One job is lost, three mouths to feed.
A parent is ill, afraid to come near.
Care for them all? What do they need?
I don't know this feeling, I think it is fear.
Can't go see your mom, though she needs to see you.
This virus would kill her. How not to spread?
I look to the sun for a time to renew.
I turn to look back with nothing but dread.
Are we not all the same, both inside and out?
We first learn to love, so we forget how to hate.
Deep down inside, each other we doubt
But know that together we've always been great.
Enough with the nonsense, you know it so.
It is a crisis we face, so don't go alone.
Reach out to someone you just barely know
Together, we'll find some new comfort zone.
2021 will be better, you know it is true.
2021 will be better. I've got to believe.
2021 will be better. Red, white and blue.
2021 will be better. I'd never deceive.
2021 will be better.
2021 will be
Red, white and blue.
Count on us.
Equity markets tried to rally on Wednesday. It felt like that anyway. Large-cap indices were hit by a late selloff inspired by dimming prospects for a larger fiscal distribution targeting the American public. Senate majority leader Mitch McConnell put the kibosh on any market enthusiasm when, in reference to tacking on another $1,400 to the already agreed upon $600 helicopter payments to individual taxpayers, he said that the increased relief "has no realistic path to quickly pass the Senate."
What McConnell has done is to combine these beefed-up payments with the elimination of Section 230 liability protection for social media companies and taking on the issue of purported voter fraud. These two issues will find little to no bipartisan support in the wake of the recent presidential election. While I (a conservative-leaning moderate, I think, but certainly not a Republican nor a Democrat) can see that after every election the losing side has problems with social media, and sees fraud everywhere, somehow the winning side cannot see these issues after elections are won, making both sides at times quite overtly hypocritical.
As for the marketplace, the Dow Industrials, Dow Transports, S&P 500, Nasdaq Composite, and Nasdaq 100 all closed up less than one quarter of one percent. An "Inside Day" was created for the all three of our most closely watched large-cap indices, which is usually seen as a pattern of continuance. In this case, this may be more an occurrence of keyword-reading algorithms just not finding a lot to react to. Breadth was overwhelmingly positive as small-to mid-cap stocks did broadly outperform large-caps. Trading volume ebbed yet again at the NYSE. However, trading volume increased significantly at the Nasdaq as advancing volume beat declining volume by nearly 4 to 1.
My Thoughts On D.C.
I agree 100% that there is certainly enough rotten-smelling evidence that indicates something has to be done to make future elections more transparent. Probably some kind of standard has to be set across all jurisdictions. I also agree 100% that if private social media companies are going to profit through posing, at least in some way, as a public utility, that users should not be able to figure out that company's political preferences quite so easily. Democrats and Republicans eat the same cheeseburgers, and they wear the same pants. They should also have the same social media experience. Not only do social media companies need to be held to the same standards as all media, but all media needs to get serious about taking their own thumbs off of the scales of news presentation. Opinion and news delivery need to be separated -- and the separation needs to be clearly defined.
That all said, these are separate issues, and combining them at a time of mass crisis is not only the wrong thing to do, it borders on unethical. This strange set of circumstances has made unlikely political allies of liberal Sen. Bernie Sanders and conservative Sen. Josh Hawley, both of whom have said that they would not vote on overriding the president's NDAA (National Defense Authorization Act) unless there too is a vote on the increased payments. I mean, Mitch, these two guys can't agree on the time of day. Suddenly I agree with both of them.
Here's an idea. The $600 payment is graduated, right? Only those making $75K or less get the full payment. Do the same thing with the $1,400, only make the cut off $50K or less? Is this difficult? Don't pay everyone. Maybe we can knock this $450 billion add-on down to $250 billion, but we have to do more for those behind the eight ball and poison pills are not the way to go right now.
Fiscal discipline is important. We have already borrowed way more than we ever should have. Do we ever get back to square one? Probably not. The time to correct this was late in the Obama administration once the recovery had built a foundation, and early in the Trump administration as that recovery accelerated. You have to fix such issues when fixing them is more luxury than burden. Does opportunity ever call again? I don't know. I do know that it is not when the line at the food pantry stretches for miles.
