Sunset Strip - 23rd September 2020
Local market was jammed up by global investors on a macro trade out of EU and into Australia. It was triggered by the second wave lockdowns in EU. Euro fell and pushed USD higher and that dragged AUDUSD lower. China looks like their stockpiling of Iron Ore is done as it falls from above $130 to below $120 in the past week. RBA is out of their depth after throwing out the baby with the bathwater with their cuts in 2019…now throwing the towel will be ignored by all. The global investors are running out of EU as more lockdown are likely with case numbers hitting previous peaks. US on the other hand has surpassed 200,000 deaths and Whitehouse still in denial and blame game. It is election cycle and facts are the first victim in the information wars.
The global trade into Australia was clear by the big transition moves in all sectors with big lines going through at the close as well. The currency wars, election wars, geopolitical wars and trade wars are going to keep volatility high into November. Global investors are moving around on a daily basis with changing macro. Market pundits will claim the bounce was due to RBA comments or government infrastructure plans but the reality is far from that. AUDUSD peaked about 4-5 days ago with EURUSD and now both are falling short term while the long term trend still have USD going lower again!!!
US market was higher overnight with a relief bounce. It was another volatile day with DOW starting up 100 then down 100 before the pump in the back end got it up 150. It has been a common thematic in the past week of pump higher into the close... even on negative days. It’s a risk of bounce lead by WFH techs. Bonds not doing much like Gold. US$ higher but most commodities were higher too. It looks more short covering in relief bounce than a sentiment change. EU lockdown dragged Euro lower and US$ higher. Retail, Tech and Property lead while Energy, Banks and Health Care lagged. Overall trend has all the US indices have broken moving average levels while more stimulus looks delayed at best.
Remain nimble, contrarian and cautiously pragmatic with elevated global macro risks!!! Buckle up...it’s going to get bumpy!!!
Second wave makes Euro worse than US$...and that is a low benchmark!!!
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