The long-term cycle backdrop continues to improve, and more importantly, the longer-term cycle backdrop continues to improve consistent with the early stages of another bull cycle. The S&P is making new relative performance highs versus the Barclays All Aggregate Bond Index, similar to what developed early in 2012 and 2016. If prior secular bull markets are a guide, the S&P could rally to 4400-4600 before a cycle peak develops in 2022-2025.

The HCM-BuyLine® is clearly positive, and any pullback in the market should be bought. Pullbacks are likely tobe shallow given the improving intermediate-term backdrop. First, despite the recent rebound, most cyclicals are still early in new intermediate-term/weekly upturns after trading sideways or correcting between June-October. Weekly momentum indicators, tracking 1-2 quarter shifts, have been progressively turning up since September, and participation continues to broaden which should carry equity markets higher. 

The Producer Price Index (PPI) for final demand increased 0.3% in October, its sixth consecutive gain, and slightly above the consensus of 0.2%. It was driven by higher prices for food and energy, up 2.4% and 0.8%, respectively. PPI ex-food and energy edged up 0.1%, below the consensus of 0.2%. The goods PPI advanced 0.5%, while services PPI was up a smaller 0.2%. Nearly 40% of the increase in the services PPI was attributed to higher transportation and warehousing prices. On a year-over-year basis, PPI for final demand gained a steady 0.5%, while its core eased slightly to 1.1%. Both have rebounded since earlier this year but continue to indicate low inflation pressures at the producer level, reflecting the significant output and labor market slack created by the recession. Prices were lower than a year ago in three of the four stages of production, rising only in the final stage that primarily produces goods for final consumption. But even there, the increase was smaller than at the start of 2020, which suggests lack of significant pipeline pressures. 

Moderna and Pfizer:  From a timeline and data quality perspectives, Moderna and Pfizer are, so far, on par. And if one, or both of them make it to the finish line, they will introduce a vaccine unlike any other on the market. Usually, vaccines work by delivering a weakened form of virus into the body. This allows the body to build up antibodies to fight infection. It is only a matter of time before a vaccine is ready for mass distribution.