Sunset Strip - 16th September 2020

Local market had a positive day with global investors dominating our market to get exposure to the rising AUDUSD and away from falling USD. All sectors were in the green with tech and telecom being the best while utilities and materials were the worst. AUDUSD started weak on NZ data before the fading USD started push it back up again. Gold remains in a positive mode with US Fed update tomorrow.

Global economy has bounced back on re-opening but parts of world are in different levels of restriction due to new waves and old waves. Chinese Yuan has hit 12 month high against USD on positive data while USD remains in pullback mode. US and China are starting to see inflation while both of them are exporting deflation to the world. Markets are waiting for US Fed to print more but it will it print more…probably won’t right now…expect outlook upgrade and ready to do more!!! Recent trend from BOJ to ECB has been to upgrade outlook and stay the current QE path. US Fed is likely to do the same in the last meeting before US election. Global markets are where they are purely due to central bank stimulus and has nothing to do with the strength or quality of the economy. If you remove the QE, normalize yields and shrink the balance sheet, US market will be 50-75% lower in the current economic cycle!!!

US market started positive overnight and then faded through the day. DOW started up over 200 and finished up 2!!! NASDAQ lead with +1.2% bounce while Russell and DOW were flat with S&P in the middle at +0.5%. No new thematics...more of same as before M&A and US Fed theme playing for the optimist. Not much of a move in bonds, currencies or commodities. Oil moved a bit higher on hurricane related supply risk but that won’t last. Property and Tech were the best sectors while Financials and Energy were the worst.

US has managed to deliver a middle east peace pact with very little detail and it is between countries that were not in conflict. But they are directly or indirectly fighting with other countries in the region. For signing up they get access to more weapons to make the middle east even more unstable than before. The timing of this alternative fact based peace pact coming out a month before US election cycle is classic media fodder. Don’t hold your breath for middle east to suddenly rejoice into wild parties after the peace pact as none of the parties that signed it trust each other or expect this to last after the election. Reality is stranger than fiction!!!

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

Live tonight on comedy channel....US Fed will deliver alternative facts!!!

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