All eyes on the last presidential debate tomorrow

Abraham George Macro View

We are running into election date very soon. Sadly the media has done its job of framing this election as a personality and character contest. There is no discussion on the rising debt situation or the impending threat of China. I am sure China will come up in the next and last presidential debate which is tomorrow.

All TV channels and newspapers are projecting a Biden victory. Climate change activists all want Trump out. They have unlimited source of funds which will be also supported strongly under a Biden presidency. The Biden plan will be driven by a multi-trillion clean energy plan that should completely transform the US economy.

My hunch is it will be a contested election in which case it will not be good for the markets until it is all resolved. If in a situation like the 2000 elections, this time around it will not be settled peacefully. Think by any chance if Trump wins there will be much bigger civil unrest all across US. We live in interesting times.

Equities

The sentiment indicators are all pointing to a market that is close to an end of a rally. But from past experiences these indicators can remain at extreme levels for longer period than you can imagine.

The Dow and S&P are showing similar price patterns. On Oct 20 the S&P carried prices to 3477 retracing a fib based pattern of its decline from Oct 16. Purely following price action chances are more that prices should decline more today and tomorrow. But a move above 3477 should open doors for a new high before markets turn down again.

Bonds

Bonds continue to subdivide lower and there is no much change to our previous analysis.

Euro

Euro has moved clearly higher from its lows of 1.1688 on Oct 15. It should still continue higher to meet or exceed the high of Sep 01 at 1.2010.

Gold

Gold is crawling higher to challenge the resistance at 1934 from Oct 12. A clear break should push it swiftly to 1985-2000 area.

Abraham George is a seasoned investment manager with more than 40 years of experience in trading & investment and portfolio management spanning diverse environments like banks (HSBC, ADCB), sovereign wealth fund (ADIA), a royal family office and a hedge fund.