Sunset Strip - 12th October 2020
Local market was aimless most of the day despite the optimism in Chinese markets before getting jammed up in the last hour by global investors chasing a stronger AUDUSD. Aussie fund managers were still in holiday mode as turnover was weak. Chinese markets are up near 2.5% due to reform policies expected to drive a post pandemic economy. China remains the main country/region showing stable recovery path and the Yuan is flying on the back of that. The Yuan peg to USD keeps rising and the Chinese are allowing that to play out. They are preparing for the next USD decline cycle. USD global currency standard is gradually being weakened by Yuan in different parts of the world. It may not happen tomorrow, but the cracks have started to appear and the lack of reform will keep the move away from USD. US 30 year bond yield has broken above 200 day MA for the first time in years as cost inflation starts to pick up. Economic recovery fading with markets as White House remains the underdog in the election cycle. Elevated risk of geopolitics taking centre stage in the next month as Chinese economy holds recovery cycle and US doesn’t!!!
The positive drive in the last hour for local markets were in Tech and Banks while Energy and Utilities were the big negative sectors. Fintechs were in M&A play with Bravura acquiring and Link getting a bid.
Globally pandemic first, second or third wave is hitting all parts…even China. Emerging Markets are a hotbed of the pandemic and that is unlikely to change in 2021. Even a vaccine in the next 3 months will not reach them for a year.
US market moved higher on Friday with weak economic data, clarity on election result and stimulus hope to deliver the best week in 2 months. DOW ran up 300 by lunch and faded to close up 160. UK growth was weaker than expected and that set the weak economic outlook for EU region in second wave. US job data also confirmed recovery fading. Trump pushed up stimulus deal worth $1.8T and then wanted one above Democrat deal of $2.2T... not sure what is real anymore. The election odds are moving towards Democrats and markets are pricing in low risk of uncertainty. Democrats holding most swing states, debates seem to be off and Ted Cruz warns of election bloodbath like post watergate. Bonds and US$ were lower and commodities higher ... except oil struggling with demand worries. Gold ripping higher again and market realizing money printing is inevitable. Gold was the best sector by a margin while tech and retail were next best...energy and property were the worst. Expect some left field move by Whitehouse as the election moves away from them. Chinese are ramping Yuan higher against US$ as they expect devaluation move...they are usually right!!!
Remain nimble, contrarian and cautiously pragmatic with elevated global macro risks!!! Buckle up...it’s going to get bumpy…new month/quarter has started!!!
Election worries and weak economy points to geopolitical risk coming!!!
Not already a Livewire member?
Sign up today to get free access to investment ideas and strategies from Australia’s leading investors.
pdf attached
SunsetStrip20201012.pdf
........
Deep Data Analytics provides this financial advice as an honest and reasonable opinion held at a point in time about an investment’s risk profile and merit and the information is provided by the Deep Data Analytics in good faith. The views of the adviser(s) do not necessarily reflect the views of the AFS Licensee. Deep Data Analytics has no obligation to update the opinion unless Deep Data Analytics is currently contracted to provide such an updated opinion. Deep Data Analytics does not warrant the accuracy of any information it sources from others. All statements as to future matters are not guaranteed to be accurate and any statements as to past performance do not represent future performance. Assessment of risk can be subjective. Portfolios of equity investments need to be well diversified and the risk appropriate for the investor. Equity investments in listed or unlisted companies yet to achieve a profit or with an equity value less than $50 million should collectively be a small component of a balanced portfolio, with smaller individual investment sizes than otherwise. Investors are responsible for their own investment decisions, unless a contract stipulates otherwise. Deep Data Analytics does not stand behind the capital value or performance of any investment. Subject to any terms implied by law and which cannot be excluded, Deep Data Analytics shall not be liable for any errors, omissions, defects or misrepresentations in the information (including by reasons of negligence, negligent misstatement or otherwise) or for any loss or damage (whether direct or indirect) suffered by persons who use or rely on the information. If any law prohibits the exclusion of such liability, Deep Data Analytics limits its liability to the re-supply of the Information, provided that such limitation is permitted by law and is fair and reasonable.
Copyright © Deep Data Analytics. All rights reserved. This material is proprietary to Deep Data Analytics and may not be disclosed to third parties. Any unauthorized use, duplication or disclosure of this document is prohibited. The content has been approved for distribution by Deep Data Analytics (ABN 67 159 532 213 AFS Representative No. 1282992) which is a corporate approved representative of BR Securities (ABN 92 168 734 530 and holder of AFSL No. 456663). Deep Data Analytics is the business name of ABN 67 159 532 213.
1 topic
Over 25 years’ experience in the finance/tech industry. Mathan has worked extensively in all parts of the finance sector (i.e. County NatWest, Citi, LIM, Southern Cross, Bell Potter, Baillieu Holst and Blue Ocean Equities). Currently Founder and...
Please sign in to comment on this wire.