E TalkMarkets Tuesday Talk: A Very COVID Christmas

Source: The New York Times

News of a mutant COVID-19 strain coming out of England has shutdown skies worldwide and vaccines aside, has put an even further damper on an already dark holiday season. After a choppy morning, US markets rebounded and closed mostly unchanged Monday. The Nikkei 225, Hang Seng and Shanghai Composite indices closed down in Tuesday trading, while European markets are higher in morning trading. Currently S&P 500 futures are trading flat at 3,695, Dow Jones futures are trading at 30,127, up 14 points and Nasdaq 100 futures are trading at 12,754 up 71 points from Monday's 12,683 close. 

TalkMarkets Exclusive contributor Arthur Donner in The Canadian Economy Has A Long Road Ahead To Recover The Jobs Lost In The Pandemic checks in with our neighbor to the North. 

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"The Canadian job market recovery continued to slow in November, adding only 62,000 net new jobs compared with 84,000 which were created in October. The unemployment rate in November fell to 8.5% from 8.9% in October. The employment increases in November left Canada 574,999 jobs short of restoring the 3 million jobs which were lost in March and April."

Despite continued hemorrhaging in the retail and hospitality industries, Donner says, "Canada’s total economic response to the pandemic recession is much more V like than the extended U shape I thought was possible."  Donner includes the below chart which shows how the Canadian labor market is recovering from the current recession vs recessions in prior years.

A V-shaped (labor market) recovery indeed, but still well below the peak.

TM contributor Travis Tim in his article 3 Pieces Of Good News, has found some ways to cheer readers on.

1. "First, the Moderna (MRNA) vaccine was approved and will start to be used on Monday. This is another MRNA vaccine like the one from Pfizer (PFE), but it doesn’t require the same especially cold freezers, and it can be shipped in smaller volumes, making it a more accessible vaccine, particularly for smaller and more rural hospitals. 

2. The second piece of good news was that Congress FINALLY agreed to a stimulus bill. The $900 billion deal provides relief to small businesses, airlines, increases unemployment benefits and provides a $600 payment to individuals that qualify.

3. The third piece of good news is that the Federal Reserve is going to allow banks to buy back stock again next year, after finding that they have more than enough capital to easily survive a dramatic stress test, far worse than what we are seeing now for the economy. This is absolutely huge, as the stocks are really cheap so these buybacks are enormously accretive, depending on the bank, but certainly the ones we own. This should help earnings per share growth and in many cases book value per share growth, which are the key metrics that guide valuations and stock prices for these companies."

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Angry Old Lady 3 weeks ago Member's comment

It will certainly be a Christmas to remember... and not in a good way!