COVID-19 in Europe, US Elections & printing money.
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The narrative so far was: US is doing much worse job on COVID-19 than EU, US election is risk off event and ECB printed enough money so far.
I believe all those “narratives” are false.
30-Oct-20 Baselines:
COVID
US vs Europe Deaths
US vs Europe “Cases”
Big caveat to COVID-19 Deaths & Cases:
- Not every country uses similar COVID-19 “accounting” (e.g. US vs Germany, or Czech Republic vs Slovakia, etc.).
- The more you test — the more cases you catch. If you did not test at all, zero cases, deaths only, etc.
S&P500 and DAX
DAX
March 2020: almost 40% drawdown!
October 2020: already almost 20% from ATH.
S&P500
March: almost 35% drawdown!
October: less than 10% from ATH, to date.
This is the COVID-19 market baseline: DAX already shitting the bed, S&P500 holding better. Yet
BLM: COVID-19 Truth Not Everyone is Experiencing
There is a part of public that does not believe what the Government and media are peddling:
- It’s the BLM protest movement.
- Maybe they know it consciously or subconsciously.
- Millions of people walked and protested, others even rioted.
Yet, there are no mass COVID-19 deaths spikes reported from these protest.
They experienced it first hand — the younger population is much safer. No other nation had this experienced, and that will also have tremendous impact on their economies.
US Elections
At first it may look like risk off event. Clearly. I believe there are only two options:
- US Elections will be non event whoever wins (market wise). Results in, mess finally over.
- US Elections will get very violent (court disputed).
There will be no middle ground. I also believe the polls are skewed.
However the markets will react flat to favourably, not violently. I also expect smart money to move in before the election (first movers & betting markets basically).
S&P500 has been slowly transitioning to US 10-Year decentralised treasury for some time already.
That would also explain the CPI (fake inflation) vs the real inflation.
Therefore the US election will be non event for markets.
FED & ECB
This is easy one. FED can & did move much faster than ECB; printed enough money, and yes in unprecedented ways.
The guys in European Central Bank are sitting on their asses now. EU is late again. Maybe they want to wait till they see violence in the streets, really?
EU has to print more and will print more, there is no other choice.
EU is bleeding their economies with the stupid lockdowns and strong Euro.
This would be an interesting experiment:
ECB lends money directly to its citizens:
EUR 10,000, 1% APR, 10 year duration, payback at the end (all).
I know, I know, I know. At the same time I do not care about “why it’s bad idea”. You can’t model it, so keep calm.
This “triangle” EU COVID-19, US Election and FED vs ECB will be very interesting to watch.
Despite all, there is only one prediction: 2021 should be much better than 2021 ;-)
