Trump’s health situation surpasses all other market news

Abraham George Macro View

The media is all about President Trump’s positive COVID status. Media thrives on sensationalism and they overemphasize the ‘cases’ data point. They bring the possibilities of death in the equation too. We are already more than 8 months since the first case was recorded in US. The death to diagnosed case rate is about 2.8%. Back in June the CDC also stated that at least 10 times as many people have it or have had it (undiagnosed). If we applied that factor to the current case count, the death rate falls to 0.28%.

President Trump and the First Lady are being treated at Walter Reed one of the best hospitals in the world. So in all probabilities think they should be fine and released from the hospital in a couple of days. The death to real infection rate is within the range of the annual flu.

Meanwhile, the current situation can create a bit of uncertainty and volatility. The Democrats have passed a revised version of their June stimulus which is now at 2.2 trio dollars. They have included lot of money for infrastructure too. It is more likely Steve Mnuchin and Mark Meadows who are handling this for the republican-led senate will give in to the Democrats ideas.

Equities

There was a lot of volatility on Friday and everything points to the type of price action you normally see with a topping pattern. A down move can start as the market opens this morning or there is a chance the S&P 500 can move up to 3440 to 3450 before it tops out.

Bonds

Though Bonds moved to the 175 handle only a break below 175 will confirm that we are breaking out of the ranges. It is important that the bonds stay under 178^17.

Euro

While we are bearish on the Euro, the price patterns have not been very convincing. It is important the Euro stays under 1.1775 to 1.1800. A move below 1.1600 should eliminate any real upside pressure.

Gold

Gold has been respecting the supports and resistances that we have been pointing out. If it continues to hold resistance between 1.1915 to 1.1925 there is risk that it will move down to challenge supports at 1.1800. On the other side if it establishes above the mentioned resistance area it could challenge the previous highs at 2072 and more.

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.