and Barclays have all published notes touting the boost to markets a Biden presidency would bring — one reason being the heightened likelihood of a more robust stimulus package being passed under Democratic leadership than is likely with Republicans in power.
"Sometimes, markets rally on the flimsiest of narratives," the chief strategist at AlphaOmega Advisors and former global chief market strategist at Cantor Fitzgerald said in a recent note. "How durable are the current narratives? Not very."Cecchini is bearish on the market's upward path, and warns that it is being driven by three "nonsense narratives" in particular. He unpacks each below.
Still, Cecchini doesn't completely discount the importance of stimulus for markets, stating his worry that a contested election might mean a delay in stimulus. Indeed, some of the most influential players in finance and economics — like Federal Reserve Chairman Jerome Powell — have made their voices heard on the crucial role another round of stimulus will play in the economic recovery and the health of financial markets.
"For 2019, S&P 500 earnings growth year-over-year was flat for large caps and down about 15% for small caps. The prospects for a quick turnaround in earnings growth seems utterly dim," Cecchini said. "Maintaining low rates can't support ever-rising equity prices when earnings remain challenged and credit quality continues to deteriorate."
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