Geopolitics + Pandemic + Asset Bubbles = Weak Economy + Money Printing
Local market was negative for the third consecutive day despite positive US lead and positive China data. It was all about geopolitics and pandemic mess in the US. US pandemic is breaking records and CDC expects restrictions to come in ahead of the Christmas and New Year holidays. Geopolitics is playing in multiple layers now. Russia test new nuclear bomb. US is about to blacklist more Chinese businesses while in transition. UK is moving to remove China tech in their communication platforms. Israel is moving into Palestine regions while being implicated by Iran on the attack that killed their senior nuclear scientist. US, Israel and Saudi Arabia are trying to curb Iran ahead of transition. China is taking more steps to curb Australia. What could go wrong when you are sitting on asset bubbles around the world while economies are still stuck in recession? Don’t worry…Central Banks are about to roll out their money printers and save us all…well there is no plan B!!!
US Fed are on the path to endless money printing as USD breaks lower to new multi-year lows…as seen below. Reflation trade as USD falls and bond yields grind higher. Currency market betting on US Fed debasing USD and buying bonds. Weak USD, more money printing and lower yields should support the rebound in Gold after recent pullback on vaccine and recovery hope.
US market had a weird undecided low turnover short trading day on Friday night that delivered a positive close. NASDAQ lead with Russell close second. DOW and S&P were positive but very slightly. Tech, Health Care, Gold and Retail were the only positive sectors. Bonds higher, USD lower, Oil lower, Gold lower and Copper higher. There wasn’t much to read through today. Vaccine optimism is getting more questions as more data gets peer reviewed. Pandemic getting worse in the US with no stimulus chat. Geopolitics keeps rising globally.
Remain nimble, contrarian and cautiously pragmatic with elevated global macro risks!!! Buckle up...it’s going to get bumpy!!!
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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...