Scott Wren, Senior Global Market Strategist, Wells Fargo Investment Institute:

Well, I think the market normally does a pretty good job of looking ahead, and so while we've had, really over the last six months, we've had protests, some have obviously turned ugly. Certainly the Capitol situation was not a good one, but the market's trying to look ahead and determine what's going to happen with the vaccine. Is it going to be efficiently deployed? Are we going to get a handle on on this virus? What's the consumer spending outlook? And really, I think the outlook is positive. The market's been positive on things like Fed stimulus, congressional stimulus, consumer spending, vaccines for a long time. And so I think the market's been able to look past what's happening certainly recently or even in recent months, to what lies ahead, and I think it's brighter skies that lie ahead.

Well, I think Friday's employment report, the number of new, non-farm payroll jobs that were created, actually we lost jobs. One thing that does is give the market more confidence that the Fed's not going to talk about a strong economy or maybe changing interest rates any time soon. And I think that was as expected. It gives the market a feeling that we're going to get more stimulus and a sluggish employment market. We've got a lot of lockdown's going on out there. We've got a big surge in coronavirus. So that hurts consumer spending. So the employment report fed into, I think, what the market had been thinking about. And then in the new week ahead, we're going to see some inflation data. We're going to see it at the wholesale level. We're going to see it at the consumer level. And so inflation has been very low versus historical standards. We expect it to pick up, but still be well below the long term average next week. So I think next week the market's going to pay attention to inflation data. But once again, it's what's going to happen with the vaccine? What's going to happen with confident consumers out spending money? When is that going to happen?

Well, I think the impact is more stimulus, a lot more if we had a divided Congress, I think we would have seen more stimulus from Congress, but the magnitude or the amount of that stimulus would have been smaller. Now that we've had the blue wave and Vice President-elect Harris will be able to cast the deciding votes, I think you can expect a meaningfully larger stimulus package coming down the road. I think you're going to see in infrastructure spending, a large package there, which we would have seen that under by the Congress as well. But I think it will be larger. And so I think right now the market's focused on stimulus. And we should think of stimulus really as a bridge to get us from now when we're seeing a lot of surge in the virus to somewhere down the road where we have widespread vaccinations, we have, we're closer to herd immunity, and the employment numbers continue to improve.

Well, with the improved economic outlook, really globally, oil market has been trading higher. If we look at our year end 2021 target, which is $45 to $55 for oil, we're close to the top end, or we're approaching the top end of that range. I think John LaForge, our oil analyst, would be very hesitant to think that oil would trade above $60 for a very long period of time. That high price brings more oil into the market. And I think there's there's a bit of a lid there, at least in John's mind right now, based on what we know, gold, we have an optimistic outlook there as well. We think gold is going to trade higher. And so this deficit spending, these negative interest rates in many parts of the world are going to continue to help gold, as is a slightly higher inflation.

Well, I think any time the stock market moves a lot higher would certainly off the March 23rd lows, we've seen the S&P 500 up 70% or so. Any time stocks move like that, there's going to be probably at least a handful, if not many more than that, stocks that you would say, hey, these are in a bubble. But when we look at the cash on the sidelines, when we look at the Fed being very easy on interest rates, when we look at stimulus that's coming in. And if we look at what our year-end target is for the S&P 500 and what our earnings number is, price to earnings ratio, for instance, is that higher than the longer term average? It is. But but valuations tend to be high when interest rates and inflation are low. And I'll give you just some perspective that might help. We're at about 21 times 2021 earnings. Our earnings are $175 on the S&P 500. In March of 2000, at the peak of the tech bubble, it was 32 times. So there's a big valuation difference between then and now. And we just feel that these higher valuations are justified, giving the interest rate levels, the inflation levels, what the Fed's going to do, and just the anticipation of some pent up demand, not just for stocks, but for goods and services as well, that will come, or we believe it will come, when we get a little bit better handle on this virus surge.