{"id":173393,"date":"2020-07-09T08:00:33","date_gmt":"2020-07-09T12:00:33","guid":{"rendered":"https:\/\/www.countingpips.com\/?p=173393"},"modified":"2020-07-09T07:26:21","modified_gmt":"2020-07-09T11:26:21","slug":"record-us-covid-19-cases-cant-halt-the-equity-rally","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2020\/07\/record-us-covid-19-cases-cant-halt-the-equity-rally\/","title":{"rendered":"Record US Covid-19 cases can\u2019t halt the equity rally"},"content":{"rendered":"
July 9, 2020<\/div>
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By Hussein Sayed, Chief Market Strategist (Gulf & MENA), ForexTime<\/a><\/strong><\/p>\n

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Equity markets have pushed higher in Asia following an impressive last hour rally on Wall Street yesterday. The record daily increase in US COVID-19 infections and the sharp rise in deaths has proved no barrier to the bulls. Rises in Apple and Amazon stocks sent the Nasdaq Composite to a new record high of 10,492, while the S&P 500 and Dow Jones Industrial Average advanced 0.78% and 0.68% respectively.<\/p>\n

The current environment has led to the closure of the $2.8 billion Lansdowne Partners\u2019 flagship equity long\/short hedge fund. The lack of short winning strategies may even force more hedge funds to follow Lansdowne\u2019s footsteps. The stimulus-driven market has made life for long\/short strategies extremely difficult as relying on traditional valuation metrics to find short opportunities have failed throughout the latest bull market, and even throughout much of the previous 12 years since the Great Financial Crisis.<\/p>\n

Fundamentals and valuations appear to be of limited influence on investor\u2019s decision making. The fear of missing out, or \u201cFOMO\u201d, monetary and fiscal policy actions, low yields, lower interest rates for longer, are some of the factors that have led to this structural change in markets. If the Fed can keep zombie companies alive by keeping the lending taps open, why wouldn\u2019t investors profit from these actions? However, the Fed cannot keep running these measures forever, and for many corporates relying on debt to stay afloat, sooner or later they will fail if they can\u2019t return to profitability.<\/p>\n

As always there is the good and the bad news. Depending on where investors put more weight is what drives asset prices and that is what leads to extreme highs and lows. Looking at where US stocks stand at the moment, it seems lots of the good news is already priced in. So even if bulls decide to keep pushing higher, the upside is likely to be limited from current levels unless we learn that an effective vaccine will hit the markets before year end and will be available for most of the population. If investors truly believed that the economy was returning to pre-pandemic levels soon, Gold wouldn\u2019t be standing today at 9-year high, so it\u2019s evident that investors who are participating in this risk-on rally are also hedging their positions by adding safe havens for their safety net.<\/p>\n<\/div>\n<\/div>\n<\/div>\n

Disclaimer: <\/strong>The content in this article comprises personal opinions and should not be construed as containing personal and\/or other investment advice and\/or an offer of and\/or solicitation for any transactions in financial instruments and\/or a guarantee and\/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.<\/em><\/p>\n<\/div>\n

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\"Forex-Time-Logo\"Article by ForexTime<\/a><\/span><\/strong><\/p>\n

ForexTime Ltd (FXTM)<\/strong> is an award winning international online forex broker regulated by CySEC 185\/12 www.forextime.com<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

By Hussein Sayed, Chief Market Strategist (Gulf & MENA), ForexTime Equity markets have pushed higher in Asia following an impressive last hour rally on Wall Street yesterday. The record daily increase in US COVID-19 infections and the sharp rise in deaths has proved no barrier to the bulls. Rises in Apple and Amazon stocks sent […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-173393","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/173393","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=173393"}],"version-history":[{"count":2,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/173393\/revisions"}],"predecessor-version":[{"id":173397,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/173393\/revisions\/173397"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=173393"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=173393"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=173393"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}