Director of Global Macro Jurrien Timmer discusses the recent market correction, why he thinks it’s taken place, what it’s done for inflation expectations and how COVID-19 and the election could affect the markets. Following the death of Ruth Bader Ginsburg, the market corrected itself, with the S&P 500 Index down 9.8% and the Nasdaq Composite Index down 14%. Jurrien notes that during normal corrections there is usually a rotation between sectors, but that didn’t happen during the week of September 21, 2020: everything was down. The market had been waiting impatiently for the next wave of fiscal relief, and the momentum based on an approaching agreement on fiscal stimulus was dissipated amid the politics surrounding Justice Ginsburg’s death. Although the number of COVID-19 cases is rising, death rates are not. If this continues to be the trend, Jurrien believes the market can deal with it, as long as businesses remain open, so the economic consequences are not too severe.

Recorded on September 28, 2020.