Sunset Strip - 11th September 2020

Local market started negative on the US lead and then chased the currency higher on global investor buying before fading at the close to deliver a negative day. All sectors were red except Health Care. Tech, Energy and Materials were the worst.

UK in Brexit and pandemic mess again. US and China are decoupling on both sides. US economic and pandemic woes are being exaggerated by election uncertainties. France joins other EU nations in second wave issues while India leads Asian pandemic problems. ECB under delivered last night and drove EURUSD higher till market flipped into risk off trade to push USD higher. US economic data clearly showing the economic recovery has stalled. US employment data overnight showed jobless level was rising in all categories while election uncertainty driving further delays in capex outlook. US Fed will be back next week with more money printing while the next potential Japanese PM is planning to go where no MMT ponzi scheme has ever gone before!!! EU is not far off while US is getting there.

US markets resumed the pullback cycle after relief bounce on the day before despite ECB holding rates and QE program. DOW started over 200 higher and then fell around 700 to be down 450 before finishing 400 down. NASDAQ leads the falls at -2.0% while Russell was hit the least -0.7%. EU markets were positive but rolled into slight negative at their close as ECB loses control of Euro in a US$ implosion. The risk off trade pushed US$ higher but overall tread is down. Bonds higher, Gold flat and commodities lower. All US sectors were red with energy and tech leading the bleeding.

The most argued topic is property cycle. Google all the leading indicators for property market and check the actual data…it ain’t pretty!!! Government is giving handouts to the sector at all levels and yet it’s an over supplied mess. All the property optimistic analysis starts after the 90’s so that they ignore the last real recession cycle. If you think property prices are going to run higher with double digit unemployment, RBA out of rate cuts, government with no recovery plan, historical high debt, budget deficits, low migration, high AUDUSD, China wars and global recession…well…good luck to you!!!

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

New global vaccine strategy....first politicians and then public!!!

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