Here we go again.

The S&P 500 is at 3,636 in the Futures (/ES) and, when we tested 3,640 earlier this month, we were harshly rejected with a 120-point (3.3%) drop but we quickly recovered – and then we quickly dropped again – but now we've quickly recovered, so let's all enjoy the pundits telling us how this rally is sustainable (this time).

Apple (AAPL) is down from $137 to $116 since early September and that's down 15% so it's actually very impressive that the Dow, S&P and Nasdaq have all held up well while their leader declined. It means people are putting money into relatively "bargain" stocks and that can put an underlying floor on the market we can build off.

Nonetheless, we went a lot deeper into CASH!!! in our Member Portfolios because it simply isn't worth the risk since we still don't know if Trump will willingly leave the White House and we don't know if there will be stimulus and we don't know if the virus will stop peaking (we are averaging almost 150,000 per day now) and we don't know if Black Friday will be a bust – too many unknowns to risk an overvalued market….

Closed Nov 27 2020

The US now has 90,000 people actively in the hospital with Covid-19 and 110,000 new cases were reported yesterday so there's no end in site as we approach the limits of our medical capacity to treat people. Thanksgiving itself could become a super-spreader event as 50M Americans (20% of the population) ignored the CDC and traveled for the holidays and 1,200 people are no longer thankful as the death toll climbs to 263,000 since March.

As you can see, we've had only 8M outcomes out of 12.5M infections in the US as more people are actively infected today than any other time in the outbreak – and they all just got together for Thanksgiving. This disease is 3% fatal folks! Typically, it takes 2-3 weeks to start seeing case counts rise after spreader events and by then we'll all be getting together for Christmas – have a merry one!

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That's the big question today, will Chrismas be cancelled? Today is Black Friday and, even if the shoppers show up, the numbers will be a disaster:

  • Walmart (WMT) stores will open at 5 a.m., and customers will be asked to form a single, straight line to enter the stores. Employees will hand out sanitized shopping carts and will remind customers to wear a mask when entering the store. Walmart will limit the number of customers in the store to 20 percent capacity
  • Target (TGT) says it will monitor the number of shoppers to ensure people have enough space to shop safely and will allow customers to reserve a spot in line outside their local store.
  • Best Buy (BBY) said it would limit the number of customers inside stores to comply with social-distancing guidelines as recommended by the Centers for Disease Control and Prevention. Best Buy also said it would consider limiting store hours, reducing occupancy and shifting to curbside-only pickup service “on a case-by-case basis to help local communities contain outbreaks.”

Black Friday means getting in the black for Retailers, that’s when you’re finally making a profit for the year. Historically, it has been a key indicator for how Retailers would do in their fourth-quarter results. This year, there's virtually no chance of getting into the black for retailers and it remains to be seen just how much of the 2020 damage will be undone in a single weekend but I think nowhere near enough to save things.

Amazon (AMZN) doesn't care, though. They have hired over 400,000 workers this year, a 50% bump in their total workforce and they are hiring another 100,000 seasonal workers so one company has created 500,000 jobs in a year, 20% of last year's entire employment growth. I'm sure Amazon will have a very merry Christmas but should it be trading at 100 times it's current earnings? That remains to be seen.

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Have a great weekend,

- Phil