Handouts are temporary, Economic cycles are permanent

Mathan Somasundaram

Deep Data Analytics

Local market started positive on global macro currency trade and faded through the day as expected. Once again the local market was a captive of the global investors chasing the rising AUDUSD due to weak USD. The main outperformers were resource sectors while banks started positive on global buying but faded on local selling into the close. The positive China sentiment remains the main driver of commodities. Too many things are looking a lot like February all over again…rising macro risk, out of control pandemic and historical high multiples. Handouts are temporary, Economic cycles are permanent.

The US political mess continues while legal challenges to the election result continues to fail. We are unlikely to get a clean cut till individual states confirm result in early Dec. Covid numbers are at 200k per day and Thanksgiving weekend is coming. Due to no plans to curb the spread, the holiday travel will inevitably spread the virus far and wide over the long weekend. Vaccine hope is likely to be dented when 20-30% of the population rejects it due to politics.

It is scary concept that a country that is the highest spender of military has done so little to fight the pandemic despite that will end up being the cause of more death than any war in US history.

US market on Friday was choppy and negative all day and closing at near the low down 220 as Covid spread continues unabated. Mnuchin move to kneecap US Fed emergency lending did that while health care policy update was mainly being ignored. Republicans are talking about stimulus but near their 0.5T while markets need 2T and Democrats are higher. Risk off ahead of short week coming due to Thanksgiving 4 day long weekend coming. Bonds and USD higher but Gold lead commodities higher too. All sectors except Gold was down with Tech, Industrial and Financial leading the falls. Political stress starting to weigh on economy and corporates.

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

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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...

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