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The Best of What They Said and I Read Week Ending 11/29/20

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 27, 2020 – Why the Stock Market Keeps Rising – and Why Its Next Test Comes Next Week – Ben Levisohn

  • “It’s as if the stock market adopted Bobby McFerrin’s “Don’t Worry, Be Happy” as its mantra on the way to record highs this past week.  It certainly had the potential to be an ugly week. The number of Americans hospitalized because of Covid-19 crossed 90,000 for the first time…Jobless claims jumped for a second week in a row, signifying further weakness in the labor market. Even questions about the results of AstraZeneca’s Covid-19 vaccine trial, which had lifted markets early in the week, couldn’t pop the bubble of confidence investors have cocooned themselves in.”
  • “Instead, the Dow Jones Industrial Average closed above 30,000 for the first time on Tuesday, and finished the week up 646.89 points, or 2.2%, at 29,910.37. The S&P 500 index rose 2.3%, to 3638.35, and the Nasdaq Composite gained 3%, to 12,205.85, both record highs...And it wasn’t just this past week. The Dow has advanced 13% this month, while the S&P 500 is up 11%, on pace for their best Novembers since 1928. The Nasdaq Composite has gained 12%, which would be its best November since 2001. The Russell 2000, which has soared 20%, is on pace for its best month on record based on data back to 1987.”
  • “The passing of a particularly contentious election certainly has helped, but news that vaccines from Moderna and Pfizer and BioNTech work gave investors confidence to look through the current surge in Covid-19 cases and the weak patch in economic data.  In fact, investor confidence is apparent almost everywhere you look. It’s in the Cboe Volatility Index, or VIX, which tumbled 45% this past week, the largest weekly drop on record in the market’s “fear gauge.” It’s in the SPDR Gold Shares exchange-traded fund, which dropped 4.5%. And it’s in CNN’s Fear and Greed Index, which hit 92 on Friday, a level signaling “extreme greed.”

 

The Wall Street Journal – November 27, 2020 – Trump’s Payroll-Tax Deferral Creates Predicament for Congress – Richard Rubin

  • “President Trump’s decision to defer payroll taxes until the end of the year is leaving challenges for lawmakers to manage after he leaves office in January, and they haven’t figured out what—if anything—to do.   Members of Congress in both parties weren’t keen on the August executive action, which let employers stop collecting the 6.2% Social Security payroll tax from many workers in the final four months of 2020. The move was meant as a form of relief during the economic slump caused by the coronavirus pandemic, but few employers stopped withholding.”
  • “That created a predicament for Congress. Employees whose payroll taxes temporarily shrank will face double withholding starting in January, which could pinch households that haven’t planned for it.  Doing nothing could cause harm for those workers, but helping only them could be unfair to others whose taxes continued to be withheld.  “No one will be happy no matter how that gets resolved,” said Mark Mazur, a former Obama administration official who now directs the Tax Policy Center. “It’s kind of like a no-win thing.”
  • “…Mr. Trump couldn’t get Congress to cut payroll taxes, so he used the administration’s ability to defer tax deadlines after a disaster to delay payments of the employees’ portion of Social Security taxes. He promised that if he won re-election, he would push to turn that delay into a real tax cut.…Official figures aren’t available yet, but payroll processor  Paychex Inc. said take-up has been very low. The one big exception—which could create pressure for Congress to act—is the federal workforce, including many members of the military. Mr. Trump required executive-branch employees to participate.”  


U.S. Global Investors – November 27, 2020 – Frank Holmes

  • “…The best performing commodity for the week was WTI crude, up 7.31%, after hitting the highest since March 6 on positive vaccine news spurring hope for a demand recovery…Copper hit a seven-year high after rallying for four days to $7,511 a ton. Traders are bullish on the red metal in hopes of a vaccine boosting demand.”
  • “…China’s mainland stock market hit its highest level since 2015 this week. China might be the only major economy likely to expand this year. The pandemic seems to be under control, consumer spending is picking up and the government is turning its focus on long-term growth and discussing withdrawing the emergency stimulus provided earlier this year to shield the economy from the negative effects of the pandemic.”
  • “…On Tuesday, bitcoin passed $19,000, reports CoinDesk, after rallying $7,000 in one month. The surge comes after the price broke the $17,000 and then $18,000 level within the same week…Bitcoin plunged nearly $3,000, or around 6%, after flirting with its all-time high earlier in the week. This was the biggest slump since the pandemic hit in March as investors take profits amid the price surge.”

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