Equities race higher by 1%
Markets remain upbeat bout rebound
Nikkei1.32% Dax 2.29%
UST 10Y 0.668
Asia and the EU
North America Open
Markets were in a decidedly upbeat mood rallying by 1% in morning European trade as traders ignored the latest political bombshell and focused on the global recovery story.
At the market open New York Times after obtaining the President’s tax returns reported that President Trump paid on $750 in Federal taxes while his businesses were swimming in losses and he has $400M+ repayment due next year that he personally guaranteed.
At any other time in history, such revelations would be cause for turmoil but the current hyperpartisan environment it is unclear just how much political damage these revelations will produce. Certainly, on the face of it, the sight of a presumable multi-billionaire paying less in Federal taxes than someone who earns a poverty-level salary of $18,000 would outrage voters but President Trump’s base appears to forgive him anything and the key question is whether this latest bombshell will repulse enough moderate and independent voters to swing the election Biden’s way.
For now, the markets are happy to ignore the political story and continue to play the rebound theme. Investors are moving back into the hospitality sector on the assumption that travel patterns will continue to improve. This seems a much too optimistic view to us as COVID cases are beginning to rise once again in the Northern Hemisphere with the advent of colder weather. Recent scientific studies indicate that COVID virus remains viable 7X longer under cooler conditions of fall and that is almost certain to lead to a further increase in cases although the lethality of the disease has been reduced markedly.
Regardless of the facts on the ground, market sentiment remains buoyant into the US session, and with no meaningful data on the docket, momentum will be the name of the game with longs trying to push Nasdaq through the 11300 level as the day proceeds.