Monthly Market Wrap-up: November 2020
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This November, investors were thankful for family, food, and vaccine news; as Pfizer (PFE), BioNTech (BNTX) and Moderna (MRNA) injected new life into global and domestic equities, propelling them to their best month in decades. Oh, and the Dow finally hit 30k.
As the Presidential Election came to a close (sort of), investors are taking note of how a Biden economy might shake out given his choices for top economic positions. Investors see a familiar face in former Fed Chair, and newly nominated Treasury Secretary, Janet Yellen, and are now keeping a close eye on the Georgia senate races, which will determine the fate of Congress for the next 2 years. November packed a year’s worth of news into a month, so this edition of the Wrap-up will focus in on these key trends:
• Off the YCharts! Flight to Coins — the Dollar and Gold are no match for Bitcoin
• Major Index Returns: Positive returns abound
• Sector Movement: Happy campers everywhere
• Hot Stocks of the Month: Energy takes off, led by Occidental (OXY)
• Laggards & Losers: Hanesbrands (HBI) falls as new CEO looks to shake things up
• Economic Data: The economy limps towards a recovery
Off the YCharts! Flight to Coins
We still aren’t sure if Bitcoin holders are “alternative investors” or “pioneers of the new economy”; but we’ll just call them happy, as Bitcoin prices notched a new high against the US Dollar at over $19,600. Was this a result of a “flight to safety” by investors? Well, it doesn’t seem like it… the Dollar weakened amidst positive economic prospects and the likelihood for loose fiscal policy under a Biden administration, and Gold got hammered during the month. We won’t pretend to be the experts on Bitcoin price movements, but the Bitcoin movement itself surely picked up steam during November.
The S&P 500 jumped over 11% during November, and closed out the month hovering around that level. That said, the correlation between equities and yields that investors became accustomed to in years past has remained decoupled, as the 10 year Treasury bounced around in a tight range before finishing nearly flat at 84 bps.
Major Index Returns
Positive returns are starting to become a motif in this Wrap-up; the MSCI EAFE recovered from dropping over 4% in October, handily outperforming both emerging markets and domestic equities. Bond returns were positive but more muted; the The global aggregate bond index gained nearly 4% while high yield corporates ticked up 1.8%. Interestingly, emerging markets and domestic equities moved relatively in tandem throughout November, surely as the vaccine news gave all countries’ economic outlooks a boost.
Reversing course from October, every sector logged positive returns for the month. After what’s been a painful 2020 for energy investors, November provided a reprieve as positive economic prospects launched crude oil futures up nearly 23%, providing the energy sector room to finish the month up 28%. Every sector returned at least 6% except for the counter-cyclical utilities, which still managed to record a gain of 74 bps.
Hot Stocks of the Month: Ten Top Performers
This month’s top performers were much more driven by sector movements than individual equity’s fundamentals. Given the sector’s overall strength, it’s unsurprising that energy stocks led the way as the top performers in November, taking 7 of the top 10 spots. We have to hand it to Occidental (OXY), a 73% monthly gain is quite impressive… that being said, it’s unfortunate the year-to-date column is just to its right. Rounding out the top 10, you might notice Boeing (BA) and Carnival (CCL) finally showing some gains, though this also comes on the back of a brutal COVID-19 shock to the cruise and airline industries. The only stock to make the list with positive year-to-date returns is Albemarle (ALB), as the Lithium miner crushed analyst expectations in the first week of November.
Laggards & Losers: Ten Worst Performers
Coming in at best of the worst, Hanesbrands (HBI) fell nearly 12% in November despite beating earnings earlier in the month. Profitability headwinds, such as over-reliance on wholesale business lines and recent contract terminations, led analysts to believe the Champion brand owner’s future was uncertain. Stephen Bratspies, who began his tenure as CEO of Hanesbrands in August 2020 following 5 years as the Chief Merchandising Officer at Walmart (WMI), will look to change those analysts’ opinions in the quarters ahead. He stated the company is conducting an “in-depth review” of their global portfolio, supply chain, and business segments.
Financial Market & Advisor News
10 Tax Tips to Take Advantage of By Year-End (ThinkAdvisor)
Painting a richer picture of past portfolio performance (Wealth Professional)
October’s unemployment rate lowered to 6.9%, down from 7.9% in September and 8.4% in August; a number Americans hope will continue to fall. Though initial jobless claims rose to 778k in the final week of November, its highest level since October, pointing to an uneven recovery.
Production and Sales
US Retail and Food Services Sales increased only 0.25% in October, its lowest increase since the start of a pandemic, suggesting the rebound in sales numbers may have plateaued. Durable Goods Orders were up 1.27% from September.
US New Single Family Houses Sold in October slipped 0.3% month-over-month, while the US House price index jumped 1.72%, building off the previous month’s 1.54% which represented it’s highest monthly gain since at least 1991.
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