Sleeping through was the best option

Posted by: Paul Donovan

30 Sep 2020

Daily update

  • Yesterday's morning audio comment suggested that investors should sleep through the US presidential debate. In the aftermath of the debate, I stand by my original statement.
  • Perhaps the only point worth mentioning is that the debate may have increased expectations for a contested election result. International investors have been prepared to entertain some extreme views on this topic (just as they entertained extreme views on the future of the Euro area in the past). Given the importance of international investors to US markets, this may add volatility around the election.
  • Japanese retail sales were above the highest forecasts, demonstrating (again) that the consumer is playing an important role in leading the recovery. Various Euro area countries offer consumer price inflation. This will understate the inflation reality as changes in spending patterns are not being captured.
  • UK 2Q GDP was revised a little higher (most economic data is being revised higher). The numbers are not internationally comparable as the UK uses different methods for calculating GDP. The methodology will boost 3Q UK GDP. The US offers another revision to its 2Q GDP—the numbers will be annualized, which is a silly thing to do normally and a ridiculous thing to do in a pandemic.

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