Jurrien Timmer, Director of Global Macro, believes that if there is less fiscal stimulus relief now, and the Democrats take over in January, trillions of dollars could be released then. If the Republicans hold the Senate, however, there will likely be less relief, and the markets are pricing in that possibility. Jurrien thinks the market is struggling right now to do so, and as a result, the S&P 500 Index has been flat for several weeks as markets wait for more information. Last week, the markets saw $53 billion in inflows; while this is a large number, Jurrien notes there are still trillions in money market funds and hundreds of billions going in and out of bond funds. After years of outflow, he is not that surprised that equity funds are taking in billions. It could be a signal that investors are seeing a light at the end of the tunnel regarding COVID-19, and that there might be a better environment ahead in 2021.
Recorded on November 23, 2020.