Looks like a slow start out of the gate, but this has been an amazing November where a number of records were established. And yet, underlying concerns and assumptions haven’t changed much over the past thirty days.
Investment Themes
- Buy Boring
- Buy Beaten Down
The rally in Energy reflects Wall Street thinking that every dog has its day even when they are being rhetorically kicked around. For all the hype over carbon-neutral societies that run on solar power, we still pray the ambulance is using gasoline and has a full tank.
- Avoid Traditional Havens
Utilities are no longer the automatic safe haven when markets get rocky. Moreover, its unclear how a Biden administration could funnel trillions of dollars to them with only executive orders and memos. Real Estate is hampered by local shutdowns and work from home trends, and Consumer Staples are having trouble rekindling the excitement seen in the first wave of the pandemic.
Mac n Cheese is a great American dish, but investors are not too hot on buying these names.
- Do not park money on sidelines
Rotation is the name of the game, and while it means certain sectors have become high Beta when the hot money crowd finds them, the key to success has been to be in the mix. Parking that cash and watching the parade from the sidelines is a losing proposition.
S&P 500 Index | +0.24% | |
Communication Services XLC | +0.64% | |
Consumer Discretionary XLY | +0.22% | |
Consumer Staples XLP | -0.01% | |
Energy XLE | -1.17% | |
Financials XLF | -0.32% | |
Health Care XLV | +0.92% | |
Industrials XLI | -0.17% | |
Materials XLB | +0.52% | |
Real Estate XLRE | -0.19% | |
Technology XLK | +0.53% | |
Utilities XLU | -0.99% |
Recommended
Jingle Bells Jingle Bells
This is the time of year when everyone is watching the consumer. Of course, things have changed, and we no longer see throngs of shoppers giving the mall security the bum’s rush for the 50% off sale on the latest toasters. In fact, those days are probably gone forever as the retail industry lengthens its sales moments from days to week. With that in mind, it’s more important to monitor trends from the start of November than Thanksgiving evening.
To see the chart, click here.
On that note, industry experts are expecting record-breaking e-commerce sales to pace a strong holiday season.
To see the chart, click here.
Holiday Trends
Thanksgiving saw $5.1 billion in e-commerce sales. Adobe predicted $6.0 billion but noted the tally is a new record and spending is on pace for $189.0 billion.
Black Friday sales were mostly in line with expectations.
- Online $9.0 billion +21.6%
- Brick and Mortar traffic -52.1%
Cyber Monday
Experts see today’s online sales climbing to $12.7 billion or +35.0% on the high end of expectations range.
Black Thursday On May 1, 1975, fixed brokerage commissions were abolished, paving the way for lower commissions. Before this moment in history, known on Wall Street as May Day or Black Thursday, commissions were fixed (see table below). Nixon’s justice department saw unfairness and incompetence in the system and moved to have it deregulated. The impact of lower commissions was immediate for institutional traders who saw their commission fees plummet. Conversely, fees for individual investors increased as the dark side of competition is collusion, and no voices were advocating or offering lowered commissions for the masses. Excerpt Payne’s Perspective November 30, 2020 To learn more, contact your representative or research@wstreet.com |
Portfolio Approach
We took profits in one Industrial position, adhering strictly to some of our early buy & sell signals, but we are replacing it with a legacy Industrial position.
There is a good chance there will be additional moves in our Model Portfolio today. There are also additional ideas for those with larger portfolios. If you are not currently a subscriber to our Hotline service, contact your account executive or email Info@wstreet.com.
Today’s Session
Its Vaccine Monday (again) with Moderna’s (MRNA) in focus. Management reports 94.1% efficacy with its vaccine candidate, including 100% for severe disease.
The company is filing an emergency application with the Food and Drug Administration (FDA).
Investors have come to expect these announcements, which mitigates the stock impact. But it cannot be overlooked with respect to the market being able to look past the dark winter from the current surge.
Part of that dark winter are the draconian lockdowns that continue to crush small businesses. Perhaps, there is clearer thinking emerging as New York City mayor Bill DeBlasio announced the reopening of schools for younger students.
Just What Doctor Ordered
Lots of manufacturing data around the world, including the United States coming in better than expected. Metals continue to climb higher, including Dr. Cooper.
Copper continues to surge and should get a boost from economic data out of China and the US Dollar changing hands at a two and half year low.
I suspect current trends and increasing demand should send copper up to $3.80+, and ultimately, we could see a test of $4.20 in 2021.
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