Good week for discrimination after Manhattan’s upscale City Winery announced it will require diners to take, and pay for, a $50 rapid coronavirus test before being allowed inside. “Given the change of the seasons, finding the next level of safety and comfort level for people to dine indoors is critical for us today,” said CEO Michael Dorf.
A new homeowner was surprised last month when he opened a closet drawer and found dozens of old coins. “They looked real old, like they were really worth a lot of money,” said James Munford. The drawers held 46 gold Liberty coins and 18 Morgan silver dollars from the 1800’s, totaling about $25,000 in value, but Munford did not consider keeping them. He texted the previous owner, who had left them behind in his rush to pack up the house. The coin collector thanked Munford for his admirable honesty and told him there’s, “no telling what else you might find in that house”.
Weekly Focus – Think About It
“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
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.
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 newish Federal Reserve 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 set off what Goldman Sachs calls the Roaring 20s Redux,” wrote Merryn Somerset Webb for Financial Times.
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.
In the United States, the Dow Jones Industrial Average moved above 30,000 before retreating, and the Standard & Poor’s 500 and Nasdaq Composite Indices both finished the week at record highs, reported Ben Levisohn of Barron’s.
|Data as of 11/27/20||1-Week||YTD||1-Year||3-Year||5-Year||10-Year|
|Standard & Poor’s 500 (Domestic Stocks)||2.3%||12.6%||15.4%||11.8%||11.7%||11.9%|
|Dow Jones Global ex-U.S.||2.2||5.2||8.8||1.9||5.3||3.0|
|10-year Treasury Note (Yield Only)||0.9||NA||1.8||2.3||2.2||2.8|
|Gold (per ounce)||-5.1||16.8||22.3||11.2||11.0||2.6|
|Bloomberg Commodity Index||0.9||-7.5||-4.5||-4.9||-1.6||-6.5|
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, 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. 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. The report stated:
“If flu season brings with it a spike in [coronavirus] cases and an increase in store restrictions, a reduced store capacity will drive more people online. E-commerce is still only around one out of every $4 spent on retail. That’s a large bucket of dollars that could move online, leading to potential for big swings this season.”
Whether you are holiday shopping in person or online, or using a smartphone or computer, watching trends may help investors identify new investment opportunities.
John Klevens, CFP ®
P.S. Please feel free to forward this commentary to family, friends, or colleagues. If you would like us to add them to the list, please reply to this email with their email address and we will ask for their permission to be added.
Securities and Advisory Services offered by John Klevens through KMS Financial Services, Inc. Member FINRA/SIPC and an SEC Registered Investment Adviser. Klevens Capital Management and KMS are separate and unaffiliated. Portions of this newsletter have been prepared by Peak Advisor
* These views are those of Carson Coaching, and not the presenting Representative, the Representative’s Broker/Dealer, or Registered Investment Advisor, and should not be construed as investment advice.
* This newsletter was prepared by Carson Coaching. Carson Coaching is not affiliated with the named firm or broker/dealer.
* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate.
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