US election debates starts tomorrow

Abraham George Macro View

President Trump has selected Amy Coney Barrett as his Supreme Court nominee. This was more or less expected. Democrats are very aware that support for her confirmation is equivalent to ending the Affordable Care Act. President Trump makes no bones about hiding that too.

Democrats who do not want to highlight any religious affiliations of Barrett (Barrett is a practicing Catholic) are very careful in their words of criticism lest it may hurt their presidential chances. Never in recent history has both parties been so divided on many matters.

Most important is the first presidential debate that will take place tomorrow. Both candidates are going to be in the same location with Fox News reporter Chris Wallace as the moderator. Going forward the debate could be the reset button for the election. All the polls up to this point really doesn’t matter.

With both parties at such logger heads another fiscal stimulus ahead of the elections is unlikely. But President Trump could use his executive order to reallocate and reauthorize some of the unspent money to the hardest hit small businesses where subsidies have run out. Brexit negotiations are also at a critical point. Time is running out and with only a couple of weeks to go until the EU summit, they have to find a compromise.

Equities

The wave structures in the major indexes are playing to book. The move up to 3307 on Friday could have ended the rally or a further move to 3320 to 3335 can happen this week. Once it tops out the down move could be swift, strong and deep. Our eyes are focused on levels close to 3000 to 3050.

Bonds

Bonds have continued to frustrate again with no clear breakouts. As long as it remains below 178^17 the downside is our preferred path.

Euro

The Euro traded down to 1.1612 on Friday. A snapback rally can help to unwind some short positions but it is not required. If it happens, it should be a good selling opportunity and a move down to the 1.1400 handle should be on the cards. A move above 1.1870 will clearly alter this outlook.

Gold

Gold entered the critical window where we are expecting some strong support. The 1825 to 1850 area should be strong. However the weakness in Silver is at odds with Gold. So we have to be careful. Any weakness in Gold below 1765 will ignite our bearish preferences and will abandon any upside pressure.

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.