Last week, I wrote that I was not worried about the deficit and the debt—at least in the short to medium term. We appear to have lots of running room before the debt is an immediate problem, which could be years (or more) away. While acknowledging it as a problem, looking at history and around the world, there are no real reasons it has to be an immediate problem.

The pandemic remains under control at the national level, and the case growth rate remains below recent peaks. Still, the medical news continues to get worse, as this past week has seen case growth continue to rise on a seven-day average basis. While some of this rise may be due to increased testing, most looks to be owing to widening outbreaks in many states. In fact, case growth in many states is starting to approach levels that could threaten the health care systems there, indicating this is a growing problem.

A month or so ago, I wrote about how worried I was that no one seemed concerned about the deficit or the debt. People were worried about lots of other things. But for some reason, I wasn’t getting any questions about the deficit or debt—and it worried me.

As of yesterday, the markets spiked again, taking the major indices back close to new highs. The S&P 500 closed at 3,534, less than 2 percent below the all-time high of September 2, just before markets tumbled. The Dow and Nasdaq results were similar. Clearly, the markets think everything is awesome.

On the medical front, the news is getting worse. The pandemic remains under control, and the case growth rate remains below recent peaks. But in this past week, case growth has continued to rise on a seven-day average basis. While some of this rise may be due to increased testing, most looks to be owing to a mix of schools and universities reopening and widening outbreaks in many states. In fact, case growth in many states is starting to approach levels that could threaten the health care systems there, indicating this is a growing problem.

September, as expected, was a difficult month, with markets in the U.S. and abroad down pretty much across the board. Despite this correction, which came after two very strong months, markets were left with strong gains for the quarter, both here and abroad. Overall, the quarter was good for investors despite the disappointing September, and the reasons why come from the same place—the pandemic.

There were two big items of news to hit the headlines this morning. The first—that President Trump has tested positive for the novel coronavirus—generated the most interest and the most fear. It has been credited with knocking down markets. The second—that job growth continues to slow—has generated much less attention but will have much more impact over time. This reaction is a classic example of what makes the headlines versus what really matters. So, let’s take a closer look.

I am running this post a day earlier than usual, as we will post the beginning-of-the-month fare tomorrow (e.g., Market Thoughts video). Next week, we will go back to a Thursday update.

One of the big unexamined assumptions of many of the questions I have been getting recently is that politics matters to economics. I get questions from both sides—how bad will it be if candidate X wins? They all assume that candidate X, whoever it is, has the ability to significantly affect the economy and the markets. But is that really the case?

In a client event this week, I got an interesting question: “How do you stay calm? With everything that is going on, with all of the problems and risks that you have to evaluate, every day, how do you manage to stay calm?” I thought it was a very good question.