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New Normal Insight
Markets start to worry: a bad jobs report, then bad inflation data
Investors are starting to reassess former favourites such as Tesla
Biden aims to grow the economy from the bottom up and middle out.
President Biden is the first President since Bush Snr not to worry about the stock market.
Excitement continues to build in most financial markets, with commentators highlighting the potential for a second ‘Roaring Twenties’
The bulls were out in force over the Easter period, supported by the relatively low level of trading
Market fundamentals are starting to matter again
The rising dollar is making commodites like oil more expensive in local currencies.
Traders are starting to realise the Federal Reserve is no longer coverng their back.
Rising interest rates will continue weighing on equities. Since 2009, the Fed has focused on financial markets, hoping to impact jobs and growth.
Markets are starting to realise you can’t have a V-shaped recovery without rising inflation and bond yields
If “everyone knows” a new bull market is now underway, who is left to buy?
Retail investors are busy topping up the “punch bowl” originally filled by central bankers
Our move to become “cautiously bearish” on the S&P 500 proved prescient.
Markets are starting to realise that Biden’s focus is on improving the lives of working and middle-class Americans, not new S&P records.
Hedge funds have been happily selling the US dollar and buying commodities for some time, creating the illusion that a strong economic rebound is underway.
An insurrection in the US capital, the formal election of the next President interrupted, and 5 people (including a law enforcement officer) dying in armed clashes. But as happens in financial bubbles, the markets sailed on untroubled.
Investors have been spoilt in recent years by the absence of risk. 2020 confirmed the ‘risk off’ mode as central banks ramped up their support. But will Wall Street continue in party mood, despite the growing problems on Main Street?
“Fundamental reality will start to dawn, as it always does, in the end”
“The rationale behind today’s euphoria seems based more on illusion than reality”
” Investors expect $trns more stimulus from Janet Yellen & Jay Powell”
“Markets cycle between greed and fear”
“Everyone hopes that the new vaccines will prove effective. But we doubt there will be a quick return to ‘business as usual’.
“Bliss was it in that dawn to be alive, But to be young was very heaven!” But this early excitement is unlikely to last once pandemic reality returns to the headlines
There are 10 weeks till the Biden Presidency is due to start. But Donald Trump has refused to concede the race, and Senate control is still in doubt.
It seems likely that Joe Biden will win Tuesday’s Presidential election. We look at the potential impact on financial markets.
50 million Americans have already voted in the Presidential election. Turnout is on course to be the highest percentage since 1908. This week we analyse President Trump’s agenda if he is re-elected. Next week, we will look at Joe Biden’s alternative for the country.
Supply/demand balances are weakening in oil markets, whilst a Fed Governor has highlighted the serious problem that developed in Treasury markets during the March collapse. We also focus on the economic impact of the Perennials – who will provide the majority of US/Western and Global population growth over the next decade.
Volatility has begun to rise in oil and bond markets, as we expected. China’s upcoming ‘Vision 2035’ seems likely to prove a major game-changer for its economic model over time.
Low volatility is either a sign that things are going well, or of complacency. As we go into Q4, “fear indices” for bonds and stocks remain at low levels. But oil prices have begun to weaken, whilst Europe has slipped into deflation.
Welcome to the first issue of New Normal Insight, which has evolved out of our Outlook briefing. It continues our focus on providing insight on the key financial markets – oil, stock markets and interest rates – along with other critical areas such as China.