The US markets stopped going lower overnight, Dow, S&P500 and Nasdaq recovered marginally by 0.2%, 0.3% and 0.37% buoyed by initial speculation that talks would resume over the economic stimulus stalemate but which turned out not to be the case.
As I mentioned yesterday, the economic stimulus stalemate is what worries the equities market and the Ginsburg replacement affair has just created a further wedge between the two major parties, that it is difficult to see a resolution until after the elections. This situation impacting the markets wobbles the President's hope for a strong market leading into the election, and caused him to sort of backflip on the extent of his TikTok/WeChat threat including delaying a comprehensive ban until Nov 12 i.e after the elections. Then of course we have the courts backing TikTok and now TikTok is asking the courts to place an injunction of the President's ban on the app download. I am less worried if the TikTok/WeChat saga does not escalate into a US-China tech war and at this point I am more than half convinced that it is less of a threat than I had imagined. Remember it was the TikTok/WeChat saga and the prospect of China reprisals on Apple and other US techs in China that I was concerned about and led to my caution on Septimber. Not unusually but ironically, it was POTUS who brought about this uncertainty for tech market participants that created the underlying catalyst for the tech rout that shook the entire market.
Earlier, you have heard me say that the Ginsburg affair could be a game changer. The opportunism of the Republicans to want to replace Ginsburg before the elections and not respecting the wishes of a much revered Supreme Court Judge who fought for women's rights , would in my view not go down well with the women voters and the young. The ninth judge is a deciding judge that could turn the tables for Trump should the election come down to a wire as many expect, and Ginsburg untimely or rather timely death create an opportunity for the Republicans when during the Obama regime, they themselves were the ones who suggested the principle of delaying the appointment for the President who is voted by the people to decide. The Ginsburg affair represented the first sign of Trump desperation to cling to power. The second came yesterday when he was asked if he would allow a peaceful transition of power (if he lost) to which he replied
“We’re going to have to see what happens,” Trump said at a news conference, responding to a question about whether he’d commit to a peaceful transfer of power. “You know that I’ve been complaining very strongly about the ballots, and the ballots are a disaster.”“You’ll have a very peaceful — there won’t be a transfer frankly,” Trump said. “There’ll be a continuation. The ballots are out of control, you know it, and you know, who knows it better than anybody else?
Any leader trying to control the courts, the institutions and not abide by electoral outcome sounds like a leader from an autocratic regime from the developing world, like Belarus according to Mitt Romney , not the "leader" of the free (lol) world.
Maybe a month or two ago, when the US economy started to recover, I'd actually expected the contest to be very close but lately the above two signs which starts to smack of Trump desperation is actually suggesting all is not well on the Republican front. And the Senate once the bastion of the Republicans is increasingly becoming skewed towards the blue camp. Which is why Whitney Tilson, known as "the Prophet" by CNBC and who convinced me about the incredible future of the EV market, has just made a bold prediction that the Dems would take the Presidency and both the House and the Senate. If that is the case, it may not be as uncertain after all if the election results are not close enough to be contested.
A Biden victory if it comes to that would be an end to the Trump put and a period of unusual direct presidential interference /involvement in the stock market. The broad market rally would end , the exuberance would wane but certain sectors would be lifted - green energy, EV, precious metals (more stimulus). Market rally would end is however different to a market crash, if the market were to better reflect economic fundamentals, there would not have been a rally as we saw in the first place. We could perhaps then see a US market that resembles Japan largely going nowhere. This would be why when investing, we would need to be firmly focused on sectors of tomorrow not the past and why it would pay to buy the future at today's price which is a small fraction of what it would be truly worth in the years ahead.
