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Blokland’s daily sketch

Blokland’s daily sketch

28-10-2020 | Daily sketch

Correction mode

  • Jeroen Blokland
    Jeroen
    Blokland
    Portfolio Manager

At the time of writing, Germany’s DAX Index is down more than 9% from its high a couple of weeks ago. Admittedly, this has something to do with one of its major companies suffering heavy losses, but that is not the sole explanation. Uncertainties surrounding the US elections remain abundant, with the S&P 500 Index also down almost 6% from its earlier high, and the VIX above 30. In addition, especially in Europe, it seems politicians are reinstating lockdown-related measures to stem Covid-19 from spreading, which would once again impact growth. I would argue, however, that the current situation is far less dire than back in March due to structural social distancing and better tracking and treatment. Also, I think uncertainties about the US elections are exaggerated, and that the likelihood of a clear result have been underestimated. A VIX of over 30 underpins this. Hence, while we could be heading for a correction after a historic market recovery, things don’t look that bad in the medium-term.

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As a senior portfolio manager I use charts to illustrate financial issues every day. I tweet my favorites as @jsblokland and was named 'one of the 50 most important people for investors to follow in 2018' by MarketWatch.
Previous editions of the daily sketch can be found on my personal financial markets blog. All graphics provided are collected from Bloomberg data and public websites. They do not always reflect my personal opinion and may also not necessarily reflect the opinion of Robeco. Please cite all references or quote the original source if replicating content.

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