DXD

The election in 2016 occurred during a very different volatility environment than markets are currently facing.Markets reeled in response to the results of the 2016 presidential elections, with E-mini S&P 500 futures prices falling more than 6% before ending the day higher.The election in 2016 occurred during a very different volatility environment than markets are currently facing.

An all Democratic government is bullish in the long run because it means the government is likely to be pretty loose with the purse strings.When you build a house you realize that so much of the economy is dependent on stability in these goods that go into a home because they all comprise such a large part of the economy.My general view is that the President does not really matter for the stock market.

When a stimulus program moves money around, some people will have more and others will have less.The purchasing power of our dollars declines with inflation, so the cost of stimulus is spread widely across the population.Helping the economy is a false justification for a stimulus program.

With coronavirus infections and lockdown risks now on the rise, could a second wave of downgrades be on the horizon?We see further signs of wavering in forward-looking EPS revision trends.As current valuation levels imply, investors appear to be looking beyond the depressed near-term outlook for the brighter longer-term prospects of a post-COVID-19 world.

Traders are clearly in risk-off mode at the moment.A correction of sorts makes sense.But, my question is if it's time to return to the COVID Winners?

The dramatic risk rally since March has driven a sharp expansion in global forward P/E multiples.The disconnect between "P" and "E" is most extreme for the US small-cap Russell 2000 and the least extreme for the FTSE UK.Sector-level P/E expansions have also been fueled by price gains, which themselves have been significantly polarized, reflecting the uneven impact of the pandemic on sector earnings.

Monday’s rout in U.S. stocks saw a pullback from the 3400 level on the S&P; the market is taking a pause and that is setting the tone for the week.FX volatility is low and there have been no big moves in emerging markets - even for the Turkish lira, which has been coming apart at the seams.Going into the middle of the week, we’ve got pressure on the markets, some expected volatility, and we’re once again seeing that familiar lockdown rotation.

There are three negative inputs to the current market action.And one ginormous positive.From my seat, the positive gives the bulls an edge.