Market Thanks

While I believe all of us who have been lucky enough to have been born here, or have chosen to move here to live, have even more reasons to be thankful for this year. I thought I’d give you some more things to consider as to why you may want to share that view.

From the market perspective, the positive trend continues. Stocks ended the week at record highs as markets rallied Friday after China’s central bank made its first interest rate cut in more than two years and the European Central Bank announced that it began buying asset-backed securities. Those central banks’ stimulus efforts and our continuously encouraging domestic outlook had the Dow ending the week higher overall. The S&P500 also finished up for the entire week at 2063. The NASDAQ ended at its best level in 14 ½ years at 4712.

The foreign banks stimulus plans helped our markets because traders see this as a way to help continue the recoveries in those parts of the world which, in turn, will help our companies benefit from doing business there which, in turn, helps reinforce earnings growth.

In no particular order, here are a few facts and comments to help reinforce our positive trend.

For instance, Federal Reserve Governor Jerome Powell said this past week that “this year is on track to be the best job creation year since 1999, if the current pace keeps up for the rest of the year.” Probably a good bet as we’re already at unemployment lows not seen since 2000…

Regarding construction news, National Association of Home Builders Chief Economist David Crowe commented that, “Low interest rates, affordable home prices and solid job creation are contributing to a steady housing recovery.” Existing home sales this week were reported at their best levels since a year ago.

Reflecting the current low energy prices, according to AAA, the average price of regular unleaded gas was $2.89 on 16 Nov, its lowest level since the end of 2010. This de facto tax break can have quite a positive ripple effect throughout our economy.

Regarding the market trend, Fundstrat Global Advisors founder Tom Lee said the S&P500 has “at least three more years of double-digit gains and could peak at about 3,500 or 4,000.” He added that, “I think there’s so much pent-up demand in the economy. We’re thinking a trillion-dollars-per-year-type levels of investment spending that could surge. I think we’re only mid-cycle.” I think he’s right, in terms of where we are in the cycle, for sure.

Historical Thanksgiving facts

I’ve collected a few facts to help with your dinner table conversation that have nothing to do with the markets or economy – as if you’d want to talk about anything else…

The first recorded Thanksgiving celebration took place, not in Massachusetts, but in St. Petersburg, Florida, in September of 1565. (“Usually reliable sources” have suggested that, based on having observed the current St. Pete populace, that some of those original celebrants are likely still around…)

The Pilgrims spent about two months at sea in tiny wooden boats. By the time they had their first celebration, 10 months after arriving, they had put up seven houses, three storehouses and a meeting house. An industrious lot, to be sure.

What about Squanto? He was a Wampanoag Indian who had spent nine years in England – perhaps the first exchange student?  In any case, he acted as the intermediary between the Pilgrims and the rest of his tribe, particularly its chief. The chief was referred to as Massasoit; but that was his title meaning Great Sachem or chief. The chief’s real name was Ousamequin. (With these individual and tribal names, spelling class must have been a real challenge.)

How about that menu? Well, it didn’t look like what we have come to think of as “traditional”. They hadn’t made the acquaintance of any turkeys as yet and the Spaniards hadn’t brought in potatoes nor had cranberries been discovered. What they did have was a series of meals over a week. Those included fish, cabbage, onions and corn, along with duck, oysters and venison as the main choices.
A lady named Sarah Josepha Hale, who was the author of “Mary Had a Little Lamb” and a noted magazine editor, led a drive to convince President Lincoln to declare Thanksgiving as a national holiday.

The very first Macy’s Thanksgiving Day parade was held in 1924, featuring animals from the New York City’s Central Park Zoo. Those big balloons first showed up in 1927.

Finally, if you happen to watch football as part of your day, it was in 1924 that the very first nationally broadcast game – on radio – was held in 1934. They played in front of an “overflow crowd of 26,000”. Bears won.

Summary

Regarding the markets and economy here in the US, it seems to me the bullish case still has to make the most sense. Things like low inflation and zero real interest rates, the stronger dollar and our new-found abundance in oil and gas and corporate profit margins at record levels and continuing to grow. To be bearish now, you have to say none of these accounts for anything.

I see no indications in our economy that indicates that it’s going to roll over or play dead anytime soon.

Have a great Thanksgiving!

Cheers!

Mike