Choco Advent Calendars and Shelf Elves – Lucky for me (throat clear), my husband starts playing Bing Crosby the very minute our Halloween costumes come off. But for the rest of the (more sane) world, the acceptable time to start ALL the Christmas is tomorrow, December 1. Between now and then when anything can happen (like the Tesla inclusion into the S&P?!), stocks are suffering a bit of a post one holiday / pre another exhaustion, just slightly curtailing the furious November moves. This past month has been fueled by investors hopes over the finalization of a vaccine and slightly less concerns over the presidential transition. Fun fact: for four straight Mondays a different drug maker reported advances on vaccine trials. Conspicuous. The momentum faded today thanks to headlines claiming surging levels of infections and an MSCI reweight, though equities still remain on track for historic gains. The Dow is up nearly 12% for the month, the biggest gain since January 1987. The S&P +10% and Nasdaq +11%, aren’t far behind. And one mustn’t forget the small caps – a record for them too! After today, we have 22 trading days left for 2020 (probably more like 14 real ones). Far too early for Santa rallies and plenty of ground to cover between now and Jan 1. Gulp.

Too Much Too Soon? With positive vaccine headlines seemingly on an endless stream recently, it’s no surprise that the indices rallied to start the week, when the Dow was propelled to a record high. However, stocks have been choppy since, as infections have surged and economic momentum has been shown to have slowed (see job postings chart below)

Resolution Reaction – We do have a winner, but this feels far from over. No doubt there will continue to be a slew of headlines over the next few weeks, calling the results of the election into question as President Trump has offered little indication he is prepared to concede defeat. Further, Trump has also refused to commit to a peaceful transfer of power. Both moves would be historical firsts, but most likely not all that surprising to market participants. Whatever your political alliances, the markets are behaving in a way that suggests investors are quite happy that at least the bulk of uncertainty is behind us. However, the election results pale in comparison to the market’s reaction to Pfizer (+11.2%) and BioNTech’s (+14.6%) vaccine progress announcement this morning. The headlines gave the markets quite a jolt, reversing the fortunes of pandemic losers such as travel companies (Carnival +37%), retailers (Kohl’s +17%) and banks (JP Morgan Chase +13.5%). On the other hand, virus related beneficiaries are seeing a decent pullback. See: Zoom (-13%), Peloton (-15%), and of course, Netflix (-6.2%). Value is outperforming Growth by 4%+ and the Russell, with its broader contingency of US economic sensitive names, is making new YTD highs. Also, JNK is loving it. second best day in 10 yrs for JNK US. (New total return high last week already.) Further, the 10y has jumped to 0.954% from 0.821%, crude is up more than 8.5%, and the safety trades – Yen, Gold, and Bunds are all enduring the opposite of risk assets. Ain’t no stopping the bull run now…..except maybe a hefty dose of reality…

One. More. Day. We are more than ready for this to be over. Both 2020 AND The presidential election. Of course, it may be more than just one day until things are official. Further, the financial implications of the outcome might not be as clear cut as many expect. If the popular narrative of a “blue wave” comes to fruition, we most likely see a weaker dollar, recovery in value stocks and a steepening yield curve. But there are a few other potential outcomes: 1) a contested election which would cause more than a little uncertainty and disharmony – UGGHHHH, 2) A “gridlock” scenario with Biden White House and Republican Senate. The Senate would then act as the last line of defense vs fiscal deficit spending and endanger the market’s anticipated multi-trillion dollar stimulus expectations for Q1. Or 3) Trump repeats a 2016 shock victory. In that case, the Fed policy will be easy, no matter who is in The White House. Also, speaking in strict market terms—according to Macro Man, the performance of the stock market in the first year after a presidential election is pretty indistinguishable, regardless of whether the incumbent party retains or loses power. The returns in one year have been generally pretty good over the past 35 years. No matter what the outcome tomorrow, investors have had plenty of time to position for any of the above results. Perhaps today’s slight squeeze by the S&P and Dow is just further reshuffling. The usual suspects —tech/large cap/growth names are not feeling the same love. The Nasdaq is underperforming the other 2 major indices for once with Amazon (-2.8%), Apple (-1.4%) and Microsoft (-1.1%) well into the red, despite more than OK earnings last week. One thing to note — the SPX rarely closes down the day before an election, according to The Market Ear. That said, this year is unlike any other. Deep breaths.

Zoom, Doom & Gloom…Risk-off has been heard throughout the land as the violent combo of a stim stalemate, panicky responses to a renewed COVID case wave (note the death rate remains flat) and fading hopes of a blue wave (polls suggest Senate races are tightening), have triply hit market optimism today. Corona has dominated the headlines to start the week as the US saw its 7-day average for cases hit a new record. WHO Chief Tedros called for “sacrifice” to meet resurging cases and the Surgeon General issued a Thanksgiving warning that said as many as 12 states may need to cancel their holiday plans if cases don’t subside. The corona quick re-escalation impact has been dramatic — US equity markets accelerated lower as the morning wore on. The Vix went above 30 and the Dow, Nasdaq (see chart below) and S&P all broke below their 50dma. The Travel&Leisure sector, COVID’s whipping boy, has also been hardest hit today, led lower by Royal Caribbean (-11.6%), Marriott (-6.2%) and United Airlines (-7.4%). With a big week ahead, including everything from macro data to blue chip earnings to a pending ELECTION, the risks to investors are not small. There was optimism in the air last week in the form of PMIs and possible stim, but the SAP (-22%) meltdown in Germany this morning was a stark reminder of what can happen when expectations aren’t matched. SEE: Alphabet, Amazon, Apple and Facebook on Thursday.

