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Positive Trump, negative market. Feliciano Macías. Investment advisor Renta 4 Málaga

Despite the negative perception we may have, the European markets closed the week with increases of + 1% on average, while in the United States the revaluations were somewhat higher (S&P + 2% in the absence of a session). Some increases in an environment of volatility, marked by the lack of rapprochement between Republicans and Democrats to carry out the fifth fiscal stimulus package, the evolution of the pandemic and, above all, doubts regarding the economic recovery. President Trump’s positive Covid result put pressure on markets in Friday’s session. All uncertainty is always frowned upon by the market. Although it seems that everything will be a scare, as in his day with Boris Johnson.

At the macroeconomic level, we have had a lot of data, where the employment figures in the United States stood out, showing a slowdown in the pace of job creation, and there is still a long way to go to recover pre-pandemic employment levels. On the contrary, we had a positive reading in the ISM manufacturing survey that beat estimates. On the other hand, both in the United States and in Europe we knew the final data of manufacturing PMIs for September, which did not provide surprises, being very in line with preliminary data. On the contrary, the official PMIs for September in China showed a slight improvement in the manufacturing component to 51.5 and also advance in services (against expectations) to 55.9, with which the composite rises to 55.1 .

At the political level, we have witnessed the first presidential debate in the US that ended with a harsh tone, without great contributions in the content, which in principle does not seem to have a great impact on the voting intention of Americans. Trump said he will not accept the electoral result if he sees fraud in the vote by mail, which could increase volatility in the markets as the appointment with the polls approaches.

Looking at the last quarter of the year, we consider the publication of 3Q20 business results to be of particular relevance, which could lead to new guideline cuts, especially for 2021 in an environment of uncertainty and a downward revision of the pace of economic growth recovery. Likewise, and due to its clear market implications, advances in the development of a vaccine against Covid-19 will be especially relevant in the coming months. According to data from the WHO, there are more than 300 candidates worldwide, with 40 of them being tested in humans and 10 are in the last phase of clinical trials. Among them, the vaccine being developed by Pfizer together with BioNtech stands out, as well as the one by Moderna, which began phase III trials during the summer months. The last to do so were Johnson & Johnson and Novavax, both at the end of September. As for the candidate from AstraZeneca and the University of Oxford, her trial has been halted on two occasions by cases of inflammation of the spinal cord. While it continues to be stopped in the US until it is clarified if there is any causal relationship between the vaccine and said adverse reaction, the trial has been resumed in other countries.

With regard to the market, we maintain a cautious position considering that risks persist and valuations continue at demanding levels especially in the US, and with the additional risk of increased volatility as the elections approach. November 3. It seems early to us for the rotation towards the cycle (necessary for the stock markets to continue rising) to be sustained in the absence of greater visibility on the evolution of the pandemic and, by derivative, of what will be the pace and intensity of the economic recovery. The announcement of new fiscal stimulus measures by the different governments (especially in the US) is the catalyst that we identify that can support a recovery in the stock markets in the short term after the aforementioned cuts.

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