November Reign: IA Flash News
November’s MBMG IA monthly outlook is bursting at the seams with a review of how our concerns about October largely came to pass and whether this has given rise to any indications of asset mispricing or flawed economic assumptions. We ask the question whether the Indian Summer is over for risk assets, especially the highest Beta, such as FANGs. Since our MBMG Flash ‘Too DAMN hot’ on October 22nd, our ALT-FANG, Domino’s Pizza (DPZ) has outperformed the more illustrious group of Facebook, Apple et al.
Much will depend, in the immediate term, on the outcome and aftermath of the US election.
The outlook contains highly stylized simplified representations of possible consequences of the 5 most likely outcomes of what is in many ways the most controversial US election so far, such as:
Uncontested Biden victory, Dems hold the House of Representatives, Dems gain Senate – markets will initially respond badly as they’ll see this as negative in terms of tax implications, stimulus fight will continue between congress & senate until January, Big tech will be worried, and lame duck session will quickly see US equities continue to look ugly – treasuries will remain soft until next year but Muni bonds would be expected to do well, especially in Democrat strongholds.
Below are simplified baseline assumptions for the gold price in the various outcomes:
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