2020's Thanksgiving holiday-shortened trading week came and went, leaving the S&P 500 (Index: SPX) sitting atop a new record high for the index before disappearing into market history.
For those who checked out early for the holiday, we'll repeat how we closed the previous edition of the S&P 500 chaos series, since it helps explain this week's update to the alternative futures chart.
On a final note, sharp-eyed readers will note that over the projected future of next two weeks, the alternative futures chart is showing a relatively short duration "echo" of the volatility that struck the market about a month ago. This is an artifact from the model's use of historic stock prices in setting the base reference points from which it projects the future. For longer duration events, we will often add a redzone forecast range to account for the echo effect, but since this upcoming echo is comparatively short, we'll simply note that the trajectory of the S&P 500 will likely appear to "run hot" with respect to the model's projections over these weeks.
Here is this week's alternative futures chart, which shows what running hot looks like in the context of what we just described.
Although we're not adding a redzone forecast to the chart, all that exercise involves is connecting the dots of the projected forecast for a given future quarter investors are focusing upon from a point before the echo effect skews the projection to a more distant point in the future after the echoes of past stock price volatility have dissipated. If we were to add one, we would start by assuming investors would remain focused on 2021-Q3 and connect points for this alternative trajectory on opposite sides of the echo. We would then indicate a range of plus-or-minus three percent of the value of the index to account for typical day-to-day trading volatility.
The current echo, which traces back to the volatility of a month earlier, will run out before the end of this week. But since you now know how that particular magic works, we'll leave it as an exercise for you to either amaze or dismay your friends by making your own redzone forecast with one of our spaghetti forecast charts!
- Monday, 23 November 2020
- Signs and portents for the U.S. economy:
- Oil prices settle up over 2% on COVID-19 vaccine news
- U.S. manufacturing, services activity expanding rapidly in November: IHS Markit
- Biden to choose ex-Fed chair Yellen as first woman Treasury secretary, allies say
- Fed minions attempt to peer into the future:
- Fed's Barkin: Next few months could be challenging until vaccine available
- NY Fed's markets head Singh says big challenges remain for economy
- Fed's Evans sees no rate hikes until late 2023, maybe 2024
- Bigger trouble developing in Eurozone, United Kingdom:
- Euro zone business activity shrinks but vaccine hopes boost optimism: Reuters/Ipsos poll
- UK shoppers drop 55% as English lockdown bites
- Positive signs of coronavirus recovery in bellwether Singapore, bigger stimulus still being rolled out in China
- Singapore upgrades third-quarter GDP, sees economy returning to growth next year
- China's Li Keqiang tells local governments to create more jobs: state media
- ECB minions plan to keep stimulus rolling out, worry about corporate vulnerability and shadow banks
- ECB emergency bond purchases to last while disruptions persist: Lane
- Euro zone corporate vulnerability at levels seen in debt crisis: ECB
- ECB's Schnabel flags role of shadow banks in passing on policy
- Cyclical boost lifts stocks; Yellen news gives short bump
- Tuesday, 24 November 2020
- Signs and portents for the U.S. economy:
- Fed minions recognize reality, see benefits to economy from COVID vaccines:
- NY Fed's Williams: Emergency lending programs could be started if needed - WSJ
- Fed's Bullard sees 'light at the end of the tunnel'
- Bigger trouble developing in Eurozone, at small businesses in South Korea and Japan:
- Ifo institute expects German economy to shrink in fourth quarter
- French business morale hits five-month low on new lockdown
- Alone in the dark': South Korea's small businesses reel from new virus clampdown
- Japan's ramen bars struggle to stay open as COVID hammers small firms
- ECB minion argues to keep stimulus rolling out, BOJ minions dismiss deflation fears and prep for bank bailouts:
- ECB should weigh taking longer to hit inflation target: Schnabel
- BOJ's Kuroda rebuffs view Japan heading towards deflation
- BOJ seen spending up to $478 million under bank aid scheme: central bank official
- Bigger stimulus ending in China:
- Dow Jones hits 30,000 as Wall Street bets on 2021 bounce
- Wednesday, 25 November 2020
- Signs and portents for the U.S. economy:
- U.S. consumer spending rises; income falls in October
- U.S. weekly jobless claims rise as COVID-19 infections surge
- Jobless aid for nearly 14 million Americans to expire the day after Christmas
- Fed minion thinking about more bond buying:
- Bigger trouble developing in Eurozone, stimulus slowdown in China:
- Euro zone business activity shrinks but vaccine hopes boost optimism
- China construction machinery industry cheers strong 2020 sales but outlook uncertain
- ECB predicts falling house prices while ECB minion cheers former Fed minion's new role:
- Euro zone house prices set for reality check as pandemic bites: ECB
- ECB's de Guindos says Yellen's appointment good for global economy
- S&P 500, Dow pull back from all-time closing highs after grim jobless data
- Friday, 27 November 2020
- Daily signs and portents for the U.S. economy:
- Chinese government blaming other nations' products for spreading coronavirus:
- Bigger trouble developing in Eurozone, Brazil, Chile:
- Euro zone sentiment drops in November as second COVID wave strikes
- Brazil unemployment rate hits record high 14.6%, as people return to look for work
- Chile unemployment eases to 11.6%, remains near decade-long high
- Bigger stimulus rolling out in Eurozone, Japan:
- German virus aid for firms to amount to 4.5 billion euros a week in December
- Japan ruling party proposal backs assistance for COVID-hit airlines
- ECB minions thinking about how to do next COVID stimulus better after first falls flat:
- Euro zone to move on bailout fund reform amid COVID worries
- ECB must enable governments to spend their way out of pandemic: report
- ECB's Villeroy says amount of stimulus not only question
- Analysis: German stimulus fails to turn anxious savers into big spenders
- Wall St. gains, Nasdaq hits record high as holiday shopping begins
A succinct summary of the positives and negatives Barry Ritholtz found in the holiday-shortened trading week's economics and markets news is available over at The Big Picture.
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