Weekly Market Commentary November 5 2020

The Markets

Last week, financial markets and economic data told very different stories.

Reviewing economic data is a bit like looking in a rearview mirror. Typically, it offers information about what is behind us. For example, last week we learned:

• The U.S. economy grew by 33.1 percent during the third quarter of 2020.Strong growth helped boost America’s gross domestic product (GDP), which is the value of all goods and services produced in the nation. At the end of the quarter, GDP was about 3 percent lower than a year ago, reported The Economist. Because of later reporting in Canada, we aren’t expected to have third quarter GDP numbers until early December.
  
  
• Personal income increased in September, and so did spending on goods and services. Consumers bought more clothes, cars, and car parts, and spent more on healthcare and recreation.  

• New claims for unemployment insurance moved lower last week. Unemployment remains high overall, but a slowdown in new claims is positive, and unemployment continues to trend downwards.  

Despite positive trends in economic data, major stock indices delivered their worst performance since March 2020. Financial markets are the windshield. They show us what investors anticipate may be ahead. Last week, it was clear investors were not optimistic. There were a number of reasons they may have been concerned:

• The number of coronavirus around the globe are on the rise.The US, Germany, France, the United Kingdom, and other nations have closed segments of their economies and tightened limits on social distancing. “The more serious the virus spread becomes, the more economic restrictions get put in place. That, in turn, applies economic pressure and spooks investors,” reported CNBC.

• New U.S. stimulus was delayed.Democrats and Republicans were unable to agree on the terms for a new stimulus package before the election. Concern that stimulus measures might be delayed until next year helped push stock indices lower last week.

• Election uncertainty is high. There was no clear result to the U.S. presidential election on Election Day. Until a winner is declared and any pending litigation dealt with, election uncertainty will continue to put pressure on the markets.

It’s possible we may see more market volatility this week. If you have any questions or concerns about your investment portfolio or recent market conditions, please do not hesitate to give us a call.

Source: Refinitiv

Weekly Focus – Think About It

“…should things go wrong at any time, the people will set them to rights by the peaceable exercise of their elective rights.”

--Thomas Jefferson, 3rd President of the United States

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