• Betting markets show the race between the President and former VP Joe Biden materially closer than the polls.  The stock market exhibited volatility levels indicate acute stress this past week, with volatility reaching 40, a level seen on only nine occasions over the past decade.  

• We are at an inflection point in the US stock market.  The high prices of defensive shares reflect the expectation of a lot of future good news. We think that shortly after the election, a rotation in cyclical stocks and non-US equity markets may begin. If it does not immediately do so, the vaccine may provide the second of three catalysts for such a rotation.

• The fact that there are four late state Phase 3 testing programs underway for the Covid-19 vaccine is itself remarkable. This will be the fastest development and release of a vaccine in human history.  

• We believe that markets will receive a “double booster shot” in Q12021, with large-scale distribution of one or more effective vaccines underway and the passage of a fiscal stimulus bill by the US Congress.  Experts in epidemiology see a 70% efficacy rate for early vaccines as the center point for their expectations.  These events would initiate a sharp “normalization” in most of the world economy in the second half of 2021.

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