[Market Madness] Edition 0121
Maybe some clarity
What’s new
Administrative topics and an introduction
Well folks, another week is behind us. A lot of the conversational topics from the week before continue to haunt us; COVID 19, finalizing election counting, and an attentive focus of the fed and the economic recovery. The biggest news of the week was the breakthrough by Pfizer in their vaccine trails which moved markets and left “stay-at-home” tech stocks down in the dumps. We’re still a long, long way away from a vaccine that can be distributed en-mass, but it is always good to hear about forward progression. Let’s get into the news.
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Fundamentals
Where did the markets end last week?
U.S. Indices 5 Day Performance
Dow Jones: +4.19%
S&P 500: +2.21%
NASDAQ: -0.53%
Asia and Europe 5 Day Performance
Nikkei 225: +4.37%
Hang Seng: +1.77%
FTSE 100: +7.04%
DAX: +4.78%
Rates, Spot Prices, and ‘Good to Knows’
U.S. Dollar Index: 92.76
US 10 YR: 0.895%
Crude OIL: $40.12
Spot Gold: $1,889.40
Market Madness Portfolio: +14.15% YTD
TEDRATE: 0.11
LIBOR (3 month): 0.221%
COVID 19 Global Cases: 54,127,451 (updated Nov. 15, 2020)
Weekly update
An article by Christopher
COVID chronicles
At the current moment, we’re in what I would consider to be a financial and economic holding pattern. As mentioned before, the vaccine news is great, but the continued wait for approval, distribution, and mass-vaccination will be a long one. In the meantime, cases are skyrocketing across the U.S. and overwhelming hospitals and other treatment facilities. Americans seem to fear the threat of quarantining and restrictions rather than the virus itself as both citizens and leaders try to find alternatives to lockdowns.
Of course, this is a generalization, and those are always dangerous. But from my experiences thus far, I’m seeing many more people out and about, despite the worsening case-conditions. People have seemed to hit COVID-fatigue and lockdown-fatigue, looking just to get out and get back to normal in a world that is still anything but.
The good news is that the scientific community is on the verge of a lifesaving breakthrough that will hopefully bring about an end to the uncontained spread of the virus. Scientists and health experts still suggest that, even with a vaccine, the return to fully normal life will be a long and winding road.
Financial market recap
On a rosier note, financial markets performed well this week, adding to the gains from the week before (except for the tech sector). Investors appear to have moved on from the election-anticipation of the week before and back focusing solely on the pandemic. A big rally for industrials and travel stocks took place following Pfizer’s announcement and a selloff on those “stay-at-home” stocks, which was something we’d seen previously on positive vaccine news. Investors finally woke up and smelled the coffee, realizing that great news is not immediately actionable, and things calmed down for the remainder of the week. Of course, the increasing case counts for the virus across the U.S. is taking a toll on investor’s optimism regarding the ongoing recovery effort. As for the major headlines, all the news is mixed and muddied. We go up and down between optimism and pessimism like a child who can’t make up their mind at a restaurant.
Elsewhere, we saw overseas indices perform really well, in line with positive vibes regarding the vaccine developments. Crude oil broke back above $40/barrel to end the week and we saw gold retract back under $1900/ounce. Both U.S. 10 year and 3-month LIBOR saw a slight increase, signaling (as we know their inverse price-yield relationship) risk-taking behavior by investors, as they look to sell out of bonds and buy into stocks.
As for the economic situation…
It should not come as a surprise that Jerome Powell and the Fed are continuing their attentive gaze on the pandemic as it relates to the U.S., and global, economy. There are lots of concerns in this domain, both in short-term recovery, as well as longer-term implications.
“Specifically, [Powell] cited women out of work involuntarily, children whose education is suffering and small business owners who have lost ‘generations of intellectual capital.’” (excerpted from CNBC article)
I tend to believe that Powell is right here, we’ve lost a lot more than we think we have, and we’ll end up bracing the consequences for generations to come. Fundamentally, businesses have had to change so much to stay alive in these times, from supply chain alterations, to supplemental training for new employees onboarding virtually, to migrating from an office experience to a virtual one, the list goes on and on. As businesses change, so too does the economy, and it will be really interesting to see what economic alterations will be made coming out of a pandemic-focused economic system.
Elsewhere, weekly jobless claims fell for another week, signaling some recovery being realized in the labor market. Claims came in at 709,000 versus the estimated 740,000 by Wall Street analysts. Zooming out, “…more than 21 million Americans are still collecting benefits, though the total is declining gradually.” (excerpted from CNBC article). There is still economic work to do, but we’re making gradual progress.
Quick Takes
To fill in the gaps
Pfizer CEO dumps shares after major vaccine announcement. (via CNBC)
Upcoming DoorDash IPO optimism rises after strong quarterly results. (via WSJ)
GM to expand hiring as it dives deeper into tech expertise. (via WSJ)
Donnie sends Defense Secretary packing. (via CNBC)
What impact does a vaccine have on investments in stock sectors? (via FT)
Disney shares performed well after “not as bad” Q4 results. (via CNBC)
More on Biden plans. (via WSJ)
Investors dive into SPACs — higher risk, higher return potential. (via WSJ)
The rush to stocks. (via FT)
General Banter
What’s on the minds of our editors and writers
The editors have decided to let the banter go this week, and we’ll return soon!
Reader’s Corner
A place for suggestions for readers like you
The reader might enjoy the quick weekly recap from the research team over at Darqube. Check that out here.
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