One of the top market rules for me, maybe even “rule #1,” is never to try to impose my views on the markets. And perhaps, it is more useful to try to decipher the message from market behavior. If I had to describe equities over the past week, they seemed to have been treating fiscal stimulus as a binary event. Regardless of the fact that this seems more of a “when not if” question to me. More on this below.
On the COVID-19 front, the trend in daily cases continued rising this week. This has been the case for the past few weeks and I see two major takeaways: (i) US cases could reach 70,000 within 2 weeks, matching the July highs, (ii) Because the spread is primarily in 11 states, we might be nearing peak velocity in those states.
We are still in wave 3 of COVID-19 in the US. And this wave, so far, is primarily a spread of cases in states that were largely unscathed in wave 1 (NY tristate +MA +RI) and wave 2 (FL, CA, AZ, TX, or F-CAT along with 19 tag along states). And this means COVID-19 is finding its way into areas of the US which are “caught off guard.”