As the dust continues to settle on the US presidential election, the same old issues in Congress have riled market sentiments this week. With so much uncertainty around the election, the confirmed result sparked an initial upward move in risk markets – however, across-the-aisle political gridlock calmed investor sentiments.
On Monday, as top Democrats and Republicans continued to discuss the long-awaited Covid-19 relief package, it was apparent that no deal will be struck in the immediate short term. Senate majority leader Mitch McConnell said a limited stimulus bill should be passed by year end. However, Senate Democratic leader Chuck Schumer said the Republican proposal is a “totally inadequate solution”.
Financial markets have been eagerly anticipating the second Covid-19 stimulus package. An extension to the plan launched in March, the new economic relief package keeps many of the benefits of the original plan, including a potential second stimulus cheque of up to $1,200 for Americans who qualify and an extension of the $600 unemployment benefit.
For many months, Democrats and Republicans have battled on the size of the package. In October, Democrats proposed a plan in the range of $2.2 trillion (down from their original $3.5tn package) while the White House replied with a $1.8tn plan, which was swiftly rejected.
Amid the political posturing, a figure and deal needs to be agreed, which would inject immediate stimulus into a US economy that could stall again. With the ongoing pandemic showing no signs of abating in the US, this is being reflected in economic data points, which are showing signs of slowing.
During last week's Federal Open Market Committee meeting, Federal Reserve chair Jerome Powell put the ball in the court of the federal government, asking it to announce the much-needed stimulus. This theme will be critical to the performance of financial markets going forward, as we have already seen from the recent pricing action.
What is also critical to note in this scenario is that while the race to the White House and the House of Representatives is confirmed, there are two key Senate seats up for grabs in Georgia, which could determine the balance of power in the upper house of the Congress. If Democrats manage to make a good run in the January 5 run-offs, it would see the balance of power shift and make passing policy for the Democrats and Joe Biden much easier.
It remains to be seen if the fiscal stimulus package will be delivered before the results of those run-offs or if the two parties can agree and deliver it by December.
History has shown us that US stock markets typically rally in the aftermath of a presidential election, but this time, we could see anaemic pricing action if this deal fails to pan out sooner rather than later. Expect this to be the major theme for US markets in the weeks ahead – which will also drive investor mood.
Amid the political posturing, a figure and deal needs to be agreed, which would inject immediate stimulus into a US economy that could stall again
Looking at the performance of the Dow Jones Industrial Index, at the time of writing it is currently trading at the 29,000 level after testing the all-time high of 30,000 on Monday. Markets caught a nice bid to run to that 30,000 level after Pfizer came out with encouraging news that a vaccine that prevented more than 90 per cent of coronavirus infections was being developed. While the euphoria settled after the initial news, markets digested the reality of timelines, scalability and distribution of a large-scale vaccine to the population, and as a result sold off after the initial hype.
I am keeping an eye on the 29,933print and expect to see another run to this level in the next two weeks, backed purely by a psychological and sentiment-driven trade. But overall, I would revert from building any positional, long-term trades in the US equity markets until the stimulus plan is clearer.
The US dollar has had a torrid few weeks as risk appetite has edged higher following the election confirmation. Already down 1.2 per cent on the month, we are seeing some good buying coming into the US dollar index in the channel between 92/92.20. These levels should hold in the next two weeks while upsides will be capped at 93.50.
Gaurav Kashyap is a market strategist at Equiti Global Markets. The views and opinions expressed in this article are those of the author and do not reflect the views of Equiti
The specs: 2018 Ducati SuperSport S
Price, base / as tested: Dh74,900 / Dh85,900
Engine: 937cc
Transmission: Six-speed gearbox
Power: 110hp @ 9,000rpm
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Fuel economy, combined: 5.9L / 100km
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What can you do?
Document everything immediately; including dates, times, locations and witnesses
Seek professional advice from a legal expert
You can report an incident to HR or an immediate supervisor
You can use the Ministry of Human Resources and Emiratisation’s dedicated hotline
In criminal cases, you can contact the police for additional support
Muslim Council of Elders condemns terrorism on religious sites
The Muslim Council of Elders has strongly condemned the criminal attacks on religious sites in Britain.
It firmly rejected “acts of terrorism, which constitute a flagrant violation of the sanctity of houses of worship”.
“Attacking places of worship is a form of terrorism and extremism that threatens peace and stability within societies,” it said.
The council also warned against the rise of hate speech, racism, extremism and Islamophobia. It urged the international community to join efforts to promote tolerance and peaceful coexistence.
The biog
Favourite Emirati dish: Fish machboos
Favourite spice: Cumin
Family: mother, three sisters, three brothers and a two-year-old daughter
The Perfect Couple
Starring: Nicole Kidman, Liev Schreiber, Jack Reynor
Creator: Jenna Lamia
Rating: 3/5
The view from The National
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Killing of Qassem Suleimani
Top tips
Create and maintain a strong bond between yourself and your child, through sensitivity, responsiveness, touch, talk and play. “The bond you have with your kids is the blueprint for the relationships they will have later on in life,” says Dr Sarah Rasmi, a psychologist.
Set a good example. Practise what you preach, so if you want to raise kind children, they need to see you being kind and hear you explaining to them what kindness is. So, “narrate your behaviour”.
Praise the positive rather than focusing on the negative. Catch them when they’re being good and acknowledge it.
Show empathy towards your child’s needs as well as your own. Take care of yourself so that you can be calm, loving and respectful, rather than angry and frustrated.
Be open to communication, goal-setting and problem-solving, says Dr Thoraiya Kanafani. “It is important to recognise that there is a fine line between positive parenting and becoming parents who overanalyse their children and provide more emotional context than what is in the child’s emotional development to understand.”
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Power: 218hp (Cooper and Aceman), 313hp (Countryman)
Torque: 330Nm (Cooper and Aceman), 494Nm (Countryman)
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How to watch Ireland v Pakistan in UAE
When: The one-off Test starts on Friday, May 11
What time: Each day’s play is scheduled to start at 2pm UAE time.
TV: The match will be broadcast on OSN Sports Cricket HD. Subscribers to the channel can also stream the action live on OSN Play.
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Pharaoh's curse
British aristocrat Lord Carnarvon, who funded the expedition to find the Tutankhamun tomb, died in a Cairo hotel four months after the crypt was opened.
He had been in poor health for many years after a car crash, and a mosquito bite made worse by a shaving cut led to blood poisoning and pneumonia.
Reports at the time said Lord Carnarvon suffered from “pain as the inflammation affected the nasal passages and eyes”.
Decades later, scientists contended he had died of aspergillosis after inhaling spores of the fungus aspergillus in the tomb, which can lie dormant for months. The fact several others who entered were also found dead withiin a short time led to the myth of the curse.
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Habibi Funk: An Eclectic Selection Of Music From The Arab World (Habibi Funk)
