Sunset Strip - 10th September 2020

Local market started positive on US lead and then faded through day to give it all back before the pump in the last hour delivered a positive finish. 

All sectors except Property were in the green with Gold, Tech and Materials leading the pack. Markets are struggling to digest the economic woes, geopolitics and currency wars as pandemic problems rise again. Australian government and RBA maintain hope as the only strategy with no real reform agenda. Forgot…they have one reform…same as before…repeating the failed trickle-down economics with more tax cuts to add to the already sky high debt. Border wars are the latest fashion for Federal and State governments to distract the public from corruptions like resource management, rorts like sports funding and full blooded management disasters like Aged Care.

ECB update tonight and chances are they are going to under deliver. USD is imploding due to US government turning an economy that was leading the global recovery cycle into an economy that was leading global recession cycle…and that was before the pandemic…now it’s even worse. There is a big chance that ECB is going to lose control and EURUSD takes off. That will push USD lower and jam up AUDUSD. Given RBA is swimming the river denial and Federal Government is fighting the fake border war, the economy is slowly rolling into a brick wall of debt. AUDUSD is going to move towards 80 cents with US election uncertainty and if the US economy tanks…it’s parity party!!!

US market had the relief bounce overnight as expected but late sell off took the shine off by 200 and finished up over 400. USD and bonds came off and pushed up commodities and currencies. Gold is the only play up for two days in a row... just ahead of more money printing from everyone…ECB tonight and US Fed next week...do you have enough? Probably Not!!! Latest GOP stimulus deal is even less than the one before while Biden has a tax incentive to bring back outsourcing (i.e. higher tax to outsource). Less stimulus and more cost…hmmm…danger signs for a slowing economy that needs more handouts!!! All sectors were positive in the US with Gold as the big outperformer while Tech leading the rest. Vaccine issues hit travel and services sectors on delayed recovery while WFH benefits.

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

Don't ignore risks when chasing returns!!!