Good Monday AM,

Dow down 900 for the day. Fears of a growing Covid wave (the US hit a record of more than 80k new cases on Saturday, the highest one-day count), clear indication a new stimulus package will not be done before the election, and that the election may be a bit more contested than thought just a few days ago. Bonds are strong as a result. The ten-year is back to .79 (I can’t tell you how happy I am). Mortgage bonds +25bps. New Home Sales were released this morning and they missed expectations, but the number of sales was high, it’s just that the expectations were too high. This week will be insane! It’s the biggest news week of the quarter because we get the third quarter GDP release which some economists are expecting it to be so high, that we will be out of the recession. This, added to Covid, the elections, and stimulus drama will make for a volatile week. I do anticipate all this fear will spark a rebound in bond prices. However, if GDP is better than expected or we get a stimulus deal, this will put new pressure on bonds. In other words, lock today or tomorrow or run the risk of volatility.

Some excellent useless knowledge from the WSJ:  on this day in 1825, the Erie Canal was inaugurated as New York City hosted a flotilla of boats with a parade, banquet, and fireworks display after they traversed the 363-mile run from Lake Erie. Financed with $6 million in stock and bonds and eight years in the making, the canal cut shipping time from New York to Buffalo from three weeks to eight days—and slashed the cost of transporting goods from $100 a ton to $15. Suddenly the American frontier was opened to a two-way flood of commerce.

Please remain safe and healthy and make today great!