Investors are increasingly preparing for market volatility ahead of the U.S. presidential election, with some shifting stock positions and selling the dollar, as Democratic contender Joe Biden maintains a lead against President Donald Trump in opinion polls. Plenty can change in the four months before the Nov. 3 vote, and many investors remain focused on whether a resurgence of the coronavirus will damage a nascent U.S. economic rebound.

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Matthew Luzzetti, Deutsche Bank Chief U.S. Economist, discusses the U.S. labor market and expectations for the upcoming June jobs report on The Final Round.

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(Bloomberg) — Bankrupt Hertz Global Holdings Inc. and its bondholders are squaring off over how to shrink its nearly half-a-million vehicle fleet. Market watchers say the outcome could upend the multi-billion dollar lease-backed ABS industry.The cars are housed in an entity linked to Hertz’s asset-backed securities and leased to the rental giant. Normally, when a company with ABS files for bankruptcy, it must choose to confirm or reject the entire master lease tied to the debt. If it keeps the lease, it has to continue making payments on the vehicles as it offloads them piecemeal. If it walks away, all of the collateral is liquidated to pay back bondholders.Hertz wants a judge to allow it to convert the master lease into 494,000 separate agreements so it can reject the terms on 144,000 vehicles. That would allow Hertz to save roughly $80 million a month while it hangs onto the remainder of the cars as it seeks to emerge from bankruptcy a viable company. If the motion fails, Hertz may press for a reduction in payments to creditors, according to people familiar with the matter.The standoff raises the stakes in what is already 2020’s largest corporate bankruptcy. Hertz is seeking to avoid liquidation and strengthen its balance sheet via the restructuring, while bondholders with billions of dollars at risk who’d grown confident of their chances of being paid back are now threatened with losses. Moreover, industry insiders worry that if Hertz is successful in court, it would re-define the rules that have long governed the ABS market.“It’s going to be a real showdown,” said Philip Brendel, analyst with Bloomberg Intelligence. “Hertz is taking an aggressive posture, but if it rejects the master lease, it doesn’t have a fleet and this bankruptcy looks more like a liquidation.”Hertz almost certainly doesn’t want that to happen.Yet neither do its ABS creditors. For them, the best bet for maximizing the recovery on roughly $11 billion of bonds would be to have Hertz make lease payments on all the vehicles while it sells them gradually, using its industry connections to command top dollar.With that kind of leverage, Hertz may try to extend a 60-day postponement on its lease payments due to expire later this month. The company may also press bondholders to accept less going forward, said three of the people familiar with the matter who asked not to be identified discussing private negotiations.Still, bondholders may not be willing to give in so easily. A resurgent used-car market has strengthened their hand in recent months, making the threat of Hertz rejecting the master lease in its entirety less ominous. Used-vehicle prices in the first 15 days of June were up 6.6% over May and 4.4% above the same period in 2019, according to Manheim, the nation’s largest used-car auction.Hertz didn’t respond to a request seeking comment.ABS RiskBoth sides are now waiting to see what happens with Hertz’s court motion. A decision could come as soon as July 6.So are ABS industry experts, who say that if Hertz is allowed to reject some leases but not others, it could undermine the $25 billion market for rental-car related ABS, as well those for farm-equipment and construction-machinery financing, by making the bonds riskier. That could raise funding costs for borrowers and ultimately consumers, representatives for the Structured Finance Association argued in a proposed brief filed last week.“Granting Hertz’s motion would disrupt access to the capital markets for entire industries that depend on favorable financing terms provided via ABS structures — and thus the national economy,” the group wrote.When credit graders and investors assess the risks of an ABS, they typically do so under the assumption that leases tied to all of the cars backing their bonds would be accepted or rejected during a bankruptcy.If Hertz is allowed to selectively reject leases, it effectively leaves bondholders with a different pool of collateral than they were expecting when they bought the securities. That could hamper their ability to be made whole by selling the cars backing the bonds, the thinking goes.“They have manufactured an assault on the securitization structure from which they raised tens of billions of dollars effectively secured by the master lease, in an effort to shift to the ABS lenders the hundreds of millions of dollars, or more, of economic cost from the depreciation on the vehicles,” lawyers representing ABS participants said in court papers.Hertz has dismissed the arguments about upending the structured-finance market as speculative and irrelevant, as have first and second-lien creditor groups.Thanks to the recovery in used-vehicle prices, many Hertz ABS investors have grown more confident they’ll get a full recovery on their bonds. Slices of ABS have rallied since the company filed for bankruptcy in May, with the portions of the securities that are first in line for repayment now trading near par. Junk-rated C slices of many Hertz deals, which are further back in line for repayment, have rallied 10 points or more since May to trade around 90 cents on the dollar.“This is gamesmanship,” Bloomberg Intelligence’s Brendel said. “It will be a constant negotiation. If the judge rules against Hertz, the company will say, ‘you took away my sword, now I’ll take out my club.’”The case is Hertz Corp. 20-11218, U.S. Bankruptcy Court, District of Delaware (Wilmington)(Updates to include additional markets affected in first and 12th paragraphs)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.

