New Lévy Flight Event Sinks S&P 500 in Final Week of October 2020

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

• COVID-19 pandemic deals body blow to quant models, study shows

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:

• Europe a sea of red: German shares plunge up to 5% on emergency lockdown

Bigger stimulus developing in the Eurozone:

• Germany seals new aid package worth 10 billion euros to compensate firms: sources

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

• Coronavirus, consolidation taking toll on energy jobs

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:

• Fed reduces loan minimum, easing terms for Main Street 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:

• Hong Kong recession shows signs of slowing as China economy expands

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.