Bears are seeing cracks in the central bank protection strategy

Mathan Somasundaram

Deep Data Analytics

Local market had a positive day but the momentum seems to be running out of gas from the global asset allocation trade. The key positives for the market remain with the stimulus upside from weak economic recovery. Election uncertainty and Covid pandemic are the overhang on the global economy struggling to recover from the recession damage. Macro trade back into equities and bonds seems to be fading while BOE adding QE and ECB / US Fed are talking positive on stimulus. The relative calmness in the bond market over the last 24 hours suggests we may be at the back end of the macro asset allocation trade. Pandemic cases are rising fast in EU and US while geopolitics between China and Australia has reached danger territory!!!

US election is in the late cycle as fraud calls and legal challenges are flying thick and fast as the numbers get tight. The latest election update shows that Democrats are likely to flip the White House than Republicans holding it. Senate looks safe for Republicans but nothing is certain. Numbers are moving around due to historical high voting turnout and historical high pre/postal voting. We should have enough data in key states to put one side over the line on the weekend. Elevated risk of market and social volatility due to the polarized state of US!!!

Overnight the US market had another solid positive day while bonds took a break. Election uncertainty and social unrest remains elevated while we may get clarity on the numbers later today...pre legal challenges!!! BOE added more QE while US Fed and ECB were flagging more needs to be done. Looks like everyone waiting for the election mess to clear before acting... unlike wasted RBA cuts that just boosted bank profits. USD and Oil fell again while Gold running up again. AUDUSD moved closer to 73 cents. All sectors in the green except Energy with Gold ripping higher. There is a lot of water to go under the election bridge before it settles...even if the numbers give a guide today!!!

Remain nimble, contrarian and cautiously pragmatic with elevated global macro risks!!! Buckle up...it’s going to get bumpy!!!

Not already a Livewire member?

Sign up today to get free access to investment ideas and strategies from Australia’s leading investors.

........
Deep Data Analytics provides this financial advice as an honest and reasonable opinion held at a point in time about an investment’s risk profile and merit and the information is provided by the Deep Data Analytics in good faith. The views of the adviser(s) do not necessarily reflect the views of the AFS Licensee. Deep Data Analytics has no obligation to update the opinion unless Deep Data Analytics is currently contracted to provide such an updated opinion. Deep Data Analytics does not warrant the accuracy of any information it sources from others. All statements as to future matters are not guaranteed to be accurate and any statements as to past performance do not represent future performance. Assessment of risk can be subjective. Portfolios of equity investments need to be well diversified and the risk appropriate for the investor. Equity investments in listed or unlisted companies yet to achieve a profit or with an equity value less than $50 million should collectively be a small component of a balanced portfolio, with smaller individual investment sizes than otherwise. Investors are responsible for their own investment decisions, unless a contract stipulates otherwise. Deep Data Analytics does not stand behind the capital value or performance of any investment. Subject to any terms implied by law and which cannot be excluded, Deep Data Analytics shall not be liable for any errors, omissions, defects or misrepresentations in the information (including by reasons of negligence, negligent misstatement or otherwise) or for any loss or damage (whether direct or indirect) suffered by persons who use or rely on the information. If any law prohibits the exclusion of such liability, Deep Data Analytics limits its liability to the re-supply of the Information, provided that such limitation is permitted by law and is fair and reasonable. Copyright © Deep Data Analytics. All rights reserved. This material is proprietary to Deep Data Analytics and may not be disclosed to third parties. Any unauthorized use, duplication or disclosure of this document is prohibited. The content has been approved for distribution by Deep Data Analytics (ABN 67 159 532 213 AFS Representative No. 1282992) which is a corporate approved representative of BR Securities (ABN 92 168 734 530 and holder of AFSL No. 456663). Deep Data Analytics is the business name of ABN 67 159 532 213.

1 topic

Mathan Somasundaram
Founder & CEO
Deep Data Analytics

Over 25 years’ experience in the finance/tech industry. Mathan has worked extensively in all parts of the finance sector (i.e. County NatWest, Citi, LIM, Southern Cross, Bell Potter, Baillieu Holst and Blue Ocean Equities). Currently Founder and...

I would like to

Only to be used for sending genuine email enquiries to the Contributor. Livewire Markets Pty Ltd reserves its right to take any legal or other appropriate action in relation to misuse of this service.

Personal Information Collection Statement
Your personal information will be passed to the Contributor and/or its authorised service provider to assist the Contributor to contact you about your investment enquiry. They are required not to use your information for any other purpose. Our privacy policy explains how we store personal information and how you may access, correct or complain about the handling of personal information.