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Polls still have VP Biden as the current front runner and frankly so does the market. Since June 8th the Morgan Stanley Democratic Policy Pair has outperformed the MS Republican Policy Pair by ~35%
The performance of safe assets this September has been the worst in at least a decade during a major equity market drawdown
Chart: Returns on defensive and quasi-defensive assets during largest global equity drawdowns since the Global Financial Crisis. X axis shows dates of all drawdowns in MSCI AWCI of 5% or more.
Quantity-On-Loan on individual US stocks and Non-US stocks (excluding ETFs)
On loan value as a % Lendable Value. Last obs is for 23rd Sep 2020.
"The correction in September to-date has cleared many of the pockets of overextension that were evident in late August; momentum traders are now more neutral US equities, and short interest at the individual stock level has risen to levels seen in mid-2020 suggesting scope for further de-risking has been reduced.
Moreover, the equity weights of global non-bank investors, which were still below post-Lehman averages in end-August, are now further diminished"
Chart: Average of the z scores of JPM short and long lookback period Momentum Signals for Nasdaq and S&P500
GS Sentiment Indicator measures stock positioning across retail, institutional, and foreign investors versus the past 12 months. Readings below -1.0 or above +1.0 indicate extreme positions that are significant in predicting future return
In this brave new world, appears debt don't matter. As Holger Zschaepitzwrites"Looks as if debt does not matter anymore: Italy's 30y yields have hit fresh low this week at 1.75% despite rising debt. Italy debt/GDP on course to 160% when the new draft budget is presented early next week up from 135% at the end of 2019. (via DB)"
For those who have an interest in the subject in relation of all things happening right now. A very goodarticleby Michael Tanchum on the topic.
Eric Nuttallbrings upan interesting point: "Electric car adoption: ignoring the matter of 5 years olds digging for cobalt with their bare hands in the DRC, can someone explain to me how mass adoption happens over a reasonable time frame when all known reserves of cobalt/lithium would be ~ exhausted?"
This month’s downtick in the global PMIs would represent the earliest-ever momentum loss in this indicator after a recession
Chart: Level of JPM global composite PMI in two years before and after the end of seven US recession of past 50 years. Pre-1998 levels inferred from ISM survey.
There has been plenty of talk about the rise in cases are ok as hospitalization rates are low. This appears to be changing.
As George Pearkspoints out"US COVID hospitalizations are up WoW for the first time since July; increase isn't large yet and overall rate remains near best levels since March but this is a giant red flag."
Sahil Bloom has an excellent and simplethreadexplaning the Cantillon effect. Maybe there are some kinks in "trickle down economics"...?
Sometimes, a simple chart can explain a lot of things.
Indian farmers are turning on Modi. FTreports"Angry farmers have blocked highways & railways across India in 2nd day of protests against agricultural reforms that they say will leave them at the mercy of corporate agribusinesses. Ruling BJP pushed farm bills through parl to deregulate ag markets”
On top of covid, another headwind for Modi. Maybe his power is not as safe as some expect.
To little surprise, it appears one market which there has been a v-shaped recovery. Via, "North bluff Capital". Carmax CEO Bill Nash "Carmax asked on wholesale strength: "As COVID unfolded, we saw some of the most rapid depreciation in a very short period of time. We also saw the most rapid appreciation. I think from the depth of COVID, there's probably a $3,000 to $4,000 swing in vehicle value.""
Iceland which had basically eliminated covid is seeing rapid increase in cases. Does not bode well for other countries.
Daily new cases in the US have picked up since September 12, most notably in rural counties