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Only human after all

It is showtime on the reality-TV-format ‘meet the Trumps’, adding yet another boost to the world’s obsession with a single man. I have had seasoned journalists asking me about the market impact of corona at the White House.

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The usual point I make is that market impact is not based on short-term sentiment only; there has to be material economic impact too. I struggle to find that here. But maybe this time is different. Anyone following the election polls and seeing this as the last straw that breaks the Republican back should reconsider the 2016 experience. Everybody else, please just bear in mind that we are approaching the climax of the US election campaign. And this time around it is a climax – literally – on steroids. Some even fear that the confusion will last beyond the election date of 3 November 2020 (see number of the week).

There are very vague ideas around where ‘normal’ is these days
On a similar note, over the past few months, we have had an economic rebound that was off the charts relative to reasonable economic expectations. Positive surprises were skyrocketing across the globe. With everybody longing for normalisation, it seemingly is a major concern that economic activity normalises as well. Again, there are very vague ideas around where ‘normal’ is these days. Some call for a ‘new normal’ but that term was already used after the Great Financial Crisis. The consensus goes for a serious slowdown after the post-recession bounce. We caution against too much pessimism here. At least if the argument is centred around a repeat of the global lockdowns, we deem this as highly unlikely. The learning curve was too steep to start hitting with the same sledgehammer again when fighting the virus both from a pandemic and economic perspective.

What should investors do?
Ideally switch off the news channels – but agreed that it is hard to avoid the informational-area bombing these days. Next best is to embrace the moment and not get carried away by the jitters. On our end, we keep a cyclical tilt, stick to Spanish sovereign debt and upgrade oil. Why not try contrarian for a change?