Stocks only go up - For how long?

 A solid performance from European stocks today - Stoxx 600 up 0.8%, FTSE 100 up 1.6%, DAX up 1.3%, CAC up 1.2%, IBEX up 2.0%— Michael Brown (@MrMBrown) November 24, 2020 

 🔔 US Closing Bell 🔔

Go-Go-Gadget Stonks

🔺 NASDAQ UP 153.64 POINTS, OR 1.29%, AT 12,034.27

🔺 DOW UP 460.26 POINTS, OR 1.56%, AT 30,051.53

🔺 S&P 500 UP 57.60 POINTS, OR 1.61%, AT 3,635.19— PiQ (@PriapusIQ) November 24, 2020 

Once a laggard, the Dow and its cyclical components have shot up 13% since Halloween, putting it on track for the best month since 1987.

Gains in the world’s most-famous equity index mirror a profound market reordering in November, when growing optimism about an economic reopening pushed up industries like energy and banking that suffered under stay-at-home restrictions and the policies enacted to cope with them.

“Investors will continue to look through near-term noise and position for normalization next year,” said Dennis DeBusschere, head of portfolio strategy at Evercore ISI. “Cyclical will continue to lead into year end, basically on the idea that people realize they are still awesome companies and everything else has moved significantly.”

“30,000 makes headlines, it does tend to generate interest, and interest generates money coming into the market,” said Bill Callahan, investment strategist at Schroders. “Investors and institutions and fund managers are still heavily overweight to defensive and growth sectors. There’s still a lot of money that needs to come into these cyclical sectors before the move is over. I think it’ll continue to go higher.”

If the November restrictions should be extended, it is clear to me that the financial support of the industries directly affected will then also continue to be necessary.

That would be a challenge financially and complicated under European law.

But it is about securing livelihoods in this difficult time, so we have to act pragmatically, unbureaucratically and wisely.

 🚨Chart that should keep Congress up at night...

"Looming expiry of #unemployment benefits"

👍> Regular benefits claimants: down from peak of 22 million to 6 million

👎> PUA and PEUC claimants: up from zero to 13 million, but they expire at the end of the year! pic.twitter.com/SgEnrbeQsy— Gregory Daco (@GregDaco) November 19, 2020 

The US reported 169,190 new Covid-19 cases on Monday, up from 142,732 on Sunday and the situation may get worse as 50 million people are expected to travel this week to celebrate Thanksgiving.

The seven-day average of new infections increased more than 11% over the previous week to an all-time high of 172,118 and several states continue to roll out measures to flatten the curve, with North Carolina on Monday extending a mask mandate and restrictions through December 11th. Covid-19 has claimed 257,671 lives in the US and new hospitalizations are soaring at unprecedented rates.

This month’s consumer confidence data is based on survey responses collected Nov. 1-13.

Consumers’ views of the economic outlook soured in November as coronavirus cases soared across the country, according to survey data released Tuesday.

The Conference Board, a private research group, said its index of consumer confidence fell to 96.1 this month, from a revised 101.4 in October. Economists surveyed by The Wall Street Journal had expected a reading of 98.0.

Americans’ dimming view of the economy’s prospects in the months ahead drove the index’s decline, said Lynn Franco, senior director of economic indicators at the Conference Board.

“Consumers’ assessment of present-day conditions held steady, though consumers noted a moderation in business conditions, suggesting growth has slowed in [the fourth quarter],” said Ms. Franco. “Heading into 2021, consumers do not foresee the economy, nor the labor market, gaining strength. In addition, the resurgence of Covid-19 is further increasing uncertainty and exacerbating concerns about the outlook.”

 ~5.8 million adults say they are likely to face eviction or foreclosure in next 2 months, accounting for 1/3 of 17.8 million adults in households which are behind on rent or mortgage payments ... unfortunately, this is becoming a sea of red @uscensusbureau @Bloomberg pic.twitter.com/qEKxMMaNnU— Liz Ann Sonders (@LizAnnSonders) November 24, 2020 

After a more than 60% recovery from the March lows of the outbreak to a record high on Nov. 16, the benchmark index is now up about 10% in the year to date.

The benchmark S&P 500 will finish 2021 at 3,900, a 9% gain from its close Monday of 3,577.59, according to the median forecast of 40 strategists polled by Reuters over the last two weeks.

The index is expected to end 2020 at 3,600, close to its current level, according to the poll median.

Financial markets are not tightening. Now, to be sure, longer term interest rates are edging higher, but that increase could be consistent with improving economic conditions, so it is not readily obvious the Fed would need to push back.

This from Clarida this week was illuminating:

We are buying a lot of Treasuries, we’re buying $80 billion a month, that comparable to the path of QE2 and it’s roughly the duration pull…with long-term yield at historically low levels and below both current and projected inflation, financial conditions are accommodative…not concerned about the rise in Treasury yields and it is still in an accommodative range.

Those are not the words of someone interested in expanding asset purchases or changing the duration of the program to sit on the long end of the curve.