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The Final Countdown

If Biden should win decisively in early count states such as North Carolina, Pennsylvania and Florida, risk sentiment will soar on expectations of a landslide victory.

As dawn breaks in the US later today, voters are expected to turn out in droves to choose the next POTUS. Biden continues to make headway in key battleground states. With some states expected to take days to get all the votes counted, markets will be on a knife’s edge as Trump is rumoured to be ready to declare victory without official counts on election night should he have an early lead.

Expect volatility and fear should the vote count be close in the battleground states. If Biden should win decisively in early count states such as North Carolina, Pennsylvania and Florida, risk sentiment will soar on expectations of a landslide victory.


  1. Gold & Silver — Strong support for Gold is at 1850–60 and for silver, major support is at 21.80–90. USD was relatively stable on the day but precious metals continue to grind higher. Encouraging price action augurs well for the days ahead.

Key risks — US election vote counts will be key. US long term interest rates and virus worries are still key risks too.


Market Movements as of New York Close 2 Nov 2020
  • U.S. ISM Manufacturing Index for October checked in at 59.3% (expected 55.7%), which is an improvement from 55.4% in September and the highest level since September 2018. The dividing line between expansion and contraction is 50.0%.New Orders Index hit its highest level (67.9%) since January 2004, signalling that the recovery in the manufacturing sector is running at a fast pace still despite the lack of a new stimulus package, the election uncertainty, and the new wave of coronavirus cases in the U.S. and Europe. The ISM Prices Paid Index came in at 65.5 (expected 60.0). (This index represents business sentiment regarding future inflation. A high reading signals possible inflation which may lead to higher interest rates in the US bond markets) Impact of the release was negligible as focus was largely on the U.S. elections.
  • Dollar inched to one-month highs (94.13, +0.10%) against a basket of peers on Monday on investor jitters over the outcome of Tuesday’s U.S. presidential election. GBP weakened after Prime Minister Boris Johnson announced over the weekend a one-month lockdown across England. GBP fell as low as $1.2852 (-0.68%) the lowest since Oct. 7, eventually closing -0.14% lower on the day, 1.2922. AUD bounced +0.87% from intraday low of 0.6992 as risk sentiment improved together with the rallying stock market. CAD has an even stronger showing, with USDCAD falling -1.11% after hitting an intraday high of 1.3369, as crude oil bounced nearly 10% from the lows of the day.
  • Note: the session high for the S&P 500 was set in the first hour of trading. The lack of follow-through buying suggested that the market retained a wait-and-see mindset for the presidential election later today. News that Massachusetts announced a stay-at-home order might have also tempered gains in the cyclical stocks.
  • The energy sector rose 3.7% amid a turnaround in crude futures ($36.79, +1.09, +3.1%) (one of the reasons — Top executives of Russia’s oil companies discussed on Monday the future of the OPEC+ deal with Russian Energy Minister Alexander Novak, including an option to extend the cuts as-is for three months until March 2021, instead of easing the cuts from January as planned), which were down 5% from Friday’s settlement price after several European countries announced renewed lockdowns. The materials (+3.4%), industrials (+2.7%), and financials (+1.9%) sectors were other notable gainers.
  • At the other end, the information technology (+0.3%), consumer discretionary (+0.3%), and communication services (+0.1%) sectors struggled to keep pace due to renewed selling pressure in their mega-cap components, which were also among the weakest performers last week.
  • Twitter Inc on Monday outlined a plan for placing warning labels on tweets from U.S. election candidates and campaigns that claim victory in advance of official results. The move comes as the social network braces for what it has called an unusual election due to a high number of mail-in ballots that may cause a delay in final results. Beginning on election night through the inauguration, Twitter said it would place warning labels such as “official sources called this election differently”, or “official sources may not have called the race when this was tweeted”.
  • In other notable developments, Chinese Stocks, China A50 (+1.15%) and Cannabis Stocks, ETF: WEED (+10.723%) rose yesterday in hopes of a Biden win as well.



More than 95 million Americans had cast their votes in the 2020 presidential election by Monday, according to a tally by the U.S. Elections Project at the University of Florida, a harbinger of what is expected to be the highest turnout of modern times.

Just a day before Election Day, the record-breaking number is equal to 69% of the entire voter turnout for the 2016 election.

A sharp increase in mail-in and early in-person voting was largely prompted by the coronavirus pandemic, which has killed more than 230,000 people in the United States and continues unabated in many U.S. states.

The race is still a toss-up in battleground states that decide the election through the Electoral College, including Arizona, Florida and North Carolina.

