Market Summary

Stocks continued their impressive run of form this week. Positive momentum following November’s vaccine news continues to propel stocks to all-time highs. All major U.S. stock indexes pushed their record levels higher, with the S&P 500 up 1.7% over the week.

Apparent fiscal stimulus progress helped to extend the stock market run. Senate Majority Leader Mitch McConnell suggesting a deal was “within reach” on Thursday. However, McConnell’s own plan for a $500 billion package is still far from the $908 billion proposed by a bipartisan group earlier in the week.

The need for a fifth coronavirus relief is becoming increasingly evident, with a worse than expected U.S. jobs report and ISM manufacturing survey for November.

The U.S. also had its deadliest day since the start of the pandemic on Wednesday, with over 2,800 recorded fatalities due to Covid-19. The number of people in hospital with the coronavirus also hit a new record high, topping 100,000 for the first time. A stark reminder that a long road to recovery remains.

Elsewhere, the U.K. became the first western nation to authorize the widespread distribution of a vaccine, with the first vaccines to be administered as early as this week.

Equities

+1.7%S&P 500

Energy jumped as the oil industry continues to claw its way out of the hole it plunged into earlier in the year. Small-cap stocks continued to outperform their large-cap counterparts this week. The small-cap Russell 2000 Index registered its best monthly gain in November since its inception in 1978 and extended its rich vein of form into December, jumping over 2% this week.

Currency

-1.6%USD/EUR

The dollar continued its descent, vaccine approvals, and an imminent stimulus package boosted demand for riskier assets, taking the safe-haven dollar to a 2-1/2-year low versus the Euro.

Bond Yields

0.97%US 10Y TREASURY YIELD

Longer-term Treasury yields defied the mixed economic data and climbed through much of the week, fueled in part by optimism for a fiscal stimulus deal. The 2 and 10’s yield curve now at its steepest since February 2018.

Crypto (Bitcoin)

+13.0%CRUDE OIL

Bitcoin resumed its recent rally follow last week’s pullback, rising over 13% over the week. Bitcoin sat at just $10,600 as recently as October. This most recent surge has seen its price top 19,200.

best+4.5%Energy

Worst-2.1%Utilities

Market Outlook

Much of the market chatter for the remainder of the year will be focused on some high-profile IPO’s, most notably, Airbnb, which is scheduled to float this Wednesday. For many investors, it feels like Christmas is coming early. Frivolous details such as a global pandemic and a decimated travel industry have done little to quell the excitement surrounding the much-touted ‘Biggest IPO of the year’.

AirBnB’s bankers have now raised the range to $56-$60 a share from $44-$50. This latest expected price jump is a testament to Airbnb’s brand strength, boasting a cool $40+billion valuation at the top end despite being deeply embedded in a travel market that is expected by industry insiders to sustain long-term damage from the pandemic.

The interest is certainly not unwarranted. Airbnb founders Brian Chesky and Joe Gebbia claim they have “created a whole new category of travel” and I’m inclined to agree. Definitely one to keep an eye on this week.

DoorDash, the largest food delivery company in the U.S. will also go public this week with a top end expected valuation of $35 Billion.

I know which company I would prefer.

The S&P 500 recorded its best November since 1928, gaining 10.8% over the month; the question now is ‘can stocks continue to climb or is a pullback imminent?’

As always, nothing can be ruled out, and 2020 could still throw up a surprise or two. Nevertheless, we maintain a positive outlook for equities in the year ahead due to the expectation for three-plus vaccines to fuel a reopening process as 2021 progresses along with low-interest rates and the potential for fiscal and monetary stimulus to boost the economy as needed.

HOLDUN