October Core PCE inflation declined in line with expectations and remains below the Fed’s 2% target at 1.4%. Durable goods orders meanwhile surprised to the upside and are approaching a full, and v-shaped, recovery. Is the broader economic recovery set to become even more “K shaped” though as pandemic-specific unemployment programs—currently utilized by 13 million+ Americans—approach a December 26th expiration date? The market rotation continues meanwhile as small caps benefit from improving financial conditions and vaccine optimism. Are the same forces fueling the surge in Nasdaq trading, which just hit a 15-year high?

Happy early Thanksgiving Fireside Charts readers! While we’re grateful for our families, our jobs, and our homes this Thanksgiving, we’re reminded that many are not so lucky—particularly in 2020—and are facing struggles that are likely to worsen in the coming months. A wave of foreclosures and evictions is approaching, many are being pushed out of the workforce, and small businesses are wading further into debt to stay afloat. And the market may have hit new highs recently—the Dow crossed the 30,000 milestone for the first time ever yesterday—sending sentiment soaring, but dividend suspensions and decreases have also spiked this year, surpassing 2008 levels. Could we be due for a pullback? The Fed meanwhile has focused much of its attention on purchasing longer-term treasuries this year, but how will inflation come into play? Finally, the manufacturing sector looks to be holding up well both here and abroad, and growth is accelerating here in the U.S. Will the trend continue into the winter?

Many Americans will be celebrating Thanksgiving in a new home this year—the pandemic-induced housing boom remains red hot as housing completions climb and mortgage rates sink ever lower. Paying for those homes (among other things) may soon grow more difficult for many though, as heavily utilized pandemic unemployment assistance programs are set to expire on December 26th and Congress remains stalled on the next round of stimulus. Meanwhile, it’s been a strong couple of weeks for equities following a slew of good news on vaccine progress: global equities saw their largest 2-week cash inflow on record and the Dow, the S&P 500® Index, and many emerging market indices have recently clinched new record highs. Will AstraZeneca’s announcement of yet another promising vaccine contender add fuel to the fire heading into the holiday season?

The jobs recovery is slowing and is poised to struggle further this winter if the current explosion in new Covid cases continues at the same pace. More than 10 million jobs have been lost since the onset of the pandemic, and the typical duration of unemployment is climbing. Though many used stimulus payments and curbed spending to pay off debt, negotiations on additional funding stalled in Congress this summer, and now many—particularly renters—are faced with being unable to afford their homes, even as the housing market itself enjoys significant growth. The market rotation has continued this week as investors pile into small caps, Energy, and other sectors that have struggled under Covid. Under pressure from the Treasury Department, many of the Fed’s emergency lending programs are being shuttered—though the decision is not without controversy. Will the stability these programs provided in the early days of the pandemic last if Congress “reappropriates” their funding?

Manufacturing has slumped in the Empire State, underperforming expectations and coming in at 6.3 as businesses increasingly feel the weight of surging Covid cases. The Dow and the S&P 500® Index both hit new all-time highs on the Moderna vaccine news, and stocks favored by retail investors also saw a significant bump—could equally emotional reactions drive future volatility as vaccine developments and record case counts battle for column inches? Value sectors like Energy and Financials also climbed on the news in what could be a long-anticipated rotation away from growth stocks. The USD meanwhile has continued to weaken as the Yuan climbs—could it help the U.S. narrow the trade gap with China?

The S&P 500® Index closed at a record high on Friday as optimism on vaccine progress—which we heard more good news on this morning—battled a dramatic and accelerating spike in Covid cases. That spike is making its presence felt in the larger economic recovery though, where momentum has slowed. Small caps and the energy sector both enjoyed a boost themselves last week in what could become an interesting reversal of established trends. Meanwhile, yields have continued to rise as the Fed’s balance sheet soars to new heights… will that climb be complicated by the ongoing push-pull between spiking Covid cases and progress toward a vaccine?

Spiking Covid cases have undercut some of the market optimism following the announcement of Pfizer’s vaccine progress on Monday, but the market reaction offers some interesting insight into the “vaccine sensitivity” of various sectors—something we’ll be keeping an eye on as trials continue and results flow in. Meanwhile, the recent flood of new bond issuance could make its presence felt everywhere from CPI—which remains subdued at a reading of 0.0—to the growing spread between growth and value stocks. The U.S. hit a record October deficit of over $284 billion; will the bond market become even more crowded in an attempt to address it with new debt?

Infrastructure spending—a popular form of economic stimulus—is increasingly being shouldered by state and local governments, where investment has established a downward trend over the past 60 years. With local governments already stretched thin during the pandemic, will they face obstacles attempting to employ this particular policy move? REITs have established some upward momentum lately, but they may face headwinds as offices continue to close and subleases surge in the work-from-home era. And junk bond yields climbed on vaccine news, but not before hitting a new record low on Monday. Highly leveraged companies have been particularly vulnerable during the pandemic—have many already passed the point of no return, and could it spell trouble for high yield investors?

Equities were off to the races this morning and are on track to set new records following the conclusion to a tense election week and promising news on a Covid-19 vaccine. The U.S. dollar has experienced significant weakness since March and may remain under pressure from growing risk appetite and the transition to the new administration. Eyes will also be on inflation this week—numbers remain fairly weak but are inching closer to 2%. Could we soon see the Fed’s new policy of average inflation targeting in action? Momentum is slowing on the economic recovery in the U.S. as new daily cases spike to a record of 120,000+/day, so we’re hoping this doesn’t turn into a case of stagflation…

Today’s jobs report showed a promising drop in the unemployment rate to 6.9%—down a full percentage point from September—but initial benefits claims continue to roll in at a rate of over 1 million per week. As additional fiscal stimulus has remained a point of contention in the senate, the mortgage delinquency rate has passed 8% to approach heights last seen during the Great Recession. And while America waits for a verdict on the election, tech stocks and the Nasdaq have gotten a boost from the fading likelihood of a single party congressional majority—could equities at large follow the same pattern?