From Financial Advisor Joseph Stango: My Take 11/30/2020

Written by Joseph Stango

I hope you had a wonderful Thanksgiving holiday despite the Covid virus and the disruptions in family life that it corrected.

Today is the last day of trading in November. This month has been a great month for investors as the market has continued to rally culminating last week with the Dow closing above the 30,000 mark for the first time ever. Last week’s performance numbers were due to the trifecta of positive news.

First, the announcement that three Covid vaccine makers announcing that their vaccines are ready for approval and that they stand ready to begin distribution. This morning a fourth drug maker, Moderna, announced that the drug is also ready, and, like the others, they will be seeking emergency approval.

Second, the announcement by the Trump administration that they would begin the transition process with the incoming administration.
Third, and this was a key driver last week, the announcement that former Federal Reserve Chairwoman Janet Yellen was asked by President Elect Joe Biden to be the new Treasury Secretary. This news was greeted positively by not only Republicans and Democrats but also by investors as Yellen brings with her highly regarded credentials and the ability to now bridge the gap between the monetary and fiscal policy makers. This was a very “statesman” like move on the part of the incoming President as it suggested a more balanced approach to a key cabinet position and one that is vital to the health of the economy, rather than a more politically ideological one.

This trifecta has added to the euphoria that surrounds Wall Street now but please remember this; it is not about the destination it is about the journey. There is still much to be done and many questions to be answered that can cause volatility ahead.
There remains the challenge of getting the vaccine distributed to the American public which is a monumental undertaking and one that can take a few years to complete. The puts the concept of returning to normal into a new light as it will not be a “light switch” approach to the problem. More than likely it will be a “dimmer” approach to the problem where the light gets brighter a little at a time.

About questions to be answered:

First, a stimulus/relief package is still necessary. The questions that surround a package are when will we get it and how big will it be? This is a crucial time for our economy and there is no question that a second relief/stimulus will be needed to stabilize it giving relief and support to small businesses and individual households and well as the needed support for seniors particularly those in nursing homes.

Second, will the new administration slow the distribution of the new vaccines? You may remember that during the campaign the candidate Kamala Harris kept warning Americans that she would not trust a vaccine approved by the current administration.
Finally, it should be noted that there continues to be a widening chasm between Main Street and Wall Street. We need to remember that the indices are not the economy and it certainly does not reflect our present state. Risk is still present, and we need to be careful in how we approach it.

I will have a much more in-depth explanation for you this morning at 10:10 AM on WATR’s “Talk of the Town” with host Steve Noxon. Click here if you would like to listen; www.watr.com. Additionally, I will be calling you in the next several weeks to share my views and to offer my suggestions for adjustments to your portfolio to prepare for the coming year.

In the interim, as we begin this period of peace on earth and good will to all, I want to express my sincerest wish to you for a peaceful and joyous season of love and good will.

Enjoy your week!

Sincerest Regards,
Joe