Sunset Strip 01st September 2020
The local market was bashed from the open as everyone ran for the door after end of month pump in the last few days. Market sentiment can be very fickle when you put historical high multiples against weak economic outlook. We are starting a new quarter and so far the last 2 quarters started negative.
Overnight US market started negative and then wobbled near the low before month end window dressing boost came in the last hour to limit the damage. S&P500 and Russell were down with DOW while NASDAQ up on Apple and Tesla running on stock splits. That’s right ...retail punters playing leverage bets on more shares than before... it is an illusion of more exposure!!! DOW index calculated on share price weighted...so the stock split in Apple should get index funds to sell Apple on the weight drop. Amazon got FAA approval drone delivery fleet.
US index options are positioned at bullish level not seen since pre DotCom. US$ continues to tank and push AUDUSD above 74 cents. All the economists who were calling 50 cents before and now calling 80 cents. Given the excellent policy work by White House and US Fed, there is a high chance of double dip US recession and that will get AUDUSD to parity!!! Lazy
policy work with no reform has left US in a big mess. Even the Big Buff has followed up his Gold trade with the Yen trade by buying into Japanese traders…basically betting against US$!!! The US$ decline looks to have only just started and that means AUDUSD appreciation has only begun!!!
Best August in 3-4 decades in the US leads to one of the seasonal weakest month in September. The local market and the top three stocks (CSL, CBA and BHP) that represent the three biggest sectors broke below key moving averages today. Buckle up!!!
Remain nimble, contrarian and cautiously pragmatic with elevated global macro risks!!!

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