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It was a difficult start to the week for Heron Therapeutics (HRTX). Monday saw shares plunge after the small-cap biotech received another CRL (complete response letter) for its experimental post-operative pain medication, HTX-011.Following the verdict, Stifel analyst Derek Archila acknowledges that the current sentiment surrounding HRTX is negative, but he remains optimistic about the candidate.“While we think investors are losing confidence/patience with HRTX on getting HTX-011 over the goal line (2 CRLs and a PDUFA extension), the issues raised by the FDA in the CRL appear to be of a minor nature, and management’s commentary on the conference call make us confident they are addressable. No issues in terms of clinical efficacy, safety or CMC were brought up in the CRL.” said Archila.HTX-011 was rejected because of four non-clinical issues. Three were linked to “confirming excipient exposure in pre-clinical reproductive toxicology studies,” and one was related to changing the manufacturing release specs.Management stated it plans to request a meeting with the FDA in which they will discuss how to provide the correct information regarding the excipient exposure. At worst, Heron will need to conduct reproductive toxicology studies for six months. The other lingering issue was, by and large, an administrative one which could be easily resolved.For Archila, the main question remains how long it will take to fix these issues and re-submit the NDA. This is hard to gauge. Without the need for additional studies, Archila estimates a new NDA could be submitted within two months. Should new studies be required, on top of the six months it would take to run the study, a further six months would be required to sift through the data and conduct a Class II review.“So, is it possible HTX-011 could get approved in 2020?” Archila asked before answering, “In our view, yes, technically it could, but we would be conservative and assume a one-year delay.”With approval still very likely, Archila keeps a Buy rating on Heron shares. Even though he cut the price target from $29 to $21, there’s still room for shares to gain 36% over the next year. (To watch Archila’s track record, click here)The rest of the Street’s enthusiasm for Heron hasn’t soured, either. All 9 reviews posted over the last three months rated the stock a Buy. HRTX’s Strong Buy consensus rating is backed by an average price target of $31.33, which implies possible upside of a painkilling 102%. (See Heron stock analysis on TipRanks)To find good ideas for biotech stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights. More recent articles from Smarter Analyst: * Online Shopping Trends Another Good Omen for Amazon; Analyst Raises Price Target * Is BlackBerry Stock a Buy Right Now? This Is What You Need To Know * Nike Stock Will Surge 15% From Current Levels, Says Analyst * 2 Beaten-Up Penny Stocks That Look Set for a Rebound

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Uncle Sam best come through with more stimulus checks, or else investors could be battered.

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Tigress Financial Partners Chief Investment Officer Ivan Feinseth joins Yahoo Finance’s Zack Guzman to discuss his outlook on the markets as new Pfizer data sparks coronavirus vaccine optimism.

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If you are looking for the best ideas for your portfolio you may want to consider some of Amana Mutual Funds top stock picks. Amana Mutual Funds, an investment management firm, is bullish on Dupont De Nemours Inc. (NYSE:DD) stock. In its Q4 2019 investor letter – you can download a copy here – the […]

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