Investors and traders who returned to their desks on Monday for yet another week of unpredictable market activity were surprised to hear two major news announcements.
First, we had ANOTHER announcement of a COVID-19 vaccine being 90% effective. This came directly from AstraZeneca, who claims their dosing schedule – half a dose, followed by a full dose a month later – delivered some great results without any serious side effects.
(This is the THIRD Monday morning in a row since the media declared Biden the President-elect where a new pharmaceutical company announced promising news for a COVID-19 vaccine… very suspicious timing, if you ask me.)
Second, we had Joe Biden announce his pick for Treasury secretary: Janet Yellen, the former Federal Reserve Chair. This woman was instrumental in keeping interest rates low while allowing the economy to expand between 2014 and 2018. Like her or not, Yellen is a widely influential figure on Wall Street and the markets seem to like her.
Here’s what happened as a result of both news announcements:
- Dow Jones: +1.1% (1.5% away from reaching the 30,000 benchmark)
- S&P 500: +0.6%
- NASDAQ: +0.2%
- United Airlines, Carnival Corp.: +2.6% and +4.8%, respectively
- Tech stocks: -2.4% for Netflix, -3% for Apple, -0.5% for Facebook
This is eerily similar to how the markets behaved during the past two Mondays.
Travel and hospitality stocks went straight up, along with every other stock where the company’s success fundamentally rests on in-person interaction and buying. Tech stocks, along with any stock benefitting from the stay-at-home trend, went down. This is a pattern consistent with an outlook where the American economy will make a full recovery.
By far, the big theme of 2020 for the markets is future-focused optimism. The markets have demonstrated this weird behavior in moving on the basis of what WILL happen, rather than what HAS happened.
It’s why factors such as rising COVID-19 cases, a lack of a second stimulus package, record levels of unemployment, and violent riots happening nationwide have done nothing to slow the momentum of the ongoing market rally.
But I want to know what YOU think about all of this. Does the market have enough juice to keep on going up after the expected holiday rally, or will it start crashing down in early 2021? Reply to this newsletter and share your predictions with us!
Your Work-At-Home Pay Is at Risk of Being SLASHED!
Those of us who are working remotely have thought about the real possibility of relocating to a cheaper place while keeping our current salaries.
But according to a survey done by Willis Towers Watson, consisting of company executives who represent 344 companies in North America and collectively employ 5 million workers across several industries, that fantasy dream might not be worth pursuing:
- Around 33% of employers have expressed interest in cutting the salaries of employees who re-locate to cheaper cities (25% will adjust pay based on lower living costs, 9% will cut salaries of employees who don’t serve “critical roles”)
- Over 50% of employees are expected to work from home for all of Q1 2021
- Only 28% of employers expressed no plans in location-based compensation adjustments
About 13% of all the companies involved in this survey belonged to the tech sector, where several high-profile names – Slack, Box, Facebook – have announced plans to make salary cuts for employees who now have lower living costs.
This is especially important when you consider that these companies happen to be squarely located in expensive cities such as LA, NYC, and San Francisco. So while moving to a place like Las Vegas or San Diego might theoretically be easier on your wallet, the corresponding pay cut might make you feel like you’re living in a high-tax Democrat-run state all over again…
The Rise of the Four-Day Workweek for Increased Worker Productivity
During the early stages of the pandemic, when workers were adjusting to the stay-at-home lifestyle, productivity took a big fat nosedive. It was primarily due to the lack of flexibility, which was made evident by the increasingly blurry life between work life and family life.
Commercial real estate firm JLL conducted a recent survey of over 2,000 office workers to figure out what would be most helpful for remote workers. And the answers were quite surprising:
- 74% of respondents support the idea of a four-day workweek
- 18% of respondents do not support his idea
- 8% claim they are already benefitting from such an arrangement
Granted, there have been some early signs of success in implementing a four-day workweek in other countries. It worked well for New Zealand-based Perpetual Guardian, where stress levels were lowered and productivity went up. It also helped Microsoft employees based in Japan experience a 40% boost in productivity last year.
