5 charts from the past week that tell an interesting story in markets and investing…
1) Call It a Comeback
661,000 jobs were added back in October, building on the gains from May through September.
In February and March, 22.1 million jobs were lost and since then 12 million have been added back. This means the number of jobs remains 10.1 million (or 6.6%) below the prior high.
The US Unemployment Rate moved down to 6.9% in October, declining for the 6th consecutive month from a peak of 14.7% in April. Prior to the covid-related shutdowns it stood at 3.5%, a 50-year low.
2) Earnings Rebound
With 75% of companies in the S&P 500 reporting their third quarter results, the decline of 5% from the prior year is a sharp rebound from last quarter (-49% YoY) and above expectations.
S&P 500 sales were down 3.7% over the last year, also beating expectations of a larger decline.
3) Covid Continues
Covid-19 hospitalizations in the US moved above 50,000 this week for the 3rd time.
Newly reported cases in the US continue to rise, topping 100,000 in a single day for the first time.
My simple model that adjusts cases for higher testing is currently showing that community spread is at its highest level since early May.
4) A Divided Government
The final results are not yet in, but the betting markets are pointing to a divided government with Biden winning the presidency (94% probability), Republicans maintaining senate control (77% probability), Democrats maintaining control of the house (96% probability).
Here’s a current snapshot of the electoral map according to bettors on one site…
5) 2016 Redux
In a repeat of 2016, markets rallied on election day, and continued to rally in the days thereafter.
What about the uncertainty of the presidential outcome and the prospect of a divided government?
Markets seemed completely unfazed with volatility ($VIX) getting crushed in one of its largest weekly declines on record.
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And that’s it for this week. Thanks for reading.
Have a great weekend everyone!
-Charlie
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