S&P 500 Index - NOV 2020


The market gave an exhale of relief this week despite a Presidential winner not being official. Markets are more concerned about policies over personalities so if the Senate remains republican then gridlock will keep large legislative changes at bay. The government will need to help rebuild the economy in 2021 which will be a bi-partisan effort so I expect some marginal changes to the healthcare laws and perhaps a larger infrastructure bill. In the short-term, another stimulus package is likely in the coming weeks which will be accepted as a positive by the stock market.

There are trillions in stimulus dollars churning through the economy so a bridge to the post-pandemic era looks to be in place if the vaccines in testing are viable. Valuations look high but a rebound in economic activity over the next year will normalize this metric. Earnings from growth sectors are coming in strong but areas like commercial real estate will be hobbled for years as people move from the cities and work from home.

Back to the chart below as we all focus on prices. I have two price behaviors below, a trending market in blue parallel lines (think of it as running cool) and a volatile corrective market in red (running hot). If we are turning the corner with the election over and a vaccine on the way, we may return to a trending market in 2021. That means less volatility and more certainty so if that is going to happen then the next several weeks should show evidence of this new trend emerging.

Chart of the S&P 500 Index by Kisco Capital

Chart of the Week!

The U.S. Elections Project, a nonpartisan website run by University of Florida professor Michael McDonald, has announced that the 2020 presidential election has had the highest voting turnout rate in 120 years

Statistica - Voter Trunout

Economic & Central Banking Snippets 

  • October’s jobs numbers are encouraging as they beat expectations, and came amid headwinds from mounting coronavirus infections and waning fiscal stimulus. Private payrolls grew 906,000, well ahead of economists’ expectations and slightly faster than in September. In contrast to Europe, U.S. governors have yet to reimpose lockdowns, though some are tightening restrictions or hitting pause on reopening. (WSJ)
  • The unemployment rate fell far more than economists expected in October, to 6.9% from 7.9% in September.
U.S. Non-Farm Payrolls - OCT 2020

Macro Snippets

  • U.S. firms are getting another boost from China. Companies including Coca-Cola, General Motors and Estee Lauder said they got a lift in the September quarter from Chinese consumers who spent big on soda, perfume, SUVs and other products. (WSJ)
  • The Italian government said it would lock down a significant portion of the country, including the northern regions that are its economic engine, in an effort to stop a resurgent wave of coronavirus infections. (NYT)
  • In one fell swoop, Uber Technologies Inc. and Lyft Inc. on Tuesday fended off labor protections that were decades in the making, allowing the companies to keep compensating their drivers as independent contractors. By design, very little will change under the ballot measure approved by California voters that was underwritten by the ride-hailing companies, along with Instacart Inc., DoorDash Inc. and Postmates Inc. (Bloomberg)
  • Voters in New Jersey, Arizona, South Dakota, and Montana approved ballot measures to legalize recreational marijuana. Mississippi has voted to legalize medical marijuana use. (Investopedia)
  • Seven major North American cruise lines have halted trips through the end of the year. The move comes after the Centers for Disease Control issued a Conditional Sailing Order to replace the “no sail order” it put in place in March. (Investopedia)
  • Mall owners CBL Properties and Pennsylvania Real Estate Investment Trust (PREIT) both filed for bankruptcy protection, marking the first mall operator bankruptcies in over a decade. The move comes as the pandemic continues to rattle the retail industry. More than 30 of CBL’s retail tenants have also filed for bankruptcy this year, including JCPenney, Ann Taylor-owner Ascena Retail Group, and Pier 1 Imports. (Investopedia)
  • FIC Restaurants, operator of the Friendly’s restaurant chain, filed for bankruptcy protection and agreed to sell its assets to an affiliate of Dallas-based restaurant franchisor RIX Holdings for $1.9 million. (Investopedia)

That is all for now and thank you for being a subscriber!

Paul J. McCarthy


Paul J. McCarthy, III

President – Kisco Capital

Paul McCarthy

Mr. McCarthy is the President and founder of Kisco Capital.