Soar With the Eagles
One trading session left to go. Year to date, the Nasdaq Composite has returned 43.4%, the S&P 500 15.5%, and the Dow Industrials just 6.6%.
Let's take a peek at the Dow 30, because it is so narrow, and so easy to slice and dice in a fun sort of way. As of Wednesday's closing bell, the top-five Dow stocks for 2020 have been Apple (AAPL) at +82%, Microsoft (MSFT) at +41%, Nike (NKE) at +40%, Salesforce (CRM) at +37%, and the Walt Disney Company (DIS) at +25%.
So how did you do? You really are supposed to check your level of participation in both leading and underperforming stocks more than once a year, but this is in a way, also supposed to be entertaining, so I'll check myself publicly. (So brave, isn't he awesome?)
1) AAPL -- Long the name currently. Long the name most of the year. Traded it though, and did miss out on some of that 82%.
2) MSFT -- Long the name from start to finish. Rock on.
3) NKE -- Barely touched this one. Traded it small through the options market, but would have to call this one a swing and a miss.
4) CRM -- Another name I was long for most of the year, but unlike with AAPL, traded it very well. The position outperformed the stock for the year.
5) DIS -- A tale of two time periods. Traded the name exceeding well over the first half of the year. Completely missed this recent surge.
Dogs of the Dow
As mentioned above, one must measure one's own performance on both ends of the scales. So, let's have at it. The five worst-performing Dow stocks for 2020 are Boeing (BA) at -33%, Walgreens Boots Alliance (WBA) at -33%, Chevron (CVX) at -29%, Intel (INTC) at -18%, and Merck (MRK) at -11%.
Let's have a look (Note: I have not included dividend payments in this piece, which does impact net basis for the better).
1) BA -- Long this name now, but only since October. Traded portions of it since. A huge winner for us. Currently my 6th top performer (among unclosed positions).
2) WBA -- Took a pass, as I have preferred CVS Health (CVS) all year. CVS is -8% itself YTD.
3) CVX -- Traded in and out of this name rather poorly over the first half of the year. Currently prefer Exxon Mobil (XOM) , which has been a small winner so far.
4) INTC -- Long this name, but only since Tuesday. Betting more on Dan Loeb than on Bob Swan.
5) MRK -- Long this name all year. Now check this out: With the shares -11%, I am up about 1%. How is that? The magic of selling covered calls in order to manipulate net basis. How more folks don't work on changing poor outcomes in this way, I will never understand.
Bold Predictions For 2021
How about I let you know after the Senate runoff elections in Georgia? Yes, they matter. Other than that, I see the New York Mets winning the first of six consecutive World Series championships, the New York Jets making the playoffs with Sam Darnold at quarterback, and the New York Knicks not embarrassing themselves.
I also predict that you and I have a good year next year. Not in our P/Ls (this year was easy), but in our lives. Let's remember who we are, and why they want to be us. Let us fight to hold back the tears as we hear that beautiful anthem. Let us support each other as we fight our way out of this mess. Let us learn how to love, and forget how to hate as we get off of the "crazy train."
Yes, I lifted that line from Ozzy, but it's the best line I know.
In short, Let's rock.
Happy New Year to you, and to your family. May all of you find the guidance and protection you seek. For this. I pray. Out loud. Every day.
Economics (All Times Eastern)
08:30 - Initial Jobless Claims (Weekly): Last 803K.
08:30 - Continuing Jobless Claims (Weekly): Last 5.337M.
10:30 - Natural Gas Inventories (Weekly): Last -152B cf.
13:00 - Baker Hughes Oil Rig Count (Weekly): Last 264.
The Fed (All Times Eastern)
No public appearances scheduled.
Today's Earnings Highlights (Consensus EPS Expectations)
No significant quarterly earnings scheduled for release.
(Salesforce, Apple, Nike, Microsoft, Disney, CVS and Boeing are holdings in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells these stocks? Learn more now.)