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The Best of What They Said and I Read Week Ending 11/15/2020

November 16, 2020
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Short excerpts from articles I found interesting. I may not agree with the author and the following material is not intended as investment advice.

Barron’s – November 13, 2020 – The Stock Market Doesn’t Need Tech Stocks to Hit a Record High – Ben Levisohn

  • “…On Monday, Pfizer announced early results from the Phase 3 trial of the Covid-19 vaccine it developed with BioNTech, results that showed the vaccine to be more than 90% effective. (The measles vaccine is 93% effective, while the flu vaccine is usually around 50%.) Not many predicted that the vaccine would be that good, and the stock market responded accordingly, with the Dow Jones Industrial Average jumping 834 points that day.”
  • “…Stocks that had gotten a boost because of the pandemic took it on the chin. Etsy, for instance, fell 17% on Monday, while Pool dropped 16% and Clorox declined 11%. Cruise operator Carnival, on the other hand, jumped 39%, while SL Green Realty, which owns offices and shopping centers in New York, soared 37% and oil refiner Valero Energy surged 31%. All three were hit hard by the pandemic.”
  • “Not much had changed by Friday’s close, despite some midweek volatility. The Dow climbed 1156.41 points, or 4.1% this week to 29,479.81, while the S&P 500 gained 2.2% to 3585.15, an all-time high. The Russell 2000 jumped 5.4% to 1744.04, also a record. Only the Nasdaq Composite fell, declining 0.6% to 11,829.29. This was the first time since March 2000 that the Dow finished the week up more than 4% and the Nasdaq finished negative.”
  • “…Of course, there could be a lot of false starts in the near term. The S&P 500 has gained 9.6% in November, and it’s very possible that the market needs time to digest the gains spurred by both the U.S. presidential election and the vaccine news. There are few catalysts to push the market higher and more to push stocks lower, including the exponential rise in Covid cases around the country that is already causing partial shutdowns in some U.S. states.”

U.S. Global Investors – November 13, 2020 – Frank Holmes

  • “…The $210 billion drugmaker Pfizer announced on Monday that its coronavirus vaccine is 90% effective at preventing COVID-19…Following the positive news, Goldman Sachs was quick to adjust its market forecast for the next 12 months. The investment bank sees the S&P hitting 4300 by the end of 2021, which is an increase of more than 20% from Thursday’s close.”
  • “…Retailers are right to court Asian consumers, particularly Chinese consumers. For proof, look no further than Alibaba’s monster Singles Day sales event this week. In the first 30 minutes on November 11, the giant Chinese retailers did a jaw-dropping $56.3 billion in sales, more than last year’s total haul of $38 billion over a 24-hour period. Indeed, China has the world’s largest share of people online, and that share is accelerating. As of October, the country represented 40% of global ecommerce transactions, according to a report by the Brookings Institution. Brookings’ report also provides startling new data on the size of China’s (growing) middle class…Every year, the country has been adding an average of 60 million people to its middle class—defined as those who spend between $11 to $110 per person per day—and by 2027, Brookings believes the total size of China’s middle class could top 1.2 billion people. That’s approximately 3.5 times as many people living in the U.S. right now.”
  • “...This week we got even more proof of home improvement’s retail dominance. is a startup that provides retailers with foot traffic analytics and predictive consumer behavior. In a blog post titled “Kings of 2020: Home Improvement,” the group shared findings showing that foot traffic in Home Depot and Lowe’s has actually grown most months during the pandemic compared to the same months last year. Look at the month of May. Lowe’s saw an almost 50% increase in store visits versus May 2019. Home Depot had 26% more. Although there’s been some slowdown, foot traffic is still substantially up year-over-year. Visits also accelerated from September to October as we head into “what could be an enormous holiday season for these chains.”

The Economist – November 7, 2020 – The bonds that bind

  • “The Treasury market has long been able to strike fear into the hearts of the powerful. Frustrated by worries in the 1990s that bond yields would spike if Bill Clinton, then America’s president, pushed through economic stimulus, James Carville, his adviser, joked that he wanted to be reincarnated as the bond market, because “you can intimidate everybody.”
  • “In the quarter-century since then, Treasuries have only become more pivatol to the world’s financial system. The stock of tradable bonds amounts to $20.5trn and is expected to approach 100% of America’s GDP this year, roughly double the share in the 1990s. The dollar’s dominance means that everyone holds them, from American banks and European pension schemes to Arab sovereign-wealth funds and Asian exporters. The yield on Treasuries is known as the “risk-free” interest rate, and underpins the value of every other asset, from stocks to mortgages. In times of stress investors sell racier assets and pile into Treasuries.”