Yet the real question is whether this will work in a Fortune 500 company based in the US. Sure, there is the idea that the hours you work are not necessarily equivalent to your productive output. But on some level, there have to be safeguards in place. Clear working boundaries that have to be set in order to ensure productivity doesn’t further decline.
Work time is for work, play time is for play. In today’s day and age, it’s more important than ever to separate the two in order to achieve an optimal life balance during a worldwide health pandemic…
What do YOU think about the idea of a four-day workweek? For it, or against it? Reply to this newsletter and let us know where you stand!
Ridiculously Low Mortgage Rates but Ridiculously Few Houses Available
The real estate market is known for operating on a single principle: When a key number beneficially goes up or down, something else goes up or down to the detriment of the buyer or the seller.
In today’s age, we are seeing mortgage rates achieve new all-time lows with each passing week. Low mortgage rates are a prime sign that home buyers have all the leverage and power, but this only works if there are enough available homes for people to choose from.
According to the National Association of Realtors (NAR):
- There are 1.42 million properties available for sale across the United States (as of October)
- In September 2020, that number was 2.7% higher
- In October 2019, that number was 19.8% higher (1.77 million homes)
This is a 38-year low when you look at all of the available data. And this has some bad implication for potential homebuyers…
Nobody wants to give up their home during a global health pandemic, and they sure as hell won’t allow potentially infected strangers to conduct a house tour. So despite interest rates on home loans and mortgage rates at all-time historic lows, there aren’t many opportunities to take advantage of them.
As you end up learning in Economics 101, low supply + high demand = increased prices. And unless you can find the right property at the right time, you’ll be in the middle of an intense bidding war.
And even when you win, your final asking price might be much higher than what you expected. So choose your next house – or your next investment property – wisely!
Six Years of Luxury Sales Growth Eliminated in Less than 12 Months
Nobody in their right mind is aggressively spending more money unless they have the financial means to do so. And they especially aren’t going to waste hard-earned cash on luxury items that have no real utility or purpose for handling the COVID-19 pandemic.
According to the Associated Press, the luxury retail sector is in for a very rough ride:
- Sales are projected to fall by 23% in 2020, the first decrease since 2009
- $256 billion in luxury retail sales are projected for 2020 ($80 billion less than 2019, and much lower than sales in 2014)
- Profits for luxury retail companies will be down by 60% for 2020.
In effect, you have six consecutive years of potential sales growth completely wiped out by the COVID-19 pandemic. To make matters worse, these companies are running out of liquidity FAST! Any company which did not adapt to the pandemic or did so when it was too late will soon find themselves restricting (i.e. declaring some sort of bankruptcy).
Their only hope for salvation is for the lockdown restrictions to be relaxed and consequently allow people to physically browse stores for products they may want to buy. At the same time, the ever-rising number of COVID-19 cases makes this dream more unrealistic with each passing day.
On the bright side, maybe it’s a sure sign that people are no longer interested in meaningless material items…
For $1 Million a Day, Can SnapChat Beat TikTok?
SnapChat may not be in the news very often as of recent times, but they have come back into the spotlight again with a new goal: Become more popular than TikTok and achieve industry leader status among other rival mobile social media apps.
How do they intend to do this? By spending $1 million per day on developing a brand-new feature called “Spotlight”. It will allow SnapChat users to publish their content for other users to review on a public forum. As you can imagine, the posts with the most amount of views will be featured at the very top.
People who create posts with the highest levels of engagement will be able to tap into a pool of funds from SnapChat themselves, which is why the cash incentive has to be so high.
(Sadly, Spotlight is currently available only in 12 countries including the US and Canada, but will expand internationally in the near future.)
It also has to be at such an extreme because TikTok’s days of being banned from the United States as a Chinese-owned social media app appear to be over. On top of Biden being the projected President-elect, TikTok has not lost any court battles against the Trump administration.
As with all things related to social media, let’s hope people don’t go to drastic extremes for fame!