Week in a Glance: US elections, central banks, NFP and pandemic

9 nov. 2020

The main event of the past week was the US elections. And they were rather surprising. The Blue wave, widely expected by experts and analysts, has failed. The name of the new President was not announced until Saturday - the candidates were extremely close. But in the end, Biden won.

Although Trump has not given up yet and is going to sue. So, we have the worst-case scenario. Especially when you consider that the Democrats have lost a number of seats in the House of Representatives, and the Senate, it seems, will remain under the control of the Republicans.

In general, despite the optimism that prevailed in the US stock market all week, we consider it clearly premature. The risks are quite material and very significant.

Other events, naturally, faded against the background of the elections, but this did not make them less significant. The pandemic set new records both in the world and in Europe and the United States. And if Europe has already closed, then the United States has so far been focused on the elections. But the steady excess of 100,000 new cases per day makes a return to this question inevitable. This means that the damage to the economy is inevitable.

In this light, the revisions towards lowering their forecasts for economic development by the EU have become quite indicative.

The Central Banks of Australia, England and the USA met during the week. And if the latter have not yet begun to change the parameters of monetary policy, the Reserve Bank of Australia lowered the rate and for the first time introduced a quantitative easing program, and the Bank of England increased QE size in UK. That is, the central banks have already begun to act, which only confirms how serious the situation is.

The statistics on the US labor market came out better than forecasted, the markets ignored it, firstly, there was no time for this due to the elections, and secondly, in the light of the future lockdown, it is still not representative, since all past trends will be instantly crossed out.

Based on the mentioned above, we expect that the current week will be sobering for the markets, that is, stock indices will go down where they belong, oil quotes will go down, and the dollar will strengthen.