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Macro overview of the current week

Macro overview of the current week

28 October 2020

Rising incidence of COVID-19

Most of the world’s investors are waiting for the pandemic to subside. At the beginning of the summer, leading analysts believed that closer to autumn it would be possible to talk about an economic recovery. However, now we understand that the crisis associated with the pandemic will not pass so quickly.

Many countries are recording an exponential increase in the incidence of COVID-19, so the coming months will be very difficult, said Tedros Adhanom Ghebreyesus, Director General of the World Health Organization (WHO).

“There is an exponential increase in the number of COVID-19 cases in so many countries, and this leads to the fact that hospitals and intensive care units are working close to the limit of their capacity or even beyond it,” Gebreyesus said at a press conference yesterday. He suggested that “the next few months will be very difficult.”

The WHO Director-General urged world leaders to “take immediate action to prevent further unnecessary deaths, catastrophic pressures on health services and school closings.”

According to the Worldometers portal, more than 42 million cases of coronavirus have been recorded in the world during the pandemic, about 1.1 million people subsequently died of COVID-19 infection. Another 31 million people have recovered.

Thus, it can be seen that the number of cases in many countries is breaking spring records. Therefore, the uncertainty in the market remains in any case.

Green economy awaits Biden’s arrival

It has been learned that fund managers who are betting that environmental, social and governance (ESG) green stocks will benefit from Democrat Joe Biden’s expected presidential victory are also looking at a number of other companies that are expected to will grow with them.

As political battles for the 59th US presidency continue, portfolio managers of funds such as Gabelli, Fairpointe Capital and Eaton Vance are shifting to shares in semiconductors, industrial equipment and utilities.

Biden, who is still ahead of his rival by polls, is already actively promoting his future green platform: he intends to spend $ 2 trillion during his first four-year term as president to combat climate change, including modernization of buildings to improve energy efficiency and the installation of more than 500,000 electric vehicle charging stations by 2030.

Sherrill Smith, portfolio manager at Trillium Asset Management, said her funds are gaining ground not only in clean energy stocks, but also in semiconductors and automotive components that will benefit from the advancement of electric vehicles.

Although it is too early to say that traditional energy sources such as coal and oil will die. At the same time, during the epidemic, energy stocks have consistently lagged behind, even as US crude oil production reached record levels.

Unlike clean energy stocks, oil companies Exxon Mobil Corp (NYSE: XOM) and Chevron Corp (NYSE: CVX) lost 51% and 40%, respectively. So far, there is hope that the lagging sectors of the economy will benefit from stimulus measures that will revive companies if the economy recovers and demand improves.

Thus, the renewable energy sector will become one of the most promising and growing sectors as a result of Joe Biden’s victory.

Prospects for incentive bill vague after Trump’s criticism of Democrats

It is no secret that the rapid growth of American indices during the pandemic is mainly due to the numerous support measures provided by the United States. Many analysts believe that without stimulus measures, stock quotes of companies would not have shown such rapid growth.

Negotiations now on a new bill to help the U.S. economy tackle the fallout from the coronavirus fell back on Wednesday, when President Donald Trump accused Democrats of not wanting to work out an acceptable compromise, despite reports of some progress earlier in the day.

Trump said last week that he is ready to agree to more than $ 1.8 trillion in aid to the economy in the fight against the COVID-19 pandemic, the amount that the White House previously proposed in negotiations with Democrats in Congress.

On Wednesday, the US president tweeted that he did not believe the Democrats “will be willing to do what’s right for our wonderful American workers, or our wonderful US in terms of incentives.” Prior to that, House Speaker Nancy Pelosi and Treasury Secretary Stephen Mnuchin spent 48 minutes discussing a possible incentive bill, a spokesman for Pelosi tweeted.

It is unclear whether talks will continue or be postponed until the November 3 presidential and congressional elections.

Aravana Capital Management provides clients with profitability even during downturns in global equity and bond markets.

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