Weekly Market Commentary

November 30, 2020

 

Vaccine Optimism Immunized Investors and Online Buying Trends

 

The Markets

 

In previous commentaries, we’ve written about narrative economics, which holds that popular stories may affect individual and collective economic behavior. Last week, diverse narratives had the potential to influence consumer and investor behavior, but not all did.

 

Coronavirus anxiety is high. “Figures from recent days suggest infections may have fallen off from record highs in some states. But no one is cheering in the emergency wards. Health workers fear that Thanksgiving gatherings will prove to be super-spreader moments… Meanwhile, many college students have just gone home for the year which could add to the spread.”

Unemployment claims moved higher. “The number of Americans filing first-time claims for jobless benefits increased further last week, suggesting an explosion in new COVID-19 infections and business restrictions were boosting layoffs and undermining the labor market recovery,” reported Reuters.

Economic stimulus is needed. “As it stands, tens of millions are already struggling to make rent payments and put food on the table. The $1,200 stimulus checks sent out by the government in the spring have long run dry and 12 million Americans are set to lose unemployment insurance the day after Christmas if Congress does not act,” reported The Washington Post.

Vaccines are on the way. “As G20 leaders pledged to ensure the equitable distribution of COVID-19 vaccines, drugs, and tests so that poorer countries are not left out, the United States, United Kingdom, and Germany each announced plans to begin vaccinations in their countries in December…,” reported The Guardian.

Fiscal and monetary policy will reinvigorate the economy. “Surely the market strength reflects the fact that barring [vaccine] rollout disasters, we should have our normal lives back within months Now add in the widely held assumption that the expected new Treasury secretary Janet Yellen will deliver the additional stimulus she has called for, and the rhetoric that holds interest rates need to stay low…Suddenly it makes perfect sense to think that pent up demand and possible productivity gains created by the crisis could help the markets

 

AND They’re Off!

 

Holiday shoppers may not have been racing into brick-and-mortar retail stores, but that doesn’t mean they weren’t shopping. Consumers have earmarked about $998 for spending on winter holidays.

  • Slightly less on gifts for family, friends, and coworkers than they did last year
  • Slightly more on food and decorations
  • Significantly less on non-gift spending (buying that special something for yourself because the price is so attractive)

A lot of that money will be spent online. On Black Friday, U.S. consumers shelled out more than $9 billion online, reported TechCrunch. It was the second biggest day for digital commerce in history. The first was Cyber Monday 2019.

Overall, online holiday sales are expected to break all previous growth records. A report from Adobe estimated 2020 digital sales will be up 20 to 47 percent, year-over-year. That’s a broad range because there is a lot of uncertainty about levels of disposable income and capacity limits for brick-and-mortar stores.

Whether you are holiday shopping in person or online or using a smartphone or computer, watching trends may help investors identify new investment opportunities.

 

Focus On The Positive

 

“As we struggle with shopping lists and invitations, compounded by December’s bad weather, it is good to be reminded that there are people in our lives who are worth this aggravation, and people to whom we are worth the same.”

–Donald E. Westlake, Crime fiction writer

 

Best regards,

Bill Spalding