Cling-On. The theme for the rest of 2020…Currently, we are clinging onto these last 2 weeks. Two weeks of high drama, unrealistic fiscal demands, and what some might call, brinkmanship. Also, possibly the ugliest election to ever grace the United States, with the last debate coming Thursday (can’t be any worse than the last….omg, can it?!). Mr. Murdoch has apparently already made up his mind on the outcome, but two weeks is a political eternity. We are also clinging on to the words of Nancy Pelosi, who gave a Tuesday deadline for stimulus agreement to the White House this past weekend. Previously, the mere mention of the word stimulus had upside potential. Not today, though. Investors are feeling numb to the stim stalemate today as the start of the week has proven lacklustre, at best. Nasdaq’s usual rip-roaring Monday is MIA with tech dragging (AAPL -0.3%, Amazon -1.1%). Further, despite plenty of talk over the weekend that the Astrazeneca/Oxford vaccine could be rolled out to the most vulnerable shortly after Christmas, the Pharma sector isn’t feeling much thrill, down -1.3%. Over the next 2 weeks we can expect to cling on to hope, as well as quite a bit of volatility.

We Don’t Need No Stim(-ulation). Apparently, investors don’t need stim to go from bottom left to top right when hope is driving the boat. As a choppy week comes to an end, stocks were given a little gift this morning in the form of better retail sales and consumer sentiment, which has been good news taken as good news for once, rather than data potentially solidifying Republicans’ stance on stim. Further, leading indicators TRAN/S5RAIL/FDX all closed at all-time highs (though JB Hunt and Kansas City Southern reports weighing today). Investors have had a lot on their shoulders of late (ya think!?) between insecurity about the economy, renewed corona concerns, an impending election and the fiscal stim tug-of-war (in no particular order). However, after 3 days this week of declines, all three major US benchmarks have been able to re-route into positive gains on this day of options expiry. From where does this confidence stem? FOMO, for one. Also, earnings have been ok (who needs Banks anyway), and Covid is Europe’s problem (this week). Not to mention, stocks look ever shinier when one looks at yields. So, why let future potential problems get in the way of gains now!?

Windows Never Fully Dressed. Following yesterday’s lack of stimulus headlines, which put a negative spin on the day/quarter end, markets came back roaring today, thanks to an update in that regard. Markets are on track for the second consecutive quarter of dramatic gains, continuing an historic recovery that few predicted in the depths of March. The move aggressively higher is a tad surprising, given the depression cloud settling over America after last night’s repugnant clown show / debate. Apparently though, “the debate changed nothing, except to diminish the country’s dignity a little bit more (Ramesh Ponnuru).” Thus, investors have chosen to ignore the dull political hangover drumming on their brains and instead focus on the fact that Treas. Sec. Mnuchin suggested he’ll offer Dems a $1.5trillion proposal in aid. Further, economic data showed US companies added more jobs than expected in September. Still, the S&P is being led by Healthcare, as vaccine developers rally thanks to promising signals from Regeneron (though the stock has fallen today as Wall Street criticizes the results). Moderna was up almost 7% yesterday and Pfizer (+2%) and BioNTech (+3.1%) are following suit today after revealing more detailed early vaccine data. Natch, tech is not far behind. Nvidia (+2.5%), Amazon (+1.5%) and Apple(+2.2%) are performing with their usual charm, despite a disappointing show from Micron overnight (MU -6%) after halting shipments to Huawei. The whipsaw nature of the past 2 weeks has left investors heads spinning. Unfortunately, we still have August Personal Spending/Income, September ISM figures, and the NFP report still this week. Dumpster. Fire.

Fasten Your Seatbelt.… From here on out (“on out” = the rest of 2020 at least) we are in for a bumpy ride — ok, maybe the roller coaster started some time ago. Either way, today has been further proof that this year will go down swinging. Nothing we didn’t already know was revealed – more of the same pandemic and president-related concerns—yet, markets bobbed up and down over the course of the morning then ramped back up to break +1%. That said, this month has pulled the S&P down more than 9% and though markets are well into the green now, it doesn’t feel very sturdy. In fact, the S&P entered correction territory early this morning, following jobless claims that did little to instill confidence in the economic recovery. The weak report underlined Fed Powell’s words yesterday that more needs to be done fiscally. Stocks were able to reverse course initially thanks to a record number of home purchases that proved just how much life has changed since the pandemic and then were fueled higher again by speculation surrounding the potential for stimulus talks to resume by Ms. Pelosi and Mr. Mnuchin. Tech stocks are outperforming the charge as per the usual, in conjunction with..oh hello banks (Jeffries had a record quarter and a broker recommended buying Goldman amid volatility this am). Only healthcare is on the opposite end, but doing little to cap any potential gains. One warning. According to strategists, it would be wise to keep an eye on QQQ’s into next week. If selling perks up again and the $270 level is taken out, the downside risk could be immense. It’s a very long way down.

Monday to Funday in 3 Seconds Flat…This week wasted absolutely no time in getting after it. Aside from the fact that the Fed, the ECB and BoE will all make announcements later this week, and there will be a slew of meaningful economic data throughout, there is also quad witching on Friday. Thus, this week was already geared up for some hype before this morning came in extra hot with 2020’s busiest weekend of deals worth upwards of $69bn. The biggest headliners: Oracle (+4.3%) beating out Microsoft (+1%) for the US operations of TikTok,  Immunomedics (+100%) doubling after Gilead (+2.6%) agreed to by the cancer drug maker for $21bn and Nvidia (+4.5%) buying Softbank’s Arm in a $40bn chip deal. Further, UBS is apparently studying the feasibility of a Credit Suisse tie-up. No doubt much focus will be on these deals and all of the aforementioned data, as well as the “skinny stim” plan and how slim it’s actually going to get. But for now, the path of least resistance is still up. One caveat: volumes are average at best – S&P 10-day AVAT -15% today thus far.