RWM

While the Q3 earnings season has been overwhelmed by the focus of investors on the U.S. election (see the latest), a look back by Bank of America shows that 67%

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

It seems there will be no stimulus anytime soon.Depending on the election, it may be months before a new one is agreed.This a risk that has not been priced into the market yet.

The Chicago Fed's National Activity Index is pointing towards more growth.South Korea has emerged from its recession.The weekly charts for the larger indexes show double-tops, which probably means the 4Q20 will be a tough trading environment.

We have a perfect storm on the horizon that is approaching fast.Election turmoil, another wave of the pandemic, and an economy absent needed stimulus are the three fronts of this storm.The market implications between now and year end are a correction at best and another bear-market decline at worst.

With record economic growth and hiring this summer, we may soon learn that the recession is already technically over.But the end of the recession doesn’t mean the economy has recovered, only that the worst is behind us in terms of lost economic output, income, and jobs.Expect the recovery in GDP to take another year, while regaining the lost jobs to take closer to two years. Getting back to the former trajectory will take longer still.Investors should be mindful that the path forward will be slow and uneven, even after the recession is declared to be over.

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.