Thematic Context: “To win again Trump has to chart a narrow path by winning states he won in 2016, such as Florida, Georgia, North Carolina, Ohio, Iowa and Arizona, and holding at least one of the Midwestern states that he took four years ago, such as Pennsylvania, Michigan or Wisconsin. It’s not over till it’s over, 2020 is filled with tail events and Trump might just pull this off. Regardless, the wall of money is awaiting and huge macro dislocations should be taken advantage of because the outcome is inevitable. (with the U.S. the buyer of last resort due to lack of foreign buying of U.S. debt, the only way out is balance sheet expansion regardless of who wins). — 2nd Nov 2020


United States: The number of new COVID-19 cases in the United States hit another record high last week, rising 18% to more than 575,000, while deaths inched up 3%, according to a Reuters analysis of state and county reports.

34 out of 50 states have seen new cases increase for at least two weeks in a row, down from 36 the prior week. They include Florida, Ohio and Michigan — all hotly contested states for Tuesday’s U.S. presidential election. New cases rose 60% in Pennsylvania, another crucial state.

France: France reported a record 52,518 new COVID-19 on Monday and the number of people hospitalised with the disease rose by more than a 1,000 for the fourth time in eight days, as the pandemic showed no signs of abating despite a new lockdown.

Thematic Context: The aforementioned comments apply to global economies as they head into lockdowns again. Main Street will once again be decimated and without stimulus, expect markets to sell off. However, we have seen this movie before, and we believe the government’s prudence (willingness to support the economy) will prevail once more and the flood of money will arrive. Till then, survive the volatility and pick your spots on where to establish buying opportunities.” — 29th Oct 2020


China’s central bank and financial regulators met on Monday with Ma and top Ant executives as Beijing published draft rules for online micro-lending.

One rule would require firms like Ant to shoulder default risks together with banks, while limiting leverage and lending amounts — all approaches used to regulate banks. An Ant spokeswoman said the company would “implement the meeting opinions in depth”.

It has also built an empire connecting China’s borrowers and lenders, securing short-term loans within minutes. It has branched out, using artificial intelligence and other sophisticated techniques to facilitate not just payments and loans but products from insurance to wealth management.

This means, Ant says, it is chiefly a technology vendor for financial institutions. Ma has called it a “techfin” rather than a “fintech” outfit.

Jack Ma, who has propelled the shift to a tech identity, recently called financial regulation outdated, badly suited to companies trying to use technology to drive financial innovation.

Thematic Context: “This reform is a key marker to China’s long term geopolitical and economic intent to be a hegemonic force within its own economic faction (One-Belt-One Road) and a tech powerhouse, in which being dominant wields you the power of immense productivity on which superpowers are built upon. We believe that the trajectory of USDCNH is going to be much lower over the long haul and any decent spikes should be sold into.19th Oct 2020

“Our aforementioned comments remain and we suspect Ant Financial will play a key role in China’s hegemonic ambitions by being a key financing infrastructural pillar to companies, trade & supply chains along the One-Belt-One-Road (OBOR). For example, small businesses who do not have access to banks, but want to join the OBOR logistics network can exchange relevant information (value add) in hope of getting financing from Ant Financial to start their microbusiness. The granularity in being able to allocate capital to rural areas (frontier economies) might be powerful. On a social level, it helps alleviate poverty and on an economic level, may be deflationary due to cheaper labour. A good way to gain exposure to the rise of China’s economic faction and ensuing hegemonic intent is to gain exposure to Ant Financial. More on this in the weeks ahead.” — 26th Oct 2020



The Reserve Bank of Australia (RBA) will decide on policy and markets are almost certain that policymakers will slash interest rates for the third time this year and further widen its quantitative easing program in another attempt to balance the negative effects of the pandemic, which brought the global economy to its knees. With the US election taking centre stage this week and the RBA decision fully priced in, the AUD may show a limited reaction, though a weaker currency would make the RBA happier as other central banks pave the way for more stimulus.

Moreover, compared to other key economies, Australia’s monetary policy is still tighter and has still some room for additional easing given that interest rates are currently at 0.25% (higher than most of its developed economies counterparts), while the RBA’s balance sheet is at a relatively smaller share of GDP.

Overall, the tone in the FX and stock markets will depend mostly on the election outcome, and the vote counts after the close of the US session.




Market Observation

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For more information on potential election outcomes, please visit our previous write ups in this series:

Links: Election Series: What Happens If The U.S. Election Is Contested? (Part 1 of 3)

Election Series: What Happens If The U.S. Election Is Contested? (Part 2 of 3)

Election Series: What Happens If The U.S. Election Is Contested? (Part 3 of 3)


ELECTION SERIES: Electoral College and the Popular Vote (Part 1 of 3)

ELECTION SERIES: The Electoral College and the Popular Vote (Part 2 of 3)

ELECTION SERIES: Is Electoral College Reform Possible? (Part 3 of 3)


Election Series: Why Pennsylvania Matters (Part 2 of 3)

ELECTION SERIES: Mirages (Part 3 of 3)

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Phan Vee Leung
CIO & Founder, TrackRecord




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