As we head toward Thanksgiving, we may find that the things are no longer the same, with coronavirus pandemic affecting our normal way of life. We should instead focus on the basis for the holiday: what we are thankful for.
“Longing for Thanksgivings past, we’ll focus on the true spirit of the holiday, and remind ourselves of what we’re thankful for,” Brian Levitt, the Global Market Strategist, focusing on North America, for Invesco, said in a note.
Levitt highlighted 10 things that investors can be thankful for this year.
- Vaccine results. For starters, promising Covid-19 vaccine results from Pfizer, Moderna, and Oxford-Astra Zeneca.
- Financial conditions have eased meaningfully. The U.S. Federal Reserve has come out with accommodative monetary policies and will keep rates low to support the financial system. Meanwhile, the U.S. dollar has weakened, the yield curve has steepened, and corporate borrowing costs have declined.
- The worst has not come to pass. Prior to the presidential elections, many feared heightened volatility and a “blue wave” that would lead to higher tax rates, along with other major policy changes.
- A recovering job market. Unemployment claims have fallen from 25 million in April to 6.4 million in November.
- A booming housing market. The low mortgage rates, demographics, and shift into the suburbs are supporting the U.S. housing market.
- Improved U.S. shipping. The Cass Corp Freight Shipments Index, which measures U.S. shipments from companies representing a broad sample of industries including consumer packaged goods, food, automotive, medical/pharma, retail, and heavy equipment, is on the mend.
- Rebounding Asian economies. Asian countries have enjoyed a sharp rebound in economic activity. China has led the recovery and remains the sole economy to generate a positive GDP this year.
- Recovering U.S. corporate earnings. S&P 500 Index corporate earnings in Q3 have regained approximately 80% of their decline.
- A supportive outlook for equity markets.
- An elongated market cycle. “I expect the global economy to continue to recover in 2021 and beyond, the near-term risks notwithstanding. Betting against that recovery is akin to betting against medicine, science, and human ingenuity. Stocks are trading cheap to bonds. There is a substantial amount of money in risk-free assets earning minimal returns. The Fed has signaled its intention to keep rates low for the foreseeable future, thereby potentially incentivizing that money to move into riskier assets. Market cycles tend to end with excessive investor optimism and a prolonged Fed monetary tightening cycle. Seen from that lens, one may conclude that we are in the early stages of the next elongated market cycle,” Levitt said.
Lastly, every generation will have to overcome some challenges. History has shown us that things get better over time, even if the path isn’t always straight.
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