Insights

Top News:

10/26: Resurgent Covid infections across the U.S. and EU heightened concerns over an extended recovery process, particularly in view of the fiscal relief legislation mired in partisanship.

 

10/27: The U.S. Senate adjourned until Nov. 9, abandoning any additional endeavor for a pre-election fiscal deal.  Business spending continued to rebound as durable goods orders rose for a fifth consecutive month in September. Unexpectedly, one measure of consumer confidence in October dipped slightly, driven by “a softening in the short-term outlook for jobs.”

 

10/28: Absent any positive catalyst, U.S. stocks extended recent weakness as investors focused on the worrisome surge in new coronavirus cases in 29 states, and weighed the likelihood of contested election scenarios.

 

10/29: Better than expected U.S. 3Q GDP and weekly jobless claims reports notwithstanding, a full recovery to pre-pandemic levels remains elusive, especially in light of further Covid-induced disruptions.  To cushion some of the blows from lockdowns reimposed on the Continent, the ECB hinted at additional monetary stimulus by promising to “recalibrate its instruments, as appropriate, to respond to the unfolding situation.”

 

10/30: American consumer income and spending capped off a strong 3Q recovery in September, while a key inflation indicator came in at a mild 1.5%.  Given the rearview mirror nature of this data, however, investors questioned whether such momentum can be sustained, considering looming public health worries and political uncertainties.

 

 

Heard on the Street:

“The question now is whether another reminder of crashes past could emerge to create a psychological sense of the risk.  A further pickup in coronavirus cases, a chaotic or violent election or any number of other events could well shake people up… We may be at something of a crossroads.”

— Robert Shiller, Professor of Economics at Yale, in an op-ed on 10/23/2020

 

“If an election dispute drags on – perhaps into early next year – stock prices could fall by as much as 10%, government bond yields would decline (though they are already quite low), and the global flight to safety would push gold prices higher… investors should be preparing for the worst, not just on election day but in the weeks and months thereafter.”

— Nouriel Roubini, Professor of Economics at NYU, in an op-ed on 10/27/2020

 

 

Longer Game:

“Global investors tend to be very Western-centric.  A number of countries have done a much better job of dealing with the virus without inflating their budget deficits and printing money… There is a substantial economic divergence between East and West.  As investors, you shouldn’t let yourself be completely locked into the West.”

— Bob Prince, co-CIO of Bridgewater Associates, in a Bloomberg interview on 10/23/2020

 

 

Bonus:

Researchers from Imperial College London found that “the proportion of people with detectable antibodies is falling over time,” raising concerns over the durability of antibodies and leaving unanswered the question of reinfection.