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Futures Jump, Near Record High On “Stimulus, Earnings Optimism”

As Mohamed El-Erian says, this is market that will just keep going up no matter what, and will goalseek whatever narrative it needs to “explain” the levitation catalyzed by $90 trillion in central bank liquidity. Today, that narrative is focusing on – what else – fresh optimism about fiscal stimulus despite there being virtually no hope of Congress reaching a deal before the elections, as well as “improving corporate earnings” with Q3 earnings season set to begin officially tomorrow when US banks start reporting.

All of that combined to push S&P futures 0.5% to fresh five week highs of 3,492 and less than 80 points away from the all time high of 3,568 hit on Sept 2, with the index rising in a straight line for 160 points from its Tuesday lows, while global stocks hit a five-week high led by China’s post-holiday surge as investors bet on a steady recovery for the world’s no. 2 economy, offsetting “worries” about rising COVID-19 cases in Europe and the United States. Oil fell, the dollar rose and Treasuries are closed for Columbus Day. House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin are expected to talk more this week about an economic stimulus plan.

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