Markets Don’t Care About December Weakness

Is The Economy Weakening?

Everyone would normally want to know if the economy was weakening and by how much. However, traders have moved on to the post-COVID-19 economy. Frankly, we thought they would move on a few months earlier. This market has become very short-term oriented which sort of makes it surprising that it is looking to next year when the economy reopens. 

On the other hand, the market is bullish on everything, so maybe we shouldn’t be surprised reopening stocks are doing well. With that being said, we must cover how the economy is doing in December even though most are looking past it.

As you can see from the chart above, there has been a moderate mobility decline in retail & recreation as well as transit stations in the past few weeks. Workplace mobility has held up better and grocery shopping remained normal as you’d expect. This data doesn’t account for the recent more stringent restrictions California has enacted. 

Retail stores can only open at limited capacity. Many bears were clamoring for this news to knock down stocks, but it didn’t do anything. That’s because markets are focused on the vaccines going out. By the time we reach herd immunity, the reopening trade will be over. In order for that to happen, reopening stocks must rally in December and January when the pandemic is still bad.

Redbook same store sales growth fell from 9.2% to 2.1% in the week of December 5th as sales growth came down from the holiday high. It will be interesting to see how Target and Wal-Mart say the holiday shopping season went.

NFIB Small Business Confidence Fell As I Expected

Any expectation that the NFIB small business confidence index would fall in December was correct. Small firms don’t like Democrats and they have been hurt by the 3rd wave. People are surprised the index didn’t fall more. Specifically, the index fell from 104 to 101.4 which missed estimates for 102.5, and the lowest estimate which was 102. 

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