by Robert Holman | The DefensiveAdvisor.com | November 24, 2020
MARKET BULLISH … Rating of 7 (0 - 4 is bearish, 5 is neutral, 6 - 10 is bullish).
Three virus vaccines appear imminent – two based on mRNA and one old-fashioned type vaccine.
A stimulus package of some sort seems likely – I saw a blurb on TV yesterday that said more than 100 economists thought it was necessary. That’s at least a third of economists employed in the finance industry.
I also saw a forecast of quarterly GDP yesterday. The figures below call for a slowdown in the first quarter of next year assuming implementation of a limited fiscal stimulus package in late 1Q’21 / early 2Q’21. So, a stimulus package is needed or the market will probably have a mild sell-off soon.
I II III IV I II III IV
Q* Q* Q Q Q Q Q Q
Real GDP -5 -31.4 33.1 2.2 0.7 3.5 6.0 4.5
Figures from The Conference Board
Unemployment was 3.5% before coronavirus. It is 6.9% now after peaking at 14.7%. So, that’s a pretty strong and quick recovery.
Maybe valuations are high in some areas (stocks that benefit from working at home, etc.), but in general, they seem to reflect overall expectations of the future economy, earnings and interest rates.
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