The market continued its hot streak after positive vaccine news from Pfizer on Monday. This news outweighed rising COVID cases and many unknowns surrounding the outcome of the election. As the holiday season grows nearer, many government officials came out to recommend that people stay home and social distance from their family[1]. Despite rising COVID cases, unemployment headlines continue to remain stagnant. Find all of this and more on the possible outcomes of Georgia’s Senate runoffs in this week’s @KonvergentWP Market Update Blog.

Here are the top three things we’re covering this week’s blog:

The Market

The S&P was up 2.35% on a rollercoaster week. The market opened trading on Monday up nearly 4% after Pfizer made headlines with successful COVID vaccine results[2]. But those gains quickly faded as investors came to terms with the reality that the pandemic is far from over. Notably, cyclical stocks outperformed the rest of the market on Monday in a way not seen for multiple years[3]. Nonetheless, the market lacks conviction to trend in one direction or the other because of the remaining unknowns.  

Economic Data

New claims decreased last week by 48,000 to 709,000. This was the largest drop off since mid-October and is a step in the right direction. Pandemic Unemployment claims also fell slightly to 298,000. Overall, this brings initial claims to just over 1 million. With COVID cases rising exponentially across the country, employment has remained stable. One reason for this may be that employers have become more prepared for the virus spread and have taken measures to protect their employees. While the initial spike of cases in April took many out of the workforce, our world has adapted to become increasingly resilient. In many ways, the pandemic forced a decade of technological improvements into under a year.

Continuing claims fell for the eighth straight week and came in at 6.786 million. This reading is now officially lower than the initial spike of unemployment claims in late March.

Total Claims for Unemployment from all programs decreased to 21.157 million. This was hardly a surprise as the number of individuals eligible to receive regular state claims continues to drop. 

It has become increasingly evident that the main catalyst for a decrease in unemployment claims is the 26-week benefit limit. The chart below displays continuing claims, pandemic emergency unemployment compensation, and benefit expiration/re-employed stacked together. Since the 26-week benefit expiration began in September the blue and red bars have steadily increased at a similar rate that the continuing claims have decreased.

Preliminary consumer sentiment released this week showed a significant drop to 77 from 81.8 in October. This reading was lower than the 82.3 expected[4] and serves as an indication of Americans fear over rising COVID cases and political tension.

Another way to view the fading economic recovery is through consumer card spending. After shooting up for the past six months, card spending is beginning to tail off. This is a concerning sign for major retailers with the holiday season right around the corner.

 Market Volatility

Headlines on Monday were centered on Pfizer’s release of positive vaccine news. While the results of their trials are certainly encouraging for reducing the risk of the virus, its critical to note that the pandemic is still far from over. Even if a vaccine is approved for widespread use, it will likely take many months for a majority of the population to receive the treatment.

Currently, the U.S. has a much larger problem at hand. COVID deaths, and hospitalizations are both up over 30% from 14 days ago. Cases have jumped 72% during that period. With the height of flu season still yet to come, COVID risks could be far from over.

On top concerns surrounding COVID, the outcome of the presidential race remains contested. As of now, the likelihood certainty points towards a Biden confirmation. But as 2020 has taught us time and time again, anything is possible. On the other hand, there has yet to be confirmation of Republican control in the Senate. Despite their current 50-48 lead, there are still two runoff races that could potentially shift the Senate control. In the case that both open seats went to Democrats, the tie breaking vote would come from the Vice President. With how close the election was in Georgia, these races could go either way and if both went to the Democrats, it would likely bring the combination of a larger stimulus package with increases in taxes.

Articles of Interest

Pandemic and Sports Fans – Many avid sports fans have missed out on watching their favorite team play in person this year because of pandemic regulations. Here in Washington, COVID has forced the legendary 12th man to cheer on the Seahawks from home. Check out this article for the timeline of when these fan restrictions may begin to be lifted for sporting events across the country.

Cyclical Rotation – Could a market rotation in cyclical stocks be on the cusp? Check out this article for insight into the historical rotation hinted at during Monday’s volatile market session.

Mink COVID Transmission – In the past few weeks, news headlines have reported a transmission of COVID to farmed Mink and then back to humans. While there has been little scientific research on the matter, the initial reaction sent a panic through Western Europe. Check out this article for credible responses to the questions asked by many about this concerning mutation.

Social Media Post of the Week

We honored those that bravely served our country on Veteran’s Day last week.  We have many clients and friends and family that were members of the Armed Forces and thank you for your service!

“As we express our gratitude, we must never forget that the highest appreciation is not to utter words, but to live by them.”

 – John F. Kennedy

Don’t forget to follow us on your favorite Social Media Feeds!!

Non-Financial Story of the Week

I am excited to announce that we will begin doing a monthly livestream on Facebook and a podcast that is going to focus on the key issues facing our clients today.  We will have topics ranging from issues facing business owners as well as high net worth individuals.  We will be sending out a separate announcement and information on watching the livestream.  The replay will be put up on the website and turned into a podcast if you are unable to watch it live.

Bottom Line

Monday’s market spike shows how highly investors are looking for positive news on a vaccine. While the path to a future with a lower risk of COVID is still far away, this was an important step in the right direction. If more promising vaccine results are released in the next few weeks the market will likely respond in a bullish way. However, there is still a lengthy dark winter ahead before the vaccine will be available to all Americans.

If you have any questions about any of the information in this week’s blog or what you should be doing right now with your personal and business planning, do not hesitate to reach out to us by sending an email to info@konvergentwealth.com or calling us at 253-236-7000.


[1] https://www.seattlepi.com/coronavirus/article/inslee-coronavirus-washington-warning-restrictions-15722713.php

[2] https://www.nytimes.com/2020/11/09/health/covid-vaccine-pfizer.html

[3] https://heisenbergreport.com/2020/11/11/in-this-market-good-news-can-actually-lose-you-money/

[4] https://www.marketwatch.com/story/americans-grow-more-anxious-about-coronavirus-republican-fret-over-trump-loss-survey-shows-11605280970

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