One of my childhood heroes, Ian Drury (who overcame being born with Polio to do what he wanted and always believed in himself), sang of Reasons to be Cheerful, Part 3. Trading in December can often be like that – here are my thoughts for the month ahead.
- New President, Fiscal Stimulus & Pandemic Response – December 14 should see the Electoral College confirm its election results. Jan 5 is the final run-off for control of the Senate – likely to remain Republican. Janet Yellen as the new Treasury Secretary should see more cooperation between Government & FED – biases a bigger overall Fiscal package. New pandemic response will be implemented from Jan 20. Restart of relationship with China, EU and even Iran. Vaccine rollout in USA before yearend.
- Global Stock Markets traditionally rise in December – especially in BULL years.
During November all US equity markets posted new all-time highs. This week the key USA500 pushed over 3675. – the SANTA RALLY looks set.
Since 1970, the equity markets (UK100 & USA500) have risen almost every December – 42 years out of 49, or 85.7% of the time1. 2020 is the 11th year of the equity market Bull Run and the USA500 has risen close to 11% during November. The USA30 had its best November since 1987, and many European & Asian equity markets also had their best November on record.
Since 1987, the USA500 has logged gains in 25 out of 33 years from the close on Friday after Thanksgiving to yearend.3
- Five of the best (positive) trading days for stock markets (UK100 & USA500) for the entire year occur in December – All of them after December 21.2
|
The Year’s 10 Best Days |
|
| Date |
% Chance of Prices Rise |
| June 6th |
77 |
| December 27th |
76 |
| December 22nd |
75 |
| August 5th |
73 |
| December 24th |
72 |
| January 4th |
70 |
| April 27th |
70 |
| December 23rd |
70 |
| December 29th |
70 |
| August 3rd |
70 |
- The FED, ECB, BOJ, BOE, RBA, BOC, & SNB – All have Interest Rate decisions & Press Conferences. No changes expected, but surprises cannot be ruled out. Outlook tweaks and even upgrades and downgrades from any of the central banks could be key.
- UK–EU – Deal or No Deal – Whatever the outcome, and the market is pricing in an 80/20 chance of a deal – it must be imminent if it is going to happen at all. Sterling, Euro and associated Equity and Bond markets all in focus.
- OPEC – Meet December 1 – market expecting more production cuts for 2021 and Russia claiming to be closer to OPEC than ever. USOil has rallied over $11 a barrel in November. Can OPEC deliver and keep production in check? – Will the sentiment rally continue and support demand?
- USD close to 3-year lows, BTC at all-time highs, Copper at record highs, NZD at 3-year highs, AUD at 2-year highs, GOLD down close to 50% of 2020’s gain.
1 The Stock Market Handbook – David Schwartz
2 The Stock Market Handbook – David Schwartz
3 The Stock Trader’s Almanac – https://jeffhirsch.tumblr.com/
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Stuart Cowell
Market Analyst
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