Good Monday AM,

Markets are more volatile today than I can remember, well that’s not exactly true, I remember when the last election was called for Mr. Trump equities and bond yields jumped then too. I will need to go back and compare the moves to know which was greater. The Dow is up 1300 points, the 10-year yield is at .95 (up from .80 on Friday). The news over the weekend was Mr. Biden has won the presidency. Mr. Trump is contesting and the current odds are 12-1 Mr. Trump can win (roughly 8.33% chance of winning).  Who knows how long this will take to iron out (When Al Gore contested Florida in 2000, it took 37 days to figure out… and he lost). A bigger concern of mine though is the run senate election in Georgia which could yield 2 additional seats to the Dems. If this happens (I think Jan 5th) and Mr. Biden is indeed confirmed as President, a Democrat controlled congress and White House is likely going to be expensive and create inflation. That is not a recipe for low mortgage rates. We do need a balance of power regardless of party affiliation. This all said, I am glad to not point today’s market movement on the election. Far more importantly, early this a.m., Pfizer’s released a report that their Covid vaccine is 90% effective in recent trials. Markets reacted in a very clear way with both stocks and bond yields surging higher at the fastest pace in months. This will be a longer road to FDA approval but the results are promising and are giving equities a steroid shot. Despite the move higher in equities, I remain cautiously bullish on bonds, but until the stock market calms down and people get back to monitoring the economy, which still has long way to go before full recovery, bonds may struggle. The volatility in bonds is historic at this point. There is no reason to float loans at this point. I believe today’s move was temporary and we should see some relief in the next several days.

Please remain safe and healthy, make today great!