Jurrien Timmer, Fidelity’s Director of Global Macro, thinks this earnings season will be a good one. Back in the second quarter, expectations at the worst points showed a 46% contraction, but ended up at 31%. Right now, the market is pricing in -21%, but it could be -15% when all is said and done. Jurrien believes that the debates have tipped the scales more decisively towards a blue wave in the U.S. He believes that the anticipated headwinds of taxation and regulation are being offset by expectations of industrial and monetary policy, and that this is behind the rotation we are seeing back into value and small caps over the last two weeks. 

Recorded on October 13, 2020.