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Morning Notes — Known Risk Events

Known Risk Events

September 16, 2020

1) Today’s Fed meeting is mostly expected to be a non-event; 2) low expectations for a fifth fiscal relief bill ahead of the elections and recent strength in US labor market data (watch tomorrow’s release of weekly jobless claims) probably reduce the risk of a ‘nothing done’; 3) reports suggest quarterly fund rebalancing at month-end could pressure equities given the ~9% QTD gain in the SPX.  But monthly fund rebalancing is more prevalent and the SPX is still down ~3.4% MTD and; 4) increased volatility due to potentially contested US election results is a real risk, but record cash levels, light equity positioning, bearish equity sentiment and unprecedented monetary accommodation are stronger influences.

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