The month is over, in this post I take July 2020 Financial Markets Overview and US Presidential Election.
It seems to me that we are witnessing unreal financial markets and I stress this word because I believe that stock market does not represent the reality of the facts.
Look at the S&P 500, Nasdaq, Dax, Nikkei have recovered brilliantly since the collapse of the financial markets in March. We are in a risk off context so stock market should go down but it is not so, just look at the US GDP data which went better than expected.
But has the Covid (if I’m not mistaken) sowed death and fear all over the world, if real economy is in trouble as financial markets rise?
Good question, we are faced with a paradox that I myself struggle to understand and I am amazed at all these funds become “bulls”, since they no longer know where to invest, they buy technological stock to earn something.
Let’s move on to the quarterly results of 3 Nasdaq companies:
Apple made 60 billion dollars, Covid forced people to stay at home, so IPad and Mac purchases increased, while smartphones due to the forced closure of Apple Stores underperformed.
Facebook came out brilliantly from Covid, posting 10% gains in the second quarter of 2020.
Amazon is the queen of 2020 with stellar revenues compared to the same period 2019, we are talking about 90 billionth revenue.
Have you seen the price/earnings?
The p/e that made me laugh is Zoom, I think we are facing a real bubble risk on financial markets, the world stock exchanges are not representing the reality but I think they are bluffing. Let us not forget the billions of dollars or euros that have been injected in recent months, but what scares me the most is how much money will be worth?
Financial systems have too much liquidity, so you understand why funds and investors continue to buy stock and this the result why markets goes up.
Since this situation is unreal sooner or later people will understand that it is a bluff and you will see the bomb that will explode on financial markets. For those who bought Put options will be glory days after so many months of suffering.
Seriously speaking, an advice for those who trade (not to mention options or trading on commodities) on stocks or bonds, is to stay not too long exposed in the market. Do trades with stop loss because on the day that financial bubble will burst, financial markets will collapse heavily.
In November there will be the election of the future president of the United States, it will be a head-to-head between Donald Trump and Joe Biden. Polls give favour (60%) Joe Biden, it seems incredible but it is, there are still a few months left, but Trump’s handling of the Covid has not been the best.
If Joe Biden wins, the market could correct the downside for uncertainty about how he will administer the country. Joe Biden’s program is set out on:
- renewable energy development
- Electric mobility
- Taxation on technology and healthcare securities
- Encouraging the public sector
- Taxation on income from financial transactions for “rich” Americans
If Biden wins, there will be so many changes and financial markets will be affected by this new policy.
Be careful in the period between August and November, before the presidential election the stock market will sparkle.