Market getting hit by US election overload and pandemic reality

Local market fell from the start on mixed US Tech results after US market close before getting hit again in the last hour to finish a solid negative day as the end of the month. Global investors were getting out and window dressing from local investors were cannon fodder in the selling pressure. Energy and Banks were the only positive sectors but that’s probably helped by the currency trade and fact that the whole market is short both of those sectors. US election is the main uncertainty into next week. We all know European ponzi scheme of money printing will not stop as pandemic hits all parts. US is ignoring pandemic hitting new highs due to political polarization. It is funny how the biggest superpower in the world is in denial about the worst pandemic in a century. If people weren’t dying, you would laugh at the stupidity…but such is life in the new century!!! We are now almost certain to get economic downgrades for Q4 and that will translate to corporate earnings downgrade. Central banks are going to be under pressure as inflation and bond yields are rising into a pandemic cycle. US election results will be delayed and create even more uncertainty over the next week. Markets want the election to give presidency and atleast one house to one side. If the presidency goes to one side of politics while both houses go to the other side of politics, we are looking at a 4 year lame duck president….and that will tank the markets!!! We may be experiencing the new FOMO (Fear Of Momentum Over)!!! US market performance over the last week shows economic, pandemic and election risks are hitting returns!!!

Overnight the US market had a bounce back day on the back of techs. Investors were taking a big bet on big techs ahead of the results. They were always expected to beat expectations easily due to very weak forecasts but the multiples need them to fly in a Covid recession as the world splits between US and China aligned techs. DOW was volatile between flat to up 150 all morning before an afternoon pump got it over 300 up...but that faded into the close to be up 140 odd. NASDAQ was the best as it got near half the bashing from the before back as Techs ran into results. US$ and metals mainly up while Bonds and Oil down. European markets were flat despite ECB more or less confirmed more stimulus in Dec. The Ponzi scheme needs endless stimulus in Japan, EU and US...so no real surprise there. Economic data was mainly showing slow recovery in play but election uncertainty and pandemic wave will take it backwards in Q4. Bond yields are rising again and that will create a challenge for multiples and raise questions about real inflation!!!

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

Market getting hit by US election overload and pandemic reality!!!

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