Risk, the US election, Crypto and China

Assets Covered: S&P 500 Futures, BTC/USD rate, Bitcoin, ETH/USD rate, Etherium, Shanghai Stock Exchange Composition Index

Right now, the result of the US presidential election is anybody’s guess. Six weeks is a long time in politics. We’re not political forecasters, so we won’t bore or annoy you with our election prediction (whew).

Instead, we’ll talk about risk and some assets that may show some volatility going into the end of the rolling nightmare we like to call 2020. This isn’t straightforward because we have several unknowns around fiscal stimulus — which is tied up in Congress — and Fed activity in the wake of Covid.

Even with a best-case scenario, new Congressional fiscal stimulus would still be smaller than the trillions issued in Q2. And while the stock of Fed stimulus issued since the spring is hearty, that flow is also slowing. Clearly, the economy hasn’t “recovered”, but most markets certainly have.

So where are we headed? Complete Intelligence has expected a September slowdown in equity markets for some time. We don’t expect to revisit the March lows, but sustainable gains will be difficult from here. At the moment, it appears the S&P 500 will likely settle above 3,000 through the election and into the end of the year.

S&P 500 Futures (SP1)

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In a risk-off environment driven by slowed flows of monetary and fiscal stimulus, we also expect cryptocurrencies to take a breather in Q4. Bitcoin is expected to fall through the end of the year as momentum is lost. We will — certainly — see renewed momentum early in 2021. Etherium — which didn’t see the same volatility as Bitcoin through the Corona period — will likely taper through Q4, then slowly rise in Q1 21.

BTC/USD Rate

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ETH/USD Rate

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Is China a safe haven? Hardly. The Shanghai Composite is already well off its highs — and we are likely to see a precipitous fall in Q4. This could imply an expectation for increasingly aggressive US policy toward China, regardless of who sits in the Oval Office.

Shanghai Stock Exchange Composite Index (SHCOMP)

CI Futures generated this chart. Book a demo to see it live in action.

This CI Weekly newsletter is originally published at https://www.completeintel.com/2020/09/21/risk-the-us-election-crypto-and-china/.
You can join our weekly newsletter by signing up here: https://www.completeintel.com/newsletter-signup/. Thank you

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