Name: Free Fallin’: A Pre-Election Stock Market Story
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Free Fallin’: A Pre-Election Stock Market Story

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SubscribeTHIS IS NOT INVESTMENT ADVICE. Please speak with a registered investment advisor or other qualified financial professional before making any investment decisions.The S&P 500 fell 5.5% this week, this was the stock market’s worst weekly performance leading up to a presidential election in history. Uncharacteristically, the 10 year treasury yield rose 2 basis points (safe-haven bonds fell in price). This is an unusual dynamic given Treasury bonds historical tendency to rise (yields fall) during periods of stock market weakness. Despite strong tech company earnings and a remarkably strong earnings season overall, this past week’s poor performance was driven by growing concerns surrounding the recent rise in coronavirus infections, lockdown announcements in Europe, and the impact these will have on the potential for a continued economic recovery. Amidst all this, The VIX (the benchmark measure of implied volatility) rose to its the highest level since June. Another factor that likely impacted investor sentiment has been the uncertainty surrounding the election outcome. To date, there have been 230 election-related lawsuits filed. With US election day on Tuesday, we reviewed some predictions from the Superforecasters:Under ordinary circumstances the coming week would have investors engaged with the FOMC meeting on Wednesday and the employment situation report on Friday but the story will be the presidential election. The whole world will be watching.Source: BloombergSource: SchwabIf you would like to receive the Weekly Macro Summary directly to your mailbox every Sunday, please subscribe. It’s free.Atlanta Fed GDPNow is currently tracking at 2.2% for Q4. New York Fed GDP Nowcast stands at 3.24% for Q4US GDP was 33% annualized for Q3 vs. 31% consensus, but the economy is still 3.5% smaller than it was before COVID. Source: Morgan StanleySource: Macquarie BankUS durable goods orders for September +1.9% (beat expectations of +0.5%) & core capital goods +1.0%.Source: Oxford EconomicsSource: Morgan StanleyConsumer Confidence headline index -0.4pt, to 100.9. Source: Oxford EconomicsUS Initial Jobless Claims 751k vs. 775k expected. Continuing claims significantly improved, now at 7.76mln from 8.37mln.Personal spending in the US +1.4%m/m in September.Source: Macquarie BankUS personal income +0.9% from September, up from a revised -2.5% in August.The Eurozone economy grew +12.7% for Q3 after falling 11.8% in Q2. The unemployment rate in the Euro Area remained flat at 8.3% in September.NBS Manufacturing PMI for China 51.4 for October.South Korea’s October consumer confidence levels are now at the highest level since the Covid outbreak in February. The economy relies on exports and the pickup in confidence bodes well for a continued global recovery in the coming months. The ECB announces no changes in its policy stance, as expected.The ECB Q3 Bank Lending Survey shows that banks’ approval criteria for loans to firms and households has tightened.Bank of Canada announced a small tapering of QE purchase last week. Leveraged buyout market rebounded significantly in Q3 on the back of readily available, low rate financing. The oil market continues to struggle this year, as ExxonMobil announces it will lay off around 1,900 employees and Chevron will be working towards reducing their headcount by 10% to 15%. Morgan Stanley sees a lucrative opportunity in the private credit market as mid-size firms look for liquidity.Bitcoin has surged 25% in the month of October to levels not seen since January 2018, closing the week around $13,800. The recent rally may be driven by institutional acceptance, rather than a retail frenzy.Source: BloombergMajor state-owned Chinese banks have swapped US dollars for yuan throughout the week according to market sources. As of Friday, 64% of the S&P 500 had reported their Q3 results. Earnings season has been strong relative to expectations, across the board.Las Vegas Sands is exploring the sale of its Las Vegas strip assets: the Venetian and Palazzo casinos, and the Sands Expo and Convention Center. Source: Deutsche BankCummins, one of the largest manufacturers of diesel and natural gas engines, EPS: $3.36 vs $2.42 expected.ServiceNow, maker of workflow software, EPS of $1.21 vs $1.03 expected on revenue of $1.15bln.Out with the old, in with the new:Microsoft (NASDAQ: MSFT): Fiscal 1Q EPS of $1.82 vs $1.54 expected.Visa (NYSE: V): Fiscal 4Q EPS of $0.97 falls short of $1.09 expected. Compared to $1.34 last year for the same periodAmazon (NASDAQ: AMZN), stellar performance. EPS of $12.37 vs $7.41 expected.Apple (NASDAQ: AAPL): EPS $0.73 vs $0.70 expected.Google (NASDAQ: GOOG) strong quarter: Q3 EPS $16.40 vs $10.12 compared to last year.Facebook (NASDAQ: FB) EPS $2.71 vs $1.91 expected, strong despite a decrease in users in the US and CanadaGEOPOLITICSVice-President of the European Commission, Josep Borrell, and US Secretary of State Mike Pompeo, met via telephone on October 23rd to discuss a range of issuesSecretary Pompeo also announced that the US and Japan have held the first ever consultations for a new host nation support agreement by which Japan will take on its share of the cost of stationing US forces in the country. Thank you for subscribing to the Primary Dealer Review. If you have any questions or comments, please email me directly at and I will get back to you.Do you know someone who would like to receive this publication? Please feel free to share the Weekly Macro Summary with them.This weekly summary expresses the views of the author as of the date indicated and such views are subject to change without notice. The author has no duty or obligation to update the information contained herein. Further, the author makes no representation, and it should not be assumed that past investment performance is an indication of future results.Moreover, wherever there is the potential for profit there is also the possibility of loss.This weekly summary is being made available for educational purposes only and should not be used for any other purpose. The information contained herein does not constitute and should not be construed as an offering of advisory services or an offer to sell or solicitation to buy any securities or related financial instruments in any jurisdiction. Certain information contained herein concerning economic trends and performance is based on or derived from information provided by independent third-party sources.The author believes that the sources from which such information has been obtained are reliable; however, it cannot guarantee the accuracy of such information and has not independently verified the accuracy or completeness of such information or the assumptions on which such information is based.This weekly summary, including the information contained herein, may not be copied, reproduced, republished, or posted in whole or in part, in any form without the prior written consent of the author.© 2020 Primary Dealer. See , andThis site requires JavaScript to run correctly. Please or unblock scripts

SubscribeTHIS IS NOT INVESTMENT ADVICE. Please speak with a registered investment advisor or other qualified financial professional before making any investment decisions.The S&P 500 fell 5.5% this week, this was the stock market’s worst weekly performance leading up to a presidential election in history. Uncharacteristically, the 10 year treasury yield rose 2 basis points (safe-haven bonds fell in price). This is an unusual dynamic given Treasury bonds historical tendency to rise (yields fall) during periods of stock market weakness. Despite strong tech company earnings and a remarkably...

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