17 October 2020
Dear Fellow Investor,
Reviewing the KLSE indexes, only the technology and healthcare sectors stand out and are trending up. The rest are flat to down. There are major uncertainties keeping Asian markets in a holding pattern. Some include Covid, lockdowns, economic stimulus payments, US election, earnings drops, unemployment etc.
Once the 3 November US elections are over many uncertainties will be resolved. No matter who wins, Biden or Trump, expect major stimulus.
Much of the stimulus will flow into the pockets of consumers . This will be positive for consumer stocks and stock markets in general. It will also be negative for the US Dollar as stimulus money will be created out of thin air.
Real interest rates will turn more negative and this will support precious metals. It would be difficult for the Federal Reserve to raise interest rates to protect the dollar as debt servicing would become impossible and this would precipitate business defaults and an economic collapse.
Asian markets and currencies should benefit as capital shifts to markets where there is deeper value. China, small cap Japan, Singapore, Malaysia and Hong Kong are on my value list.
Expect markets to churn until 3 November . Newsflow in Malaysia continues to be negative and pessimistic but there are some bright spots: car sales are increasing, unemployment is dropping, bank deposits are increasing and consumer spending is picking up. There is also progress on the Covid vaccine and this could quickly turn the investment scenarios positive should there be a breakthrough. Our critter of the week is a Corona sniffer
This week no zoom broadcast but hopefully next week.
Take care
Bill
A Corona sniffer.
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