The U. S. inventory market has been in the process of going to the U. S. inventory market. But it’s not the first time He lost apartment for a consecutive month in October.
There are many reasons to blame the slowdown. A momentary wave (or third wave, depending on who counts) of Covid-19 is sweeping the United States and setting new records for infections, there is the debatable presidential election, several generations. the names have reported disappointing quarterly effects and Congress has failed to pass a stimulus package before the election.
While November is traditionally an interim month for the inventory market, with average gains of 0. 8% since 1928, according to Yardeni Research, this year can be especially bumpy.
“November will be a difficult month in terms of volatility,” says Brad McMillan, chief investment director of the Commonwealth Financial Network. While there is “a huge amount of uncertainty” in the short-term market lately, McMillan says there is an explanation why to be positive about long-term equities.
Here’s what you should see next month.
Election Day is approaching Tuesday, November 3, but thanks to the popularity of mail-order ballots, thanks to the pandemic, we may not know until a few days later who won the presidential race. That’s because states have others for counting mailed ballots, even in the case of Washington, until November 23.
The maximum that is likely to remain in effect is not surprising to anyone who has followed the presidential race. In fact, 68% of Americans expect to have to wait for the effects, the maximum believes that a transparent winner will emerge within a few days. , according to a weekly follow-up survey by NBC News. SurveyMonkey released on October 25.
An extended election result won’t be a marvel for Wall Street either. “We’re seeing that the market is doing what it’s been doing lately, because other people are getting insurance that opposes indecision and unrest,” says Barry James, owner and portfolio manager. Still, the total debate over whether President Donald Trump or former Vice President Joe Biden will be greater for the market overestimates his influence on the economy, he adds.
“Regardless of who wins, the market has an end to pass,” James said, and presented research through Ned Davis Research showing that stocks have made historic annual gains under Democratic and Republican presidents. “Yes, we will potentially do so, turbulence in the short term, but at the end of the day, elections will not be the engine of the market. “
In this case, it’s because no matter who takes control of the White House, and even if there’s a delay in calculating the final results, there’s the pandemic, McMillan says. “And it’s the same as always. “
In addition, Trump or Biden will face the same tension as the president to approve a stimulus deal, McMillan said, and while there is a presumption of a lot of interruptions around the election and its end result, McMillan says the monetary disruptors they are preparing for are “generally not so bad,” and Wall Street probably wouldn’t be as affected by what’s going on.
However, the prospect of a so-called “blue wave,” in which Democrats take from the White House, Senate, and House of Representatives, raises more questions about the implications for the market. Term investors deserve to avoid making politically motivated decisions with their portfolios.
“If you seek to invest in the basis of politics, crazy gold explodes,” James says.
The U. S. economy has been in the middle of a nuclear economy. But it’s not the first time It grew at its fastest rate of 33% in the third quarter, but also followed the worst quarter in history, according to figures published on October 29 through The Department of Commerce. This result was not entirely surprising, given the unprecedented effect. coronavirus pandemic in the economy.
Over the next month, professional investors will see additional signs that the speed of economic expansion is improving. A position in the face of these symptoms: the profit season, the weeks when publicly traded corporations publish their effects for the last quarter, showing that U. S. corporations performed higher than analysts expected in the third quarter.
“If this trend continues, do we begin to move beyond the pandemic economy?”Ask McMillan, “There are reasons why we can be. “
Specifically, McMillan says he monitors measured business confidence through surveys through the Institute for Supply Management (ISM), which show that “things look pretty good. “Although it has not yet returned to the levels of earlier this year, business confidence is close to february 2019, which is higher from an old point of view, and a slight improvement may mean that the economy is emerging from recession, he adds.
October’s ISM production functionality survey dropped on November 2 and the ISM survey arrived on November 4.
Then there is the expansion of employment, which remains slow. McMillan will take a look at the October employment report, which will be published on November 6, to see if task creation has accelerated. He will look for symptoms that employment has hit rock bottom and is booming. recessions, the economic recession was over once the labor market touched a minimum, he added. “We want the expansion of tasks to take a turn. “
Meanwhile, James will follow up on the monthly retail report, which will be filed on November 17. The housing industries, James says, although some of this is offset by the weakness of hospitality and industries, he says there is an explanation as to why to be positive about consumers again.
Consumer spending is an important component of the economy in general, accounting for approximately 70% of GDP in the third quarter.
The election outcome and the second / third wave of the coronavirus pandemic are expected to make headlines in November, further short-term turmoil in the stock market. Look at the VIX, the Chicago Board Options Exchange’s CBOE Volatility Index, to compare how turbulent things are. can get.
The VIX is called the Wall Street Fear Gauge, and this indeed suggests some apprehension. This measure of volatility expectations over the next 30 days reached its highest point since April on October 28.
However, there is a major catalyst for actions that can make another occurrence: quantitative easing (QE). The Fed deploys this unconventional financial policy tool to acquire treasury and other securities expenses in markets and the economy. Overall, after the place of the bearish market prior to this year, the Fed eased the QE; However, if things get tough again, you may simply replace your position.
“The QE program is like an unstoppable force,” James says. “When the Fed makes the decision to do so, it’s very, very smart for action. “
Fed lawmakers are expected to meet from November 4-5 for one of the 8 scheduled annual meetings, you can make outdoor QE decisions from meetings.
Investors who can look beyond the reasons for short-term uncertainty may find an explanation as to why to be optimistic, either in the market and in the economy, according to McMillan. “In general, things are more powerful than they seem. “
Wall Street strategists agree. They’re waiting for the S
Looking to the future, an acceleration of the US economy is a major step forward. But it’s not the first time It can generate advantages for small capitalization stocks, James points out, and even the possibility that those shares will simply outperdo their high-capitalization counterparts, he adds. Unlike other primary benchmarks, the Russell 2000 index has not yet surpassed its pre-February pandemic peak.
Still, investors want to be prepared for the wildest movements on the market in November and continue to target long-term customers ahead, according to McMillan. are more beneficial than disadvantages in the market,” he says. Things can get better much faster than you think. “
Anna-Louise Jackson is an independent who has covered non-public markets, economy and finance for more than a decade. More recently, he was a senior in
Anna-Louise Jackson is a freelancer who has covered markets, economics and non-public finance for more than a decade. Most recently, she was a senior editor for CNBC’s Grow magazine and, in the past, worked for NerdWallet and Bloomberg News. Louise’s paintings have also been published in The Associated Press, USA Today, Businessweek and have been printed on Bloomberg TV and Radio, CNN Headline News, and Yahoo! Finance.