The elections in the US will take place on November 5, and there is no clear winner at this stage. The difference between the two candidates is huge and their policies will change how things are going to develop worldwide.
Currently the equity markets are doing very well, but the bond market is not. The 10-year bond yield in the US has spiked from 3.69% October 1st, to 4.19% currently. The implications are a capital loss on your bonds, although you earn better interest. The reason for this increase in yield might be the fact that inflation is under control and growth in the labour market is strong, so there is no urgent need for the Fed to stimulate the economy by lowering interest rates at an accelerated pace. Another reason might be that the debt to GDP in the US is very high and both presidential candidates will implement policies that might see it rise further.
At the end of the day we have very little control over what the new White House administration will do, but we do know that there are many companies we are invested in that will continue to be very profitable regardless. The Artificial Intelligence drive is still creating a lot of excitement in the world and companies directly involved in that, like Nvidia, Microsoft, Amazon and Google are reaping the benefits.
On the local front, things have been pretty calm compared to the last few years. It seems like the GNU is doing something right, especially the Department of Home Affairs which is under DA control. If you have been through immigration at Cape Town International recently, you would have been impressed by how efficient the customs officials are.
We are almost at that time of the year when the Christmas decorations will be taken out of their boxes and Christmas carols will reverberate through shopping malls. If we can just maintain the current levels in our investment portfolios, we will be able to claim another successful investment year.
