It has been a choppy week for markets, and stocks still remain ~7% off their recent highs. And we soon enter the seasonal trade “sell Rosh Hashanah, buy Yom Kippur” (9/19-9/28) so this bumpy ride might continue. Stocks have risen relentlessly since March, so any pullback is not entirely surprising to us. And for the past few days, we have highlighted why stocks still have positive risk/reward into YE.

On the COVID-19 case data front, I can’t help thinking that there is some distortion in trends due to last week’s Labor Day holiday. That is, the long weekend and closures means we are seeing a catch up of this data week. And for now, the best way to put this in perspective is to look at 2-week trends (see red arrows on chart below). Therefore, I think next week will serve as a better baseline for tracking case trends as the Labor Day effect will be gone.

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