The rally on Wall Street continued on the back of a better than expected Job Report and news of a Covid pill from Pfizer that has Former FDA Commissioner Dr. Gottlieb saying this is now the “end of the pandemic as we know it.” That’s a pretty bold statement. The Market sure liked it. The Stock Market keeps hitting fresh, record highs.
The Re-opening of America stocks, like Restaurants, Hotels and Airlines led the charge to the weekend on this news. These are the stocks that suffered the most during the pandemic. There has been some serious corrective price action beneath the surface all year. Strength has rotated from sector to sector throughout 2021. Also helping the rally are more signs that supply chain strains are loosening. There have also been reports that House Democrats are coming closer to a deal on infrastructure, though we’ve heard that one before. Perhaps more immediately impactful is word that Fed Chair Powell will be getting the nod for renomination. Powell was busy this week. The Market definitely likes Powell.
The Labor Market has strengthened. After a couple of months of disappointment, things seemed to have turned. 531K jobs were created in October. That easily beat the 450K expected. September was revised higher too. The unemployment rate dropped from 4.8% to 4.6%, the lowest since the pandemic started. Broad gains were shown in the important services and goods-producing sectors. The Consumer accounts for nearly 70% of economic activity in this country. Americans have been venturing out and buying more stuff. Manufacturers are manufacturing more and have apparently hired more, which means spending more. It’s an important cycle. There are definite signs that the worst of the supply chain strains are behind.
The path of least resistance has returned higher with help from Earnings and the reiteration from the Fed that monetary policy will remain supportive. The Fed formally announced its much-anticipated asset purchase taper this week. The US central bank will cut its monthly Treasury purchases by $10 Billion and mortgage-backed securities by $5 Billion. It will start next week. It is slated to be complete in the Summer. The Market took it very much in stride. Powell and crew made it clear that its tapering tactics will be slow and the financial system will be accommodated. The strong job numbers mean the Fed could even accelerate its newly announced tapering plans. Increased labor was helped by improved Covid trends and the first full month of expiration for enhanced unemployment benefits.
Inflationary pressures are everywhere. Some seem transitory. Others seem longer-lasting. The value of assets has never been higher. Pricing reflects it. Supply-Demand balances got thrown out of whack during the pandemic. Demand came back much faster than supplies. It’s put major stress on the system. Stagflation is not an issue right now. Demand is strong. Growth continues. Supply meeting demand has been the issue. We covered this topic in-depth at our virtual event this week. Here’s a link should you like to see it, for the first time, or again.
This has been a remarkable stretch-run for the Stock Market. The S&P finished higher for the seventh straight session on Friday. Even more impressive were gains in 16 of the last 18 trading days. It’s gone straight up. The October strength has definitely spilled into November. It came in the wake of the sharpest sell-off of the year, a 6% decline, in September. Back then, there were calls for a deep correction and that the Bull rally is done. It seldom ends that way. There are now 5 straight weeks of gains. And we just entered the seasonally strongest stretch for stocks on the calendar. There’s also this: FOMO is back. The fear from a major sell-off in September has been replaced with the fear of missing out on the rally. The investor synonym for that is Greed. The Market sure does like to play with human emotions.
Farewell Buster. Thanks for a decade-plus of memories. For the San Francisco Giants, it’s the end of an era. Buster Posey announced his retirement from baseball. The face of the franchise is going out on top, on his terms, leaving a lasting legacy that will see his number retired and a likely spot in Cooperstown.
Buster Posey made the Giants better. Before he joined, the team had never won a World Series in San Francisco. With him, the Giants brought 3 titles to McCovey Cove. This season past, the Giants won 107 games, a franchise record. Buster took 2020 off to spend time with his young and growing family during the pandemic. He returned this year, providing that stabilizing force, the leadership and the mindset for success.
The most important quality for Buster Posey is his ability to make others better. He raised the bar for attitude and accomplishment. He performed at the highest level and had expectations that his teammates do that too. He studied the game. He studied people. He adapted to talent and personalities, getting the most out of individuals. He caught more postseason shutouts than anyone in baseball history. Buster Posey will be hard to replace. His shadow is long and wide. But the mindset should stick, because it permeated the San Francisco Giant culture for a dozen years. It’s become part of the Giant’s way.
Everyone is replaceable. For sure, some are harder to replace than others. But when success is studied and the rest of the team learns and understands, the qualities and elements of success are understood. They get applied. They evolve. They become their way. It’s the brand, not the person. You just need to recognize it first and then seize the moment.
Buster Posey is leaving the San Francisco Giants in better shape than he found it. 3 titles in 5 years; A remarkable accomplishment. While the teammates changed over the course of his tenure, Buster was the constant. He was the core. The 2020 season was a preview of the post-Buster world. That was a gift. They learned to do it without him, knowing he was not yet completely gone. But ultimately everyone steps away. That’s why studying success, understanding success and using what you learn is essential for sustainability. And it has to evolve. Many Giants fans are sad and worried about the future ahead for the Giants without Buster. It’s a moment in time. He’s being honored for his accomplishments. He’s being remembered for his leadership and calm. His greatest quality was the positive impact he had on others. The key is to harness all of it, take things in stride and design the new path for baseball at 3rd and King. Somebody is going to rise and seize the moment. That’s where opportunity lives.
Have a nice weekend. We’ll be back, dark and early on Monday.
Mike
