in 2000, where it took 6-7 weeks to realise what was going to happen." How will Joe Biden change US trade relations? Joe Biden pushes forward with plans for office US election results in maps and charts Mr Biden has already said he will reverse many Trump era policies, including rejoining the Paris Climate agreement on his first day in office in January. There are also hopes that the new administration will expand fiscal stimulus in the US and widen measures to reduce the spread of Covid-19. However, Mr Biden could struggle to enact key planks of his agenda as its looks unlikely the Democrats with have control of both houses in Congress. This means the Senate may be able to block any big regulatory or tax policies, a plus for some businesses n China, the main shares benchmark - the Shanghai Composite - rose almost 2% on Monday, as investors viewed the Biden win as positive for trade and technology policy. Relations between Donald Trump and China deteriorated during his four-year tenure, sparking a tariff war in 2018 that imposed taxes on imported goods from both countries. "The market is taking the Biden win as a positive, as he is not very likely to fight a new trade war with China. The chance for a new tech war is also drifting lower," said Larry Hu, head of China economics at Macquarie bank. Bruce Pang, an economist at Hong-Kong based China Renaissance, agreed: "We think the Chinese authorities might be betting on a less confrontational but more predictable Biden administration that they can work with.".The best performer in Asia was Japan's Nikkei 225, which hit a near 30-year high - although the index remains well below the highs of the late 1980s. Alongside the election result, strong earnings from Japanese car makers such as Toyota were credited for the gains. "The Nikkei 225 is breaking out and is a poster child of strength and momentum," said Chris Weston, head of research at brokers Pepperstone. However, it was a different story at Japan Airlines, which saw its shares sink after saying it would raise as much as 168bn yen (£1.2bn) by selling new shares to support its finances during the coronavirus crisis. As the world awaits the first vaccine and coronavirus infections surge, Biden has acknowledged that the pandemic will not end anytime soon, but he has said he will rely on the counsel of scientists and medical professionals. “It’s going to take a lot of hard work to end this pandemic,” Biden said this month. “I do promise this: We will start on Day 1 doing the right things.” While the U.S. makes up approximately 4% of the world’s population, it has had approximately 20% of all COVID-19 cases. As of Monday, the U.S. had reported nearly 10 million COVID-19 infections and 237,574 deaths, just ahead of India (nearly 8,553,657 cases to date). To put that in context: The U.S. has a population of 328 million people versus 1.35 billion in India. The U.S. daily tally of coronavirus infections topped 100,000 on Sunday, a fifth straight day of record-setting levels, as hospitals in rural areas of the Midwest and southern states including Texas and Florida continued to feel the strain. There were at least 453 new deaths from the disease. Thirty states have reported a record seven-day average of new coronavirus infections. “Biden’s campaign has worked closely with researchers to develop comprehensive plans on COVID-19 and climate change,” it added. “He has pledged that decisions on the pandemic response will be made by public-health professionals and not by politicians; and he is rightly committing to restoring the ability of these professionals to communicate directly with the public.” Today's Economic Calendar 12:30 PM Investor Movement Index 1:00 PM Results of $54B, 3-Year Note Auction 1:30 PM Fed's Mester Speech 2:20 PM Fed's Harker Speech Right now, the market is taking the vaccine news in stride and at face value since it bodes well for the earnings prospects of many cyclical companies. There is some talk, though, that a vaccine this early might convince Congress to hold off on stimulus or pass a smaller stimulus deal. In U.S. Corporate news: Pfizer (PFE 40.95, +4.55): +12.5% after announcing that its COVID-19 vaccine candidate achieved efficacy above 90% in first interim analysis from its Phase 3 collaborative study with BioNTech (BNTX 111.77, +19.77, +21.5%). McDonald's (MCD 227.90, +11.34): +5.2% after EPS estimates and raising its dividend 3%. Zoom Video (ZM 423.00, -77.11): -15.1% amid the positive vaccine news that has undercut many other technology stocks that benefited from the coronavirus. Reviewing overnight developments: Equity indices in the Asia-Pacific region started the week with healthy gains. Japan's Nikkei: +2.1%, Hong Kong's Hang Seng: +1.2%, China's Shanghai Composite: +1.9%, India's Sensex: +1.7%, South Korea's Kospi: +1.3%, Australia's ASX All Ordinaries: +1.9%. In economic data: China's October exports +11.4% m/m (expected +9.3%; last +9.9%) and imports +4.7% m/m (expected +9.5%; last +13.2%) Japan's November Reuters Tankan Index -13 (last -26); September Leading Index +4.4% (last +1.8%) Stocks on the Move Carnival Corp (CCL), Norwegian Cruise Line Holdings Ltd (NCLH) and Royal Caribbean Cruises Ltd (RCL) are moving higher this morning, while Clorox Co (CLX), Newmont Corporation (NEM) and Abbott Laboratories (ABT) are headed lower. Jack Henry & Associates, Inc. (JKHY), New York Times Co (NYT) and Albemarle Corporation (ALB) were upgraded by analysts this morning, while Magellan Midstream Partners, L.P. (MMP), Beigene Ltd (BGNE) and Rigel Pharmaceuticals, Inc. (RIGL) were downgraded. International Markets Stocks in Asia are up. The Nikkei 225 is up 2.12%, the Australia ASX All Ordinaries is up 1.89%, the Shanghai SE Composite Index is up 1.86% the Mumbai Sensex is up 1.69% and the Hang Seng is up 1.18%. In Europe stocks are up. The CAC 40 is up 6.94%, the Euro Stoxx 50 is up 6.07%, the DAX is up 5.65% and the FTSE 100 is up 4.83%. Futures and Currencies Energy futures are up today. The price for West Texas Intermediate crude oil is up 3.15 at 40.29 per barrel. Brent crude is up 3.06 at 42.51 per barrel. Natural Gas is up 0.03 at 2.92. Precious metals are down this morning. Gold is down -39.43 at 1911.92 per ounce. Platinum is down -13.62 at 882.02 while silver is down -0.9 at 24.77. The dollar is mixed compared to the major currencies today. The greenback is down against the euro, up against the Yen and down against the Pound. Put/Call Ratio Yesterday, 1,870,116 call contracts traded on the Chicago Board Options Exchange (CBOE) compared to 766,714 put contracts. The single-session put/call ratio was