It’s Friday, the 13th, in 2020. What could possibly happen? I think we all know the answer to that question: Plenty. November is essentially halfway done. There are just 7 weeks left in this historic year. Can you believe it?
Market volatility continues, as rotation runs rampant beneath the surface. Leadership has switched back-and-forth all month between the more cyclical recovery stocks and Tech, which is insulated from Covid and is actually benefitting from life in the pandemic. Recovery stocks in the Travel, Restaurant, Industrial and Financial industries exploded higher on news that an effective vaccine is on the horizon. But reality set back in that timing could be months, which sent money back into Tech. That has been the theme all week, which had the S&P trading sideways with wide bands of volatility.
Investors are trying to weigh the impacts of surging Covid cases and a vaccine rollout against hopes of turning the corner on the pandemic and expectations that pro-business policies will remain after last week’s election. Short-term pressures are real and daunting. The spiking virus cases around the country threaten human lives and the already struggling Economy.
Throughout the year, we have been tracking high-frequency data to gauge economic activity in recovery. They seem to be reversing. Red flags appear across a range of high-frequency measures in retail activity, small business hiring and travel. Restaurant reservations fell for the 4th week in a row, according to OpenTable. The cold weather is clearly playing a role on outdoor dining. It’s been a brutal year for restaurants. Travel is expected to pick up over the Holidays, but people may rethink it in the face of rising health risks.
Fed chair Jerome Powell said he still sees the US recovery on a “solid path” but emphasized the turn for the worse in the pandemic is a big risk. The Fed has made it crystal clear that its support for the financial system is locked-in. The Market keys off of this and seems to be looking past the near-term challenges and seeing a much brighter future into 2021.
For those looking for a psychological and emotional boost right now, tomorrow might bring it. The next SpaceX flight to the International Space Station will take place on Saturday. You may recall, the company completed its maiden trip to the ISS back in August. NASA has formally authorized SpaceX for regular human spaceflight. The last time a certification was issued was 4 decades ago under the Space Shuttle program. This is the first time for a commercial system.
NASA’s partnership with American private industry is changing the scope of human spaceflight. It is opening access to low-Earth orbit and the International Space Station. That should lead to more people, more science and more commercial opportunities. It’s a really big deal.
If the prospects for space travel isn’t enough, how about flying cars? The city of Orlando is teaming up with a German aviation startup with plans to build the first hub for flying cars in the United States. Scheduled to be completed in 2025, this platform is designed to allow passengers to bypass Florida’s congested highways to get to their destination by air. These electric-powered aircraft are expected to be able to take off and land vertically from the ground-based hub and reach speeds of nearly 200 miles per hour. This just sounds so wild. It’s coming. Innovation is making it happen.
I close this week thinking back to President Kennedy’s speech in Houston in 1962. It was also a time of great challenge in America and around the world. He gave our nation, and especially our youth, hope with a simple mission: Put a man on the Moon. Just 5 months before the decade ended, 7 years later, that mission was accomplished.
“We choose to go to the Moon in this decade and do the other things, not because they are easy, but because they are hard.”
Look beyond the present. Learn from the past. Think big. It’s inspiring. It’s evolutionary. It’s real. And it’s all very investable.
Have a nice weekend. We’ll be back, dark and early on Monday.
Mike
