Message from Jon
At this point, the only focus that Wall Street seems dialed in on is the election. In our opinion, Monday's sell off was based on the final realization that a stimulus package would not come through prior to the election and seeing the beginning of the 2nd wave of COVID cases igniting around the world. Will the 2nd wave be worse than the first?
- We have more ventilators than we did.1
- We are now very aware of what COVIDis and can do.2
- It seems like the face masks and social distancing is in place around the world.3,4
Based on what we are seeing, we do not think it will cause us to go back into quarantine causing an economic suspension again.
Our opinion on the election at this point is that we are 90% likely to see a Biden win and a 60% chance of a tax reform causing a tax-based rebalancing on Wall Street reminiscent of 4th quarter of 2018. If we see a Republican controlled Senate, we will likely not see a stimulus package or at least not one strong enough to satisfy Wall Street. If we see a change from the top down, we will likely see a Stimulus package that will override a tax-based rebalance. Let's not discount a Vaccine or news of one coupled with a Stimulus package.
The above scenario possibilities are why we have delayed our October rebalance to December, which gives us a much better vantage point in which to view and process the data. More importantly, is what Wall Street's approach to the data is saying.
Keep in mind, Wall Street pays attention to a different set of information than the media or Main Street does. Earnings, Monetary Policy, Tax Reform, GDP, Jobs, Interest Rates and Consumer Spending are some of the interest points that move Wall Street. BLM, Antifa, Social Unrest, Debates, Police Shootings, Rioting and Discord, while they may all be important and make the mainstream media millions of dollars, they are not focal points by Analysts, Economists and Traders in our opinion, which explains why I rarely if ever comment on them.
We are interested in what Wall Street is interested in.
Till we speak again, make sure you VOTE!
No Stimulus, Stocks Lower
WEEKLY UPDATE - OCTOBER 26, 2020
The Week on Wall StreetThe failure to reach an agreement on a new fiscal stimulus bill soured investor sentiment and sent stocks modestly lower for the week. The Dow Jones Industrial Average fell 0.95%, while the Standard & Poor's 500 lost 0.53%. The Nasdaq Composite index slipped 1.06% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, declined 0.44%.