Week Ending 11/26/2021

Well, what was turning out to be a pretty boring holiday week ended with a bang with news of yet another COVID variant, this one from South Africa and named Omicron (after the 15th letter in the Greek alphabet-so we’ve had 15 variants already??).  So, when the news came out on Black Friday, which is a very light trading day and all the “real” traders on Wall Street were not working that day, the plebes who were there to hold down the fort went nuts and sold.  That typically exaggerates price moves, as there are fewer market participants to take the other side of trades, many of which these days are triggered by computer algorithms.  I think it was a lot of “Shoot first, ask questions later” because simply nobody yet knows what the economic impact might be.  And this was done on the back of some impressive gains in the market this year (see the graph), plus the S&P 500 index is still up almost 5% over the past 7 weeks.

Tomorrow and later this week will be interesting once folks get back to the trading desks and start digesting the news more thoroughly.  And as we are long term investors-and not day traders-I believe that this is going to be more typical going forward, that is, that there will be variants of COVID popping up for some time, and we will need to get used to them.  Just like we get a new strain of the flu each year, we will be seeing something like that with COVID, and hopefully the vaccines can keep pace.  And also hopefully we have learned that we should not be shutting down the economy to react to these events either.  The vaccines so far have saved millions of lives and more than that of people not getting so sick they need to go to the hospital.  The bottom line to all of this is simply we all need to get fully vaccinated!

One good thing that happened this past week is that Biden nominated Powell to remain the Federal Reserve Chairman.  He’s done a heroic job settling the markets during the pandemic and this is not time to be changing the Fed Chairman now.

For the week the Dow Industrials finished the short week down 2%, to 34,899.34; the S&P 500 was off 2.2%, to 4594.62; and the Nasdaq Composite shed 3.5%, to 15,491.66.  Let’s see how things play out this week, but this is not March 2020 again, but rather a country, economy and market that has endured the pandemic and is ready to deal with whatever new variants come our way.  But it will as always be an interesting ride.  Stay tuned!