US politics delivers MAWA (Make America Weak Again)
Local market started positive on better stimulus hope and improving AUDUSD before White House moves on handouts and healthcare pulled it back to flat. US market delivered a positive lead mainly on the fact that Congress and Senate have started to talk stimulus. We still don’t see any deal being done in the near term as White House remains on the war path to turn the elections result while delaying any transition help. Treasury Secretary move to stop US Fed to stop it’s emergency funding facilities to curb new administration’s ability to respond. Most Asian market sentiment took a hit as global investors started to worry that White House may move to scorch earth strategy as the election result legal challenges fail. White House has announced that they will have new strategy on driving drug prices lower tonight. Policy update in caretaker mode in a key sector during a pandemic does not give confidence to investors. US political uncertainties are driving elevated global political risk. US economy is showing cracks as seen from recent data points like jobs and retail sales. We are already seeing bankruptcies piling up through the pandemic and US Fed removing emergency funding will make it worse!!!
Overnight US market was lacking catalyst to move much as it started down 150 odd on Covid cases hitting 170k per day despite positive update from Oxford vaccine. The news about stimulus talk in the last hour got it up 50 at the close. Usual risk off trade was in play with Bonds and USD higher. NASDAQ was the best but Russell outperformed S&P 500 and DOW to keep up. Value and reflation trades are in play. European markets were down on lockdown and US is going there. Energy and Tech were the better sectors in an undecided market. Job data further showed Economic weakness that we saw in retail sales data.
Remain nimble, contrarian and cautiously pragmatic with elevated global macro risks!!! Buckle up...it’s going to get bumpy!!!
Not already a Livewire member? Sign up today to get free access to investment ideas and strategies from Australia’s leading investors.
Enjoy this wire? Hit the like button to let us know.
MORE ON Equities
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...