BAPR

This is probably the first recession that inflated rather than popped financial asset bubbles.Panicked governments and central banks are dumping trillions of play-money dollars into the system, a big part of which flow directly into the brokerage accounts of the 1%.Another effect of long equity bull markets is a growing population of companies that are only viable in the easiest of easy money environments.

What the VIX futures are telling us.What the market is telling us about election expectations.Using options to take advantage of market uncertainties.

Historical data on average one-year, five-year and fifteen-year returns for the S&P 500 since 1871, with all dividends continuously reinvested.Historical data on the range of returns for one-year, five-year and fifteen-year holding periods.History’s shocking surprise about risk and returns.

Economy does not influence stock prices.Sentiment, which fluctuates cyclically, drives stock price movement.The 10 cycles I’m following suggest the S&P 500 will start a downtrend in a few days that lasts till mid-January.I will remain neutral on the stock market for a few more days and then likely become bearish.

Investors whose sole focus is on returns fail because they don’t structure a portfolio that properly accounts for risk.Growth in America has been going down over time, due in part to both demographics and regulation; going forward, we’re unlikely to see GDP numbers above 3%.We can’t see what’s on the other side of the election, and two weeks from now things could be different, but right now, the market is pricing a Biden win.

We like higher-yielding credit amid low rates, and see corporate restructurings offering growth and potential return diversification for private credit investors.A pickup in COVID-19 cases may weigh on mobility and activity in the near term, but we see this wave of infections as much shallower than the spring one.A spate of purchasing managers’ index data this week could shed light on any potential impact that increased virus infections has had on activity.

Expect pre-election volatility in the averages to increase from here.Tech sector stocks are vulnerable to additional shake-outs.Broad market internal strength should prevent a serious decline, however.

Readers should note the improving growth rates in Q3 '20, Q4 '20 and Q1 '21 EPS and the the minor improvements in the same quarter's expected revenue growth.Bank earnings this week undoubtedly helped the 3rd quarter EPS numbers, although the bank stocks and financials didn't do much on the week.The regular pattern that's been in place for S&P 500 earnings since last Spring remains in place, particularly the sequential increases in week-to-week estimates.