Friday, 18 December 2020 was a quadruple witching day on Wall Street, as stock index futures, stock index options, stock options, and single stock futures for 2020-Q4 all expired simultaneously. It may not feel like it quite yet, but for all practical purposes, where the markets are concerned, we are now in the first quarter of 2021!
That change of financial calendar also applies for dividend futures, which saw quite a lot of noisy activity before the quad witching day's trading ended. We've learned from experience that it takes several days for the end-of-quarter noise to subside and a clear signal for the future of dividends to emerge, which is where we're at today. That signal however won't have emerged before we sign off for 2020 ourselves and go on holiday, as our annual tradition of celebrating the biggest math story of 2020 will go live sometime late on Wednesday, 23 December 2020.
Until we return in 2021, we can confirm that investors have remained focused on the future quarter of 2021-Q2 during December 2020's week of four witches, following their having shifted their forward-looking focus to that distant future quarter on 11 December 2020. The latest update for the alternative futures chart for 2020-Q4 shows the dividend futures-based model's projections for the S&P 500 (Index: SPX) through the rest of the 2020 calendar year.
The market-moving news headlines we've pulled from the newsflow of the week that was is deceptively light, where perhaps the biggest news of the week was the announcement of the Fed's plans to provide quantitative easing-like monetary support for the indefinite future. Meanwhile, the Fed's minions appear to be working hard to convince the markets that the Fed won't be doing much more to boost the economy anytime soon.
- Monday, 14 December 2020
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- Signs and portents for the U.S. economy:
- Oil prices steady after 6 weeks of gains, pressured by glut
- U.S. lawmakers plan to split $908 billion COVID-19 plan into two parts: source
- ECB minion hits rewind button, reiterates last week's news:
- S&P 500 ends down after vaccine roll-out, mega-M&A
- Tuesday, 15 December 2020
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- Signs and portents for the U.S. economy:
- Oil rises, as investors focus on vaccine rollout, brush off recovery concerns
- Facing year-end cut off, U.S. banks scramble to extend COVID accounting relief
- U.S. manufacturing production solid; imported inflation muted
- Fed minions poised to consider actions sometime next year!
- China sees post-pandemic growth, sees cash as tool to minimize inequality:
- China's factory recovery steps up as export, consumer demand grows
- China central bank urges wider acceptance of cash as payments go digital
- ECB minions looking to boost investor interest in banks:
- Wall Street ends higher on stimulus optimism, Apple boost
- Wednesday, 16 December 2020
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- Signs and portents for the U.S. economy:
- Oil prices rise on vaccine optimism and weaker dollar
- U.S. retail sales decline further as COVID-19, lack of additional fiscal stimulus weigh
- U.S. Congress 'closing in' on $900 billion COVID-19 aid bill
- U.S. business inventories increase solidly in October
- Busiest U.S. seaport, buried in imports, plucks out toys to load Santa's sleigh
- Fed minions meet, commit to keep QE alive:
- As Fed meeting looms, investors brace for higher Treasury yields in 2021
- Fed vows to buy bonds until it sees 'substantial progress' in economic recovery
- Fed extends pandemic-related dollar 'swap' lines for 9 other central banks
- Bigger trouble all over, as suggested by imports:
- Euro zone trade surplus swells as exports recover more than imports
- Japan posts record run of export declines on soft U.S., China demand
- Bigger bailout coming to Eurozone borrowers:
- Nasdaq ends at record high as investors await stimulus
- Thursday, 17 December 2020
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- Signs and portents for the U.S. economy:
- Oil prices rise, touch 9-month high on U.S. stimulus progress
- COVID-19 restrictions push U.S. weekly jobless claims to three-month high
- As coronavirus aid talks drag on, U.S. Congress prepares stopgap vote to avoid shutdown
- U.S. housing starts, building permits power ahead in November
- Bigger trouble in Eurozone as deflation continues, Russia sees falling incomes:
- Euro zone inflation confirmed as negative in Nov for fourth month
- Russia's Putin says real incomes to fall around 3% in 2020
- S&P 500, Nasdaq hit record as investors eye fiscal stimulus
- Friday, 18 December 2020
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- Daily signs and portents for the U.S. economy:
- Oil settles up, marking seventh straight weekly gain
- Trump signs into law stopgap funding bill to avoid government shutdown
- Fed minions lay out case for no changes in monetary policy, want to get involved in other things:
- Fed's Clarida says current policy 'exactly where we want it'
- Fed’s Kaplan says will be time to pull back on bond buying when economic recovery is clear: WSJ
- Fed sees 'strong capital levels' at banks after stress tests, greenlights share buybacks
- Fed keeps countercyclical capital buffer at zero
- Fed's Brainard lays out case for Fed's climate change focus
- Bigger stimulus to continue in China:
- Wall Street closes lower as stimulus rally cools, Tesla volume jumps
If you're looking for a bigger picture of the news of the week, Barry Ritholtz has you covered with his weekly review of the positives and negatives he found in the week's economics and markets news over at The Big Picture.
The week ahead should see a fiscal spending deal come out of the U.S. Congress, which we don't think will do much to reset the forward time horizon of investors.
The next edition of our S&P 500 chaos series will arrive early on Monday, 4 January 2020, when we'll also recap the more significant news headlines from the two previous, holiday-shortened trading weeks. Thank you for joining us for our analysis in 2020, we look forward to continuing to project the future for the S&P 500 in 2021.
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Closing values for previous trading day.
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