SWITCHEROO!!!

The stay home economy delivered unexpected and impressive stock market gains last year, especially in the USA. Anyone who perused a financial newspaper or listened to CNBC knows the bulk of those gains were derived from Technology and E-commerce companies. Many of the standout performers were companies that many of us barely knew – the most obvious being perhaps Zoom, whose name has now, much like Google did, become a verb.

Stock market performance in early 2021 has shown a dramatic switch in leadership. Energy and Financials were the big (understandably) laggards last year, BUT in the first 2 weeks of January, they have gained close to 13% and 5%, respectively, while the Communications sector, where Facebook and Google are major components, is down over 3% and the FANG companies have lost about 5%. If you are not aware of the FANG synonym, where have you been hiding over the last decade or so? But, if the members elude you, they are Facebook, Amazon, Netflix and Google. Apple and Microsoft are also in the negative column so far this year, with losses over 4%. As for the much lauded ZOOM shares, they have declined over 40% in value since October, before bouncing some 13% this week.

So are we seeing the start of a major shift in leadership? Interest rates are rising and interest rate spread is a huge component of Banks’ profitability, plus vaccines may speed up a return to some sort of (new) normalcy in the economy. So quite possibly these sectors, along with other Covid depressed industries, may well be the new winners. However, while the new Biden administration has promised trillions in further aid, let us not forget a major tenet of his campaign was a renewed focus on green energy and a reduction in pollution and environmental damage from fossil fuels and fracking. A potential thorn to the major banks is that Elizabeth Warren will run the Financial Institutions Subcommittee which oversees the banks and the Federal Reserve. Meanwhile, Bernie Sanders will take control of the Senate Budget Committee, giving him the opportunity to be a big influence on the Democrats tax and spending plans.

Thus, perhaps this rotation to the laggard sectors is part of a final market gasp ending the rally of 2020? As I wrote last week, “My expectation is that once the new administration takes over, investors may take on a ‘show me’ stance, and that means any disappointments could result in notable selling. Thus, I would not be surprised to see lower prices in many of the currently over-loved sectors by the second quarter.”

Overall, last week was generally a losing one, as optimism over President-elect Biden's proposed $1.9 trillion stimulus plan gave way to questions around bipartisan support. The COVID-19 vaccine rollout continues to be slow, while case counts continued their unabated rise. Plus the reintroduction of even more lockdowns worldwide and re-imposed travel restrictions elicited renewed fears of a slowing of an economic recovery.

Bottom line, I repeat last week’s sign off, “Prudent money management says keep an appropriate cash percentage on the sidelines for potential ‘bargains’.”

January 11, 2021 - Breakthrough

December 21, 2020 - Didn't!!

December 14, 2020 - A Pause Before Christmas

December 7, 2020 - Main ST. & Wall ST. Diverge

November 30,2020-AAS Revisted

November 23, 2020- Ground Hog Day

November 16, 2020 - Vaccine Pop

November 9, 2020- The American Way

November 2, 2020- PPE

October 26, 2020- Crunch Time

October 19, 2020 - Counting

October 13, 2020 - Shake It Off!!!

October 5, 2020 - The Line Holds For Now - However!!

September 28, 2020 - It's All About 3 Key Words

September 21, 2020 - A Second Wave?

September 14, 2020 - Not A Lot To Cheer About

September 9, 2020 - Hump Day then Thump Day

August 31, 2020 - ASA Coming To The Fore

August 24, 2020 - The Debate Intensifies!

August 17,2020 -Potpourri

August 10, 2020- When Bad News is Good News

August 4,2020 - Three Records of Note

July 27, 2020 - Vaccine Vs Virus - Round 2

July 20, 2020 - Vaccine Vs Virus-Fight On!

July 13, 2020- A Week of Highs & Lows

July 6, 2020 - Economy VS Covid Cases

June 29, 2020 - A Bridge Too Far

June 22, 2020 - What Me Worry?

June 15, 2020-Reality Check??

June 8, 2020- It's All About The Workers

June 1, 2020 - Can We Bank on The Banks??

May 25, 2020- A Very Good Week For Stocks

May 19, 2020- Hedgehoppers Anonymous

May 11, 2020 - Was Monty Python Right?

May 4,2020 - Balancing the Teeter-Totter

April 27, 2020 - Oil - Another reason...

April 20, 2020- The Curate's Egg

April 13, 2020- Governor Cuomo Knows Best

April 6, 2020-  Stock Markets - It's a Teeter-Totter

March 30, 2020 - Stuck Like Glue

March 23, 2020-As Always, Bob Dylan Has The Answer

March 16, 2020 - Show Me The Money

March 9, 2020 - Interest Rates-The Race to Zero

March 2, 2020 - The Unknown Unknowns

February 24, 2020 - It's Always The Unexpected

February 18, 2020 - Oh (Dear!) Canada

February 10, 2020 - Sick Or Not I'm Going To Work

February 3, 2020 - A Turn For The Worse

January 27, 2020- Run For The Exits!!

January 20, 2020 - All Aboard!!!

January 13,2020 -  The Year That Was - A Wall of Worry

December 16, 2019 - Dear Santa

December 9,2019 - Those Who Live by The Tweet...

December 2,2019 - Taylor Swift

November 18, 2019 - Like The Duck in the Pond

November 11, 2019 - A "RISK ON" WEEK

November 4, 2019 - What About The Workers?

October 28, 2019 - Trick or Treat

October 21, 2019- The Gains Continue

October 15, 2019 - All We Are Saying.....

October 7, 2019 - Saved By The Workers!!

September 30, 2019 - Second Verse Same As The First!!

September 23, 2019 - About Face!

September 16, 2019-UP In Smoke

September 3, 2019 - The Sleeping Giant is Awake

August  26, 2019 -WOW!

August 19, 2019- "Do I Feel Lucky? Well,do ya, punk?"

August 12, 2019- Recession Rumblings

August 6, 2019-Coin Toss Part 2 - It came up HEADS!! = Bonds

July 29,  2019 - THe US Economy and Stocks (still) Lead The Way

Coin Toss- HEADS = Bonds  TAILS = Stocks

A Short USA Holiday

July 2,2019 - A Friday Rally Helped Cap An Impressive Month of Gains

June 24 - The Only Missiles Launched last Week were Financial Ones!! Whew!!!

June 17 - The Calm Before The Storm

June 10, 2019 - The Powell Put #2

May 29, 2019 - What To Do For An Encore

May 27,2019 - Let's Make A Deal

May 13, 2019 - When Elephants Fight