Sunset Strip - 19th October 2020
Local market started positive with global investors chasing AUDUSD higher for the first two hours and then faded slightly to finish a positive day on weak volume. The weak volumes suggests local fundies continue to sit on the sidelines for US election to play out. The strong China data confirms the market view that recovery story post pandemic is holding up well while expectations were beaten or met in most categories except GDP growth. Market had strong growth expectations and the GDP growth miss dragged the AUDUSD lower but the global investors were happy to keep Aussie exposure with USD looking weak. All the sectors were up as you would expect with global index buying with Tech and Health Care leading. Covid numbers are remaining low in Australia while NZ travel bubble seems a management debacle. Australian and NSE government are getting dragged into corruption scandals in dodgy property, infrastructure and visa deals. Central Banks continue to talk more stimulus and QE but the economy need reform to fix structural problems that they can’t solve with cheap debt. We continue to solve debt problem with more debt and that has never worked out through history!!!
US market started Friday trading over 300 up on positive retail data and vaccine/stimulus hope but as usual the sentiment faded and closed up 100 with NASDAQ and Russell in negative territory. Retail sales were positive but mainly driven by car sales...used cars... driven by people staying away from public transport...global trend. It was also the last month with enhanced handout...not sure that will hold in October. Vaccine hope was about Pfizer potential getting emergency tag in late Nov...if the drug works... again not built on facts. Stimulus seems inevitable as Trump promised big and beautiful while Republicans are sticking to small and ugly. Bonds, US$ and commodities were a bit lower. Energy and Retail were down the most while Utilities and Health Care were the better performers. EU markets bounced from yesterday’s bashing. Covid numbers are out of control in EU and US. Expect US to go into lockdown restrictions after election like in EU. US election always gets close as you get to it and this won’t be any different. Millions are pre voting and that may delay results and create more uncertainty and unrest.
Remain nimble, contrarian and cautiously pragmatic with elevated global macro risks!!! Buckle up...it’s going to get bumpy…new month/quarter has started!!!
Central banks creating a bigger mess by trying to fix debt with more debt!!!
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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...