November 20, 2020

The Finish Line Will Be A Starting Line

 What does it say when commercials are more entertaining than the programs they interrupt?

So many are exuberant without consideration of the whole picture, some are in dismay for the same reason. Maybe a little crazy, but I find this the most interesting election season of my entire life. The economy is holding in, vaccines are on the way and everyone seems to ignore that they all got a piece of what the future of normalization will look like. While I know I’m sounding like the media narrative, but maybe that’s why the markets are rallying.


When the pundits shout that the markets are rallying, they are really referring to the Dow Jones Industrial average. Problem is, the Dow has only 30 stocks in it, and as the year progresses to the finish line that index still has not broken 5% for the year. Even the S&P 500 is over 10% and while the Nasdaq eked out a gain this week the index has been lagging in the current environment, not a reason for concern since it’s up nearly 33% year to date return suggesting enough room  to give back a little without causing too much damage. An interesting development in the markets this week was the announcement by Amazon (AMZN) that they will be entering the online pharmacy business. In my opinion, no other company is prepared on a global scale to deliver this, and as companies such CVS (CVS) transition into another brand of walk in medical clinics and more, the future of lower cost medical care and pharmaceuticals has never, in my opinion, been more within in reach. Lastly, the previous weeks technical indicators showed the broad indexes to be overbought leaving this week’s modest decline well within expectations. 


The economy has been moving along with the usual stability in productivity and the industries in support of home sales and new construction. Along with the rise in the pandemic so goes the rise in unemployment. The Fed is keeping stable while sounding the alarm for more government stimulus neither of which, in my opinion, will help economically until the threat of lockdowns dissipates.

External Events

The political arm of the economy is dormant, the narrative of pending disaster is less than clear, and I remain a humble skeptic. The virus has a solution, the data will be volatile, and in my opinion, economically there is no reason to panic, emotionality, I refrain. Therefor the stimulus will likely remain at odds for the foreseeable future and in the meantime the economy has more room to improve and thus so does the market. 

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