It’s the final countdown, still light years to go

As a special service to our long-standing readers, we would like to highlight that there is a US presidential election scheduled this week on Tuesday – just in case you had not heard. So watch out for media reports on the matter.
Key takeaways:
- In the days ahead, open your mind for watershed moments: US elections, the European Covid-19-related policy response and China’s five-year plan.
- With regard to Europe: we have trimmed growth forecasts, downgraded eurozone stocks in technical analysis, and upgraded European Union (EU) peripheral bonds.
Well, of course, it has been impossible to shield yourself from the ‘dirtiest US presidential election campaign in history – since the last one’ if you have had access to any kind of media over the past 12+ months, but this week features decision day.
For those following the Brexit saga and other reality-TV formats, the expectations may be lower. With eerie echoes of the 2016 experience, all outcomes seem to be possible. Even a ‘contested’ vote, as in 2000, may be a feature of the 2020 season. It is just good to know that almost 75% of global fund managers already expect this outcome. In other words, a clear outcome would, in itself, be quite a relief.

Christian Gattiker, Head of Research, shares his view on the markets.
China is quite the opposite in terms of predictability, and the upcoming five-year plan may likewise be a watershed moment for this decade. However, here it is more about the details of the plan that will add some colour to its exact impact.
Then there is Europe, where the second wave of the pandemic has been hitting populations much faster and harder than many feared. The policy response is more targeted but will take its toll on economic output. We have trimmed our forecasts here for the final quarter of 2020 and delayed the predicted return to pre-crisis output levels by one quarter, to Q3 2022. This also has an impact on eurozone assets. Our technical analysis team has downgraded European stocks on weakening relative trends. On the other hand, our fixed income specialists have upgraded peripheral debt, as crisis fighting in Europe will take austerity off the map for quite some time and lower the risk of peripheral bonds structurally.
We wish you good nerves and sound judgement in the days ahead. Stay tuned. We will not let you down.

The Chinese 14th five-year plan and the vision for 2035 focus on: (1) technological independence, (2) consumption, and (3) the environment, among many other topics that were discussed.
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