Weekly Market Commentary with Retail Results!
ROBARE AND JONES ON THE MARKETS
Last week, vaccine optimism immunized investors against signs of economic weakness.
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. You may have read that:
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… [A medical professional said], ‘It is like slow-motion horror. We’re just standing there and being run over,’” reported The Economist.
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 Lucia Mutikani of 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 Jacqueline Alemany of 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.
The optimistic stories – the potential for vaccines to restore ‘normal’ and the possibility of new stimulus measures if Janet Yellen becomes Treasury Secretary – helped drive markets higher last week. Global stock markets rose and were positioned to deliver their best monthly performance ever, reported Camilla Hodgson of Financial Times.
Let's take a look at the benchmarks from this past week
S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods. Sources: Yahoo! Finance, MarketWatch, djindexes.com, London Bullion Market Association. Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.
Retail Results!
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, which include Christmas, Hanukkah, and Kwanzaa, according to the National Retail Federation. They plan to spend:
- 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.
Sources:
https://press.princeton.edu/books/hardcover/9780691182292/narrative-economics
https://www.economist.com/united-states/2020/11/28/the-midwest-is-americas-covid-19-hotspot (or go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/11-30-20_TheEconomist-The_Midwest_is_Americas_COVID-19_Hotspot-Footnote_2.pdf)
https://www.washingtonpost.com/politics/2020/11/25/power-up-millions-face-benefits-evictions-cliff-congress-remains-stalled-relief-talks/ (or go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/11-30-20_TheWashingtonPost-Power_Up-Millions_Face_Benefits_and_Evictions_Cliff_as_Congress_Remains_Stalled_on_Relief_Talks-Footnote_4.pdf)
https://www.ft.com/content/1f4568ca-d6db-4e1c-be46-07bffcb87d80 (or go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/11-30-20_FinancialTimes-Vaccines_Not_Politics_are_Driving_the_Soaring_Markets-Footnote_6.pdf)
https://www.ft.com/content/530e3c1c-306d-42e1-9f8c-33a2dc7af82a (or go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/11-30-20_FinancialTimes-Global_Stocks_Close_In_on_Best_Ever_Month-Footnote_7.pdf)
https://www.barrons.com/articles/why-the-stock-market-keeps-risingand-why-its-next-test-comes-next-week-51606515605?refsec=the-trader (or go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/11-30-20_Barrons-Why_the_Stock_Market_Keeps_Rising_and_Why_Its_Next_Test_Comes_Next_Week-Footnote_8.pdf)
https://nrf.com/insights/holiday-and-seasonal-trends/winter-holidays (Slides)
https://techcrunch.com/2020/11/28/black-friday-online-sales-numbers/
https://www.adobe.com/content/dam/www/us/en/adi/2020/pdfs/Adobe_Holiday_Predictions_2020.pdf (Page 6) (or go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/11-30-20_Adobe-Unboxing_2020s_Holiday_Shopping_Forecast-Footnote_11.pdf)
