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- Markets are still quite volatile, but the skew seems to be +ve. The coronavirus still shows no sign of abating, but they key message seems to be don’t fight against the FED. U.S/China organized a talk in Hawaii, although it seems sentiment is quite positive between the two relations. China plans to accelerate purchases of American farm goods in accordance with Phase 1 trade deal – seems both sides don’t want to escalate things just as of it.
- However, I think US/China relations is a big headwind that the market has yet to priced in. Or maybe it doesn’t matter – I mean unemployment is double digits in the US, global economy is set to contract >5%, global pandemic probably going to kill a few million people, but stock markets back to record highs!
- Are we in a second wave? Mike Pence thinks there’s no second wave and that the virus is pretty much controlled. See here. Many think we are still in first wave, but think people are missing the point – whatever wave we’re in, the market has already discounted this possibility & doesn’t think will be an issue.
- Bottom Line: Markets probably still optimistic, as all the bad news has been digested by the market (whether appropriately or not).