Debate. Lets move on...

Macro Perspectives: Thu 1 Oct 2020

The debate was uglier than expected. Both sides seemed to lack the very basic of communication skills and with any meaningful interaction missing, there’s not too much, from a financial market point of view, for us to be better informed.

If anything, it seems to be broadly agreed that Biden stepped over a low bar of expectations, and with that, gets some incremental gains for the election.

If we look back at the history of the past sixty years of debates/elections, there is no correlation between debate winners and election outcomes. As for the first debates, the winner of the first debate lost five of the past six elections.

The democrats continue to push the narrative that the health crisis is still raging, and that the economy is in depression. Trump didn't do a lot to dispute that, despite the clear data on hand.

Below is a look at the CDC's chart of COVID hospitalizations.

The lockdown “flatten the curve” was all about preventing a run on hospital capacity. The U.S. has since been open to increasing degrees since April (that's five months), and according to the data in the CDC's chart above, there currently are five COVID patients per hospital in the U.S., in the 50 and over age group - whilst a percentage of those are hospitalized with COVID not because of COVID. 

Meanwhile, the positive surprises continue to roll in for the economy, in an environment where the size of the response has been far greater than the size of the economic damage. Alongside the Citi Suprise Index ticking in at 172, the report on Chicago PMI showed a spike to a nearly two-year high - the huge snapback in business activity continues.

For now, Trump continues to entertain the debate.