E Market Briefing For Wednesday, Nov. 25

A 'return to normalcy' - with minimal concerns about radical transformations, especially as relates to fiscal and monetary policy, partially relates to the S&P surge, which was expected to reach the low-to-mid 3600's, but not 3800 yet.

The economy and interest rates matter more than politics, and COVID relates to all of it. Worse fears are removed with Yellen's appointment, more so than any enthusiasm about Yellen herself. I was often not a fan myself years ago, and very much welcomed Fed Chairman Powell. The point is more a 'centrist' one that particularly being a fan of return to 'some' prior policy perspectives.

During Yellen’s prior tenure as Fed Chair, Fed policy uncertainty fueled fairly long-lasting strength of the dollar, and we were consistently Dollar bulls then. The perception must be that you could see a better, shall we say more formal setting, around the Dollar as we go forward next year. Nobody argues higher rates until we are well into the post-COVID recovery phase.

I don't disagree at all with concerns about eventual debt risk being expanded in a Democratic Administration, just that it would be regardless in this backdrop. However at some point money-printing temptations risk becoming addictive to politicians especially, and that's when the risk returns. I have often noted that the favorable growth and firmer credit markets will eventually create a price to be paid, while pointing-out this is on our radar but it's not closing-in 'yet'.

Many payment deferrals are going to collide with this 'happy days' upside run, whether that's sooner or later, and especially if you stimulus doesn't emerge, in this lame-duck Congress. Yes things are getting frothy, and there are many disruptive considerations out there, which aren't being focused on. One of the greater concerns might well turn-out to be resistance to getting the vaccine, if we don't see at least one or two of the newer vaccines with few side effects.

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