President Trump Signs The Stimulus. Will There Be More?

Also, lumber had a massive spike, then sharp pullback, then another spike. This is because of the hot housing market which should cool off a bit. It's doubtful that lumber will stay this high since commodity supply always increases after the price spikes. Some are bullish on the economy next year, but those 2 commodities might not rise.

Manufacturing was strong this fall as it is the most resilient part of the economy. It is deemed essential and goods demand has spiked this year. The December Dallas Fed manufacturing index fell from 12 to 9.7 which isn’t that bad. It beat estimates for 5. The consumer seems to have been the biggest loser in December.

Earnings Revisions Up Hugely

Analysts have raised 2021 EPS estimates 10 straight weeks. As you can see from the chart below, of the S&P 500 firms issuing Q4 profit guidance, more than half have increased it which is the most in at least a decade. S&P 500 EPS is expected to be $167 in 2021 which is up from $159 in July. 

Usually, estimates for the next year fall during this period. However, that doesn’t make up for the fact that the S&P 500 trades at 22 times earnings. Tesla’s entry into the index certainly doesn’t make it cheaper.


Traveling is likely going to increase in the next few weeks as people gain confidence in the vaccines. That could lead to a temporary increase in COVID-19 once we start getting better data in January. The stimulus passed and another one is being voted on. 

It would be hugely bullish for small cap value stocks if it passes. It would also be bullish for the stocks popular with retail traders because many will put their money directly into the market. EPS revisions have been great, but the market is still expensive. 

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