Sunset Strip - 1 October 2020

Local market jumped up on the open with US market bounce and then faded through the last few hours to finish a positive day. The dominant player in the marker was the global investors chasing currency. Turnover was weak with big stock lines were going through the market all day.

US presidential debate/debacle remained the main talking point globally overnight. Number of potential vaccines have come out and clarified that they won’t be able to deliver before election. We had positive ADP data in the US overnight that built on the momentum from positive manufacturing data from China. Whitehouse talked up getting stimulus through around $1.6T while democrats are sitting near $2.2T. Stimulus hope is the main catalyst as economy is running on emergency surgery. No stimulus and it will go belly up!!! US$ has started to fall over as inevitable money printing is coming…just a question of how much!!!

Locally government is throwing napkin policy patchwork to distract from the disaster that is debt and deficit for decades to come. The new growth drivers are cherry picked small stimulus that will not change the dial. Everyone in the media is preoccupied with what RBA is going to do but the reality is that it does not matter much at all!!!

China has started their week long “Golden Week” holiday period and NSW has a long weekend with Monday off. School holidays through next week. Turnover to remain weak from local investors!!!

US market started positive overnight and ran up over 500 on stimulus hope and better economic data...then it halved its gains on potential fiscal deal getting pushed back again before recovering to finish up 330. Stimulus deal is like the trade deal...it will get dragged as long as they can and then a useless deal will be signed but by then everyone will be over it. Bonds, Gold and US$ were a bit lower while A$ and commodities were a bit higher. DOW lead the run overnight while Russell barely moving. Energy and Industrials were the weak sectors while Health Care and Banks the best. The month/quarter end macro asset allocation into equities helped but it’s the first negative month since March. China remains a better, stable and preferred recovery story.

Remain nimble, contrarian and cautiously pragmatic with elevated global macro risks!!! Buckle up...it’s going to get bumpy…new month/quarter has started!!!

October is the most volatile month for the US market...even if you strip out crashes and elections!!!