As if 2020 wasn't crazy enough already, the S&P 500 (Index: SPX) experienced a new Lévy flight event on 28 October 2020, sending the index down 3.5% for the day as investors suddenly shifted their forward looking focus from 2020-Q4 toward the more distant future quarter of 2021-Q1. Overall, the index ended the final trading week of October 2020 some 5.6% lower than the previous week, ending the month at 3,269.96.
Since we've already covered that event as an update to the previous entry in the S&P 500 chaos series, let's update that update through Friday, 30 October 2020 by noting that investors have continued focusing on 2021-Q1 in setting current day stock prices.
With the outcome of the 3 November 2020 having the potential to greatly affect the expectations for future dividends, here is the latest snapshot of those expectations:
Finally, here's a sampling of the random onset of new information that investors absorbed in the final week of October 2020.
- Monday, 26 October 2020
- Signs and portents for the U.S. economy:
- Oil drops 3% as virus infections, Libyan oil output rebound
- U.S. new home sales drop; record low mortgage rates underpinning demand
- Bigger trouble developing in Eurozone:
- SAP drags down German shares, COVID-19 worries weigh on broader Europe
- German government raises 2020 GDP forecast to -5.5%, source says
- German business morale falls on virus angst as rebound fades
- ECB minions prepping for big bank merger/bailouts, debate new stimulus round, deal with woke leader:
- Cross-border mergers in Europe would help diversify banks: ECB's de Cos
- Testing times: Five questions for the ECB
- From climate change to equality, Lagarde turns ECB more political
- Wall Street closes down on soaring virus cases, U.S. stimulus worries
- Tuesday, 27 October 2020
- Daily signs and portents for the U.S. economy:
- Oil rises 2% on U.S. Gulf shutdowns, outlook weak
- Trump says COVID-19 aid deal expected after Nov. 3 election
- Bigger trouble developing in China, changing recovery plan:
- China's industrial profit growth slows as factory-gate deflation weighs
- Explainer: What to watch at the fifth plenum of China's Communist Party
- China's economic growth seen hitting 44-year low in 2020, bounce 8.4% in 2021: Reuters poll
- ECB minions planning Eurozone bank bailouts:
- ECB's Enria backs network of bad banks to mop up bad loans
- Euro zone banks curtail credit access amid fresh pandemic worries
- S&P 500, Dow slip on worries about earnings, U.S. stimulus outlook
- Wednesday, 28 October 2020
- Signs and portents for the U.S. economy:
- Oil plunges over 5% to four-month low as pandemic surges, U.S. crude output soars
- Record U.S. third-quarter growth assured as goods trade deficit falls, inventories rise
- U.S. businesses splurge on insurance to protect against post-election chaos
- Bigger trouble developing in the Eurozone:
- Bigger stimulus developing in the Eurozone:
- Wall Street sinks 3%, Dow at late July lows as pandemic surges
- Thursday, 29 October 2020
- Daily signs and portents for the U.S. economy:
- Economy Roars Back in Third Quarter With 33.1% Growth in GDP
- Oil extends losses with 4% slump on renewed lockdowns
- Post coronavirus recession recovery signs in Japan, Asia:
- Japan's factory output rises for fourth month on jump in car, machinery production
- Analysis: As COVID persists and U.S. election nears, China growth lifts Asia
- ECB minions hint at, but deliver, no new stimulus despite lockdowns triggering double-dip recessions:
- Euro zone faces risk of double dip recession, ECB supervisor says
- ECB keeps stimulus unchanged but hints at December action
- ECB eyes more bond buys, cheap loans in December as pandemic hits
- Lagarde comments at ECB press conference
- Wall Street rebounds as market eyes tech results, strong U.S. data
- Friday, 30 October 2020
- Daily signs and portents for the U.S. economy:
- Oil falls on demand concerns, posts second monthly decline
- U.S. Senate leader says coronavirus aid bill should advance in early 2021
- U.S. consumer spending beats expectations in September
- Fed minions expand small business loan program:
- Bigger trouble developing in Eurozone:
- Euro zone economy surges in third quarter before expected blow from new lockdowns
- German government: Economy will shrink 5.5% this year, expand 4.4% in 2021
- Recovery signs in Asia:
- ECB minions demonstrate amazing grasp of obvious:
- ECB's Visco says worsening COVID picture could hit euro zone recovery
- ECB ready to help but must be mindful of side effects: Mersch
- Tech slide, pandemic surge slam Wall Street, biggest weekly loss since March
Elsewhere, Barry Ritholtz lists 8 positives and 8 negatives he found in the past week's economics and markets news.
+Update 5 November 2020: Our headline for next week could be "Second Lévy Flight Event Boosts S&P 500 After Election". It's taken just two days for investors to fully shift their focus from 2021-Q1 back into 2020-Q4 in the aftermath of the 3 November 2020 election, thanks largely to the failure of the Democratic party to deliver a 'blue wave' election result that would ensure their promised tax hikes on corporate and investor income. Here's the updated alternative futures chart showing the shift in the level of the S&P 500 corresponding to that change in the future time horizon for investors:
