LONDON, Oct 9 (Reuters)Bond funds saw the second-largest weekly inflows ever of $25.9 billion, BofA said on Friday, as the market continues to price in a Democratic sweep in next month’s presidential election, which could mean even more fiscal stimulus.

“Blue wave election outcome (Democrats winning) has curiously flipped from consensus bear to bull catalyst in recent months,” the U.S. investment bank said.

Equity funds attracted $4.4 billion, mainly driven by U.S. equities, BofA said. Government and U.S. Treasury bond funds sucked in $3.8 billion, the largest inflows in 14 weeks, in the week to Oct. 7.

The bank also highlighted the likelihood of renewable energy stocks front-running a Democratic election sweep that was followed by a fiscal stimulus, pointing to one solar energy exchange traded fund’s stellar performance.

Invesco solar ETF TAN.P soared 255% from its March lows and has gained 42% in the last month alone. “A ‘blue wave’ clean sweep which could see Dems in control of the Oval, Senate and House is seeing money pile into renewables”, a London-based trader said.

(Reporting by Thyagaraju Adinarayan Editing by Tommy Wilkes)

(([email protected]; +44 20 7542 7015; Reuters Messaging: [email protected]; Twitter @thyagu))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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The beaten-down oil patch hasn’t had much good news of late. However, that changed earlier this week when Devon Energy (NYSE: DVN) and WPX Energy (NYSE: WPX) revealed that they would combine in a merger of equals. That news jolted the oil sector by fueling speculation that more deals could be forthcoming.

The industry needs to cut costs to combat lower oil prices. Analysts thus believe that we’ll see a lot more consolidation in the coming quarters.

An image of a handshake superimposed over an image of an energy facility.

Image source: Getty Images.

Charting the path

Devon Energy’s proposed merger with WPX Energy is the second notable deal in the sector following a devastating price crash earlier this year. The other is Chevron‘s (NYSE: CVX) $5 billion all-stock acquisition of Noble Energy (NASDAQ: NBL). Both transactions have similar features, making them good templates for future consolidation.

Chevron and Devon made all-stock deals featuring relatively low premiums, with Chevron only agreeing to pay 12% above Noble’s prior closing price and Devon offering a 2.7% higher price for WPX. By taking the all-stock route, the buyers preserved their cash and avoided taking on new debt. Meanwhile, they ensured these deals would boost results on a per-share basis within the first year by offering low premiums and avoiding too much dilution. 

Another major driver of these deals is the estimated cost savings and associated improvements in cash flow. For example, Chevron expects that by combining its operations with Noble Energy’s, it can capture $300 million pre-tax in annual run-rate synergies. It expects the transaction to be accretive to its return on capital employed, free cash flow, and earnings per share one year after closing, assuming the global oil price benchmark averages about $40 a barrel. 

Meanwhile, Devon sees its deal enhancing its existing cost savings

(Bloomberg) — Canada’s labor market probably recorded a fifth-straight month of strong job gains in September with schools and childcare centers reopening, but a second wave of Covid-19 cases is dashing any hopes for a quick recovery.

The country’s economy likely added about 153,000 jobs in September, according to the median of 10 estimates in a Bloomberg survey of economists. That would bring bring the number of jobs recovered since the height of the pandemic to just over 2 million, or about two-thirds of the 3 million lost jobs in March and April.

But the gains are fading. New employment last month is expected to be down from the 245,800 jobs added in August, and the 418,500 new positions in July.



chart: Slowing Gains


© Bloomberg
Slowing Gains

While demand in some industries like technology may drive near-term hiring, there is continued weakness in travel and food services industries. And with new cases rising across the country, provincial leaders are imposing further restrictions on the economy, which could prompt a setback for recovery.

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“Rising virus counts could lead the economy to make a U-turn and shed jobs again as the year winds down,” said Royce Mendes, an economist at Canadian Imperial Bank of Commerce, by email.

Still, Canada’s unemployment rate may have dropped below 10% for the first time since the pandemic struck, economists predict. That’s partly because more young people are back at school, and out of the labor force, according to Royal Bank of Canada economist Nathan Janzen, who is forecasting 200,000 new jobs in September. Youth were among those most affected by the pandemic, given they disproportionately work in low-pay service jobs hardest by the business closures.

Forecasts in the survey ranged from a low of 100,000 jobs to 200,000.

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KEY POINTS

  • Unemployment dropped to 7.9%
  • 661,000 jobs were added to nonfarm payrolls
  • A survey found 31% of those who got a new job said they are earning less

The Labor Department reported Friday the September unemployment rate dipped to 7.9% as a wave of layoffs in the airline and other industries were poised to hit. The Bureau of Labor Statistics said 661,000 jobs were added to nonfarm payrolls, about 200,000 less than what economists were expecting.

The announcement comes against the backdrop of coronavirus stimulus talks between Democrats and the White House and tens of thousands of layoffs in the airline industry, tourist, insurance, banking and other industries.

The report attributed the dip in the jobless rate to “resumption of economic activity due to the coronavirus pandemic and efforts to contain it.” Leisure and hospitality, retail trade, healthcare and social assistance, and professional and business services led the way.

“September payroll gains were on the disappointing side, below expectations and well below the pace seen in previous months. The decline in the jobless rate is tainted somewhat by the drop in the labor force participation rate,” Mark Hamrick, senior economic analyst at Bankrate.com, said in an email to International Business Times.

Labor force participation was down 0.3 points to 61.4% while the employment-to-population ratio was 56.6%, off 4.5 points from February.

Labor estimated 7.2 million people had dropped out of the labor force, 2.3 million more than before the pandemic hit. People who wanted a job in September but who were unable to find one numbered 1.9 million while the number of discouraged workers who thought no job was available for them numbered 581,000.

The pandemic was in its 28th week. The number of long-term unemployed, those who have been without jobs for more than 26 weeks, increased 781,000

MADRID (Reuters) – More than three quarters of Spain’s furloughed workers have returned to work since April, data from the Social Security Ministry showed on Friday, as the euro zone’s fourth-largest economy posted robust job-creation and unemployment figures.

Some 83,529 people left the ERTE furlough scheme in September, leaving 728,909 workers still enrolled, the data showed. That is 76% lower than the April peak, when more than 3 million people were supported by the programme.

Some 84,013 net jobs were added in September, an increase of 0.45% from August and the fifth consecutive month of job creation.

Over the same period, the number of people registering as jobless fell by 0.69%, or 26,329 people, leaving 3.8 million people out of work, according to the Labour Ministry.

Labour Minister Yolanda Diaz said it was the largest drop in jobless numbers recorded in September since 1996.

“These data show a positive trend in a still uncertain pandemic scenario,” she tweeted.

Unemployment had risen by 0.79% in August as new outbreaks of the coronavirus and travel restrictions imposed by other countries began taking a toll after months of timid recovery from an initial lockdown.

However, around 450,000 jobs were destroyed compared to September 2019.

(Reporting by Joao Manuel Mauricio in Gdansk and Nathan Allen in Madrid; Editing by Belen Carreno and Ingrid Melander)

Copyright 2020 Thomson Reuters.

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