Thanksgiving, Pandemic in Europe and the Doom of Evergrande

Nov 23, 2021

Purely statistically, the current week for the US stock market should be successful. Beginning in 1950, on average, the last five trading days of November ended with an increase in the US stock market. The market has a two-thirds chance of rising on the day before Thanksgiving, and a 71% chance of the market rising on the Monday after Thanksgiving. But these are statistics, how it will actually be - time will tell.

Although there is reason for optimism here and now. This refers to the successful House vote on a $ 1.75 trillion bill that would radically expand the US social safety net.

But markets also have reason to worry. Austria announced a complete lockdown, Germany, through the mouth of Merkel, announced the need for tougher restrictions to control infections. The situation is very difficult in the Netherlands, Hungary and a number of other European countries. In general, the rapid economic recovery in Europe seems to have to be forgotten.

And the development sector in China is becoming more and more toxic for investors. Evergrande is excluded from the Hang Seng China Enterprises Index. And S&P Global predicts the default of the second largest developer in China at the start of next year. The fact is that in March and April 2022, the company will need to pay the principal amount of $ 3.5 billion on its public bonds denominated in US dollars. Considering that Evergrande is now struggling to scrape together hundreds or two of millions of dollars selling its properties, the chances of covering $ 3 billion look more than elusive.

In general, we continue to monitor the mood in the markets - they will determine where prices will move.