US pandemic mess to weigh on vaccine hope in the short term
Local market started negative and stayed there after weak lead from US and China coal problems. US pandemic miss management has daily death rate expected to be above Sep 11 for number of months. Thanksgiving holiday was expected to be another super spreader event and that will start to play out in the next week. Vaccine rollout has started but will not cover the public for another 4-6 months while some part of the population might not take it at all. Markets are expecting parts of US to move into lockdown restrictions as hospital capacity is full. Election uncertainty may be over by some measure after the electoral college system votes were casted to Biden. US Fed meeting needs to deliver as stimulus seems to be missing in action.
Bond market has been flagging reflation and the equity markets are starting to agree as growth to value rotation picks up steam. We are early in this cycle as reflation to pick up dramatically in the next 3-4 months!!!
Overnight US market rolled from being up 350 on vaccine rollout hope to down 150 on looming lockdown restrictions. NASDAQ and Russell holding positive. Russell on value reopening trade while NASDAQ on Alexion up over 30% on AstraZeneca takeover. Bonds, USD and commodities are lower while Oil ticked higher on Saudi Arabian Oil tanker attack. Tech and Retail were the only positive sectors while Energy was hit the hardest. Brexit remains a never ending story and now London has a new faster spreading variant of COVID. US death toll is over 300k and expected to be higher than Sep11 death toll on a daily basis for a month or longer. Vaccine rollout will be 3-6 months away to fully cover...assuming no logistical problems. Restrictions were always needed after pandemic management mess while stimulus is the only growth engine. Electoral college votes will confirm Biden today and US Fed meeting ahead.
Remain nimble, contrarian and cautiously pragmatic with elevated global macro risks!!! Buckle up...it’s going to get bumpy!!!
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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...