Your Money - November 20th 2020

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Well, it wasn’t a bad week overall, especially if you were in the right sectors. Trouble is, investors are very fickle these days, moving in and out of individual names as well as sectors. Trading action seemed to go from one extreme to the other with seeming little long term conviction. Perhaps it’s a realization that stock valuations are getting stretched and a lot of things have to go right in 2021 to support current prices. Vaccines will need to be fast tracked through the regulatory system and then an efficient distribution system will need to be sutured together to make sure the first people to get the vaccines are front line workers and those with compromised immune systems.  Not to be cynical but I have a feeling professional athletes will also somehow get to the front of the bus along with politicians. It’s kind of like how the healthcare system operates in Canada. But I digress.

Of perhaps more importance will be how Americans Handle their upcoming Thanksgiving celebrations. Hard to emotionally process the sentiment that the best way to say “I love you, so I am not coming to Thanksgiving Dinner.”

Unfortunately, Black Friday may be the litmus test for retailers, airlines and restaurants and whether they can hang on until a vaccine is readily available especially in light of no Federal aid on the horizon. In fact, today’s stock market action was marred by a semi public spat between the soon to be outgoing Treasury Secretary and the head of the Federal Reserve. It seems that some of the funds made available in the last bailout package was not efficiently allocated: but instead of showing some monetary restraint as a possible stick, The Federal Reserve has indicated it will use every tool in the box to support the financial system.

Still, one cannot look a gift horse in the mouth and with Moderna’s vaccine results on Monday, a “return to normal” trend developed this week and its why the TSX outperformed most of the US indexes as energy, financials, tech and industrials rallied this week. Sure some of them have a long way to go but at least it’s in the right direction and if more pharma companies can also release positive results in the coming weeks, the Santa Claus rally is on!

Stay safe and Happy Trading.

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Steve Bokor

Steve Bokor

Portfolio Manager