Buy While You Wait?… US equities once again feel like they’re waiting for more catalysts to restart the rally party, but in the meantime why not grind out some more ATHs? A green finish is no sure thing however, as the S&P just blipped into negative territory momentarily with 2 hours left in the trading day. Stimulus talks continue to reassert themselves as the apple of investors’ eyes as vaccine excitement wears off, but that doesn’t mean much progress is being made. The latest back and forth today saw Senate leader McConnell say a deal is “within reach” but excitement has waned in the last hour or so as the two sides remain apart on key issues after a phone call between Pelosi and McConnell this afternoon. The mood this morning was boosted by more comforting eco data, with lighter than expected jobless claims providing a nice appetizer for NFPs tomorrow and Markit Services PMIs and ISM Services data both healthily in expansion territory. The Nasdaq is outperforming the S&P thanks to a few high flying software earnings (CRWD +14%, ZS +23%) but SPX has more of a Value tilt with Energy applauding OPEC+ reaching a deal to taper supply increases gently. Solid results from PVH (+8.7%) are leading Apparel names higher, while the cruisers (CCL +10%, NCLH +10%, RCL +5%) tow Hotel/Leisure higher following broker upgrades (we also hosted Carnival CEO yesterday, ask for more!). Hard to complain about a lack of action considering where stocks currently stand… especially when US daily COVID hospitalizations and death both marked their own records yesterday…

Back to Business… Not much has changed but the calendar, but after an impatient rebalancing pause yesterday US stocks are back to doing what they did through most of November. The fresh highs are nothing new for the S&P and Nasdaq, but even usually stagnant Treasuries are getting in on the risk-on mood today, with yields moving higher on word a bipartisan group of senators is putting forth a $908bn proposal to Pelosi/Mnuchin (which the two are currently discussing on an ongoing call). Solid ISM data this morning pitched in as well. The dollar continues its slide today, getting an extra midday kick from the Euro and GBP gaining on headlines that Brexit trade deal negotiators have “entered the tunnel” (this really could be a day of loosening stalemates). It’s no doubt a Rotation-ary day (VLUE +1.5% vs MTUM +0.4%), but Tech/Media have overtaken Banks and Autos at the top of the sector table amid a busy conference schedule that includes AWS Reinvent (AMZN +2.2%). Fellow Value space Energy is well in the green but held back by crude’s preoccupation with OPEC+ talks. Defensives Telcos and Household Goods are lagging, along with Commercial Services space getting dragged lower by HIS Markit (-5.2%) giving back some of yesterday’s merger fueled gains. It’s a very cheery start to the holiday season, but with so much euphoria abound, what’s left for Santa to contribute?

Third Time Still a Charm?… Monday isn’t exactly known as the most popular day of the week, but this recent streak is starting to make the weekends seem less exciting… AstraZeneca stepped up to the plate to make it 3 straight starts with vaccine data on the tape, but going even further back the last 10 Mondays have seen the S&P move at least 1% (7 up, 3 down). That means we have some work to do today to keep the streak alive, and even when futures were higher this morning it felt more like the vaccine data was a convenient excuse rather than a real reason behind the recent rush of enthusiasm behind stocks. Solid beats from November Flash PMIs (both Manufacturing and Services) added some juice shortly after the open, but it’s a been a bumpier ride since, with the S&P briefly turning red as weighty Tech space dragged indices down. Indices are attempting to regain steam now heading into the afternoon, and the Rotation/Reflation trade is clearly on display with Energy, Autos, and Banks leading while Tech lags along with Pharma feeling not quite so excited about the AZN news. Breaking the narrative is Semis: the sector keeps on rolling higher, this time as UMC’s (ADR +20%) plans to expand capacity show chip demand remains hot.

Roller Coaster Finish… A bit of a topsy-turvy finale to the day following the View @ Two being sent out, thanks largely to options expiry. Heading into the last hour it also seemed sentiment dampened as updated virus case numbers from California and NY brought Covid to the forefront, prompting some pre-weekend selling. However, expiry volatility was certainly at play as markets only a few minutes later whipsawed higher before fading again into the close.

Only a Matter of Time… That’s how NYC Mayor de Blasio described the inevitable rollback of indoor dining in the city that he said this morning is likely coming in the next 2-3 weeks. At this point in the Covid resurgence investors know that more restrictions on the way, yet the fact that it’s also only a matter of time before an approved vaccine is distributed is keeping stocks seesawing near all-time highs. Today’s action has seen the lockdown fears weigh slightly heavier than vaccine hope, with futures mostly in the red even before weekly jobless claims rose for the first time in 5 weeks. Still the damage was limited and the S&P has just now broken into the green even as investors grapple with what to do next. The tech-heavy Nasdaq has been positive for most of the day as the scales tip slightly back in favor of pandemic winners (Software/Semis outperforming). Oddly though Energy is also near the top of the sector table despite crude prices trading lower amid the virus outlook (the again the space is -38% ytd). With earnings winding down it feels like this lockdown / vaccine debate is going to carry us through the end of the year (as the stimulus front remains quiet). That could mean more relatively dull days like this one, which some may welcome the way 2020 has played out…

Back to Reality… A second consecutive “Vaccine Monday” made the proverbial “light at the end of the tunnel” that much brighter for 2021, but investors are following up another Rotation burst with a more wary assessment of the more immediate obstacles blocking that tunnel exit. In addition to the daily list of states announcing new virus curbs, and an October Retail Sales print that showed slowing growth, Republican senators reminded last night they remain opposed to any large scale stimulus. That caused enough concern to spark a bit of an unwind to yesterday’s rotation, and the usual 3 Value suspects Banks, Energy, and Autos were the worst performers shortly after the open. However, sentiment has evened out as the day’s progressed (VLUE was underperforming MTUM by 1.9% at 10am, but is now only -0.6% relative) and indices are attempting to fight their way back to their unchanged marks. Now Healthcare is at the bottom of the pile, with CVS (-8.9%) and other pharmacy names (WBA -9%, RAD -16%, GDRX -20%) feeling sick about Amazon’s (AMZN +0.7%) foray into the space, and Boston Scientific (BSX -8.9%) falling after initiating a recall of one of its heart valves. Retail and Food Retail are also red following a poor reception for earnings beats from Home Depot (HD -3.0%) and Walmart (WMT -0.6%) [another sign winners may be topped out?]. More defensives sectors like Household Goods and Real Estate are faring best today, along with Apparel stocks which are benefitting from broker upgrades.

