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COVID-19 UPDATE: Wall of worry is growing given Europe case surge. Supreme Court Justice battle. US cases organically easing. VIX falling similar to June correction.

Click HERE to access the FSInsight COVID-19 Daily Chartbook.

STRATEGY: VIX falling, looking more like June sell-off.  Low prior to election day...
For the past 3 weeks, stocks have been correcting and in the past few days, this sell-off has become very steep on the downside.  Yesterday's 3% intraday selloff also pushed the S&P 500 to >10% off its recent high, making it the steepest selloff since the June 8% correction.

The wall of concerns has been mounting in recent weeks and over the weekend:
- Supreme Court Justice death of RBG brings dysfunction of Washington front and center
- 2020 election likely to be contested and potentially undecided
- Europe is seeing a resurgence of cases
- Many healthcare experts see a COVID-19 second wave beginning this Winter
- China/US geopolitical tensions (TikTok)

The list can go on and on, but you get the picture.  Investors can cite a mounting list of concerns.  But here are some things to keep in mind.


Uncertainty risen and markets prefer visibility --> election day will mark a turning point for visibility...
The list above is adding to uncertainty and hurting market visibility.  And we all know that as visibility contracts, equity risk premia rises.  Hence, stocks fall.  November 3, 2020 is a key turning point.  The uncertainty into the election will be behind us by that date.  And similar to 2016, the actual election outcome brings some clarity -- and regardless of the winner, this clarity is what will impact markets.

- In 2016, equity markets bottomed on 11/4/2016, 2 trading (technically 3 trading days) before election results (after the close 11/8/2016).

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