Deep Breaths… If yesterday was a “pause for breath” after a whirlwind start to the week, today feels like the first exhale of some of the vaccine cheer that’s been a boost to equities. With virus cases quickly heading in the wrong direction, shutdowns (partial at least) looking inevitable this winter, and any vaccine distribution plan lacking medical and logistical finality, there are plenty of near-term clouds obscuring investors’ view of a sunnier 2021. What began as a mild pullback this morning has become a bit more exaggerated, with Powell failing to save the day with anything new in his comments at the ECB forum, only reminding that the next months will be “challenging.” The ball is still in Congress’s court in terms of stimulus, but the only movement on that front was the White House announcing it will leave the House / Senate to get negotiations going again (apparently the WH is busy with “other things”…). All the above has led stocks to continue to fade into the afternoon. Defensive sectors Healthcare and Food Retail have been the best of the worst for most of the day but now Media has taken over the top spot as the usual winners get some of their mojo back (relatively speaking). Consequently Banks, Autos, and Energy are back in their usual place in the basement of the sector table. It was fun while it lasted? The debate continues…

They Can’t All Be Like Yesterday… The way the week started off, you half expected to come in today and hear that a Brexit trade deal had been negotiated and that Congress passed a stimulus package… But alas, US equities are once again subject to gravity after flying higher on Monday. Still that hasn’t stopped rotation game from being played (VLUE +1.3%, MTUM -1.2%), just not nearly to the same extent as yesterday’s frenzy. Tech/Semis are the laggards again, with an extra drag from Amazon (AMZN -3.0%) staring down EU antitrust investigations. Joining them in the red today is Banks (+13% yday), bringing into question how far any “Great Rotation” will carry the battered sector. Monday’s other big sector winner, Energy (+14% yday) is also cooled off a bit but remains in positive territory. Industrials are leading, namely Autos and Cap Goods (Boeing +5% as it reportedly nears 737 MAX approval). Transports are also outperforming, but that’s thanks to freight names (CSX +3.7%, KSU +2.3%) carrying the load as airlines come down from their vaccine high (AAL -4.1% after being first to pull the trigger on a stock offering). With the S&P pretty much unchanged and the 10-year Treasury yield still hovering around yesterday’s highs, the market can’t be accused over letting too much of yesterday’s jubilance slip away yet, but the big question is whether the party will last or start to fade into year-end…

Let’s Never Do This Again… Well it appears that investors ready for the weekend… After a looong week that saw the S&P notch 4 consecutive gains of over +1% (first time since 1982), today’s session feels like a bit of a pause for breath as investors as investors regather their bearings. At the moment, Biden looks all but certain to lock up the presidency, while the fate of the Senate may need to be decided by two runoff elections in Georgia in January (but still looks good for Republicans). While indices are little changed on the day, trading has still been choppy (vols +20% vs 20-day avg) as political headlines are still managing to keep jumpy traders on edge despite a conclusion nearing. Semis have also refused to calm down, with SOX making a new all-time price and 12-month relative as Microchip (MCHP +5.2%) earnings impressed last night. Telcos are also enjoying an earnings glow with T-Mobile (TMUS +6.0%) dialing up a beat and smashing expectations for costs savings from its merger with Sprint. Value sectors are dragging once again after their joining the party yesterday: Energy, Banks, and Autos are all among the worst performers. While there’s no doubt the election litigation will drag on for weeks, hopefully by Monday the market’s focus can return to the prospect of stimulus…

About Last Night… Look this has been fun, but maybe it’s best if we end things? The market is taking it all relatively well (VIX still sitting below 30) considering the election night surprises and lingering uncertainty, and indices have extended gains post-EU close (but are off their highs). That comes as vote counts continue to trend well for Biden, who is now carrying narrow leads in both Wisconsin and Michigan, where he could be declared the unofficial victor as soon as this afternoon (going a long way to sealing the deal even without PA’s help). What is more concrete is that Democrats’ hoped for Blue Wave is not going to materialize, and whoever is President will be dealing with a split Congress. The promise of a Republican Senate has prompted a strong tide of rotation rewind as investors adjust expectations for a skinnier stimulus package (MTUM +5.0% vs VLUE +1.1%; QQQ +4.8% vs IWM +0.4%,) — still stocks have gotten an extra bid over the last few hours as Senate Leader McConnell promised a stimulus deal would be “top priority” when the body reconvenes next week. Tech / Media / Semis are all outperforming amid the return to growth / winning trades; in addition, reduced concerns of reform / regulation are helping Big Tech as well as the Healthcare / Pharma names. Treasury yields remain under pressure as the political rollercoaster certainly hasn’t come to a full stop, but the 10-year yield is only back to the range it occupied last week. It may be days before all the votes are finally tallied (and then expect some recounts), but if they’re all days like this, the bulls are fine with that.