BREAKDOWN: A ‘Santa Claus Rally’ for the Stock Market?
CoinDesk Podcast Network
CoinDesk
4.8 • 689 Ratings
🗓️ 4 December 2020
⏱️ 14 minutes
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Summary
Since 1969, 34 out of 45 years have seen a late December rally. Here are 5 reasons why that might not happen this year.
This episode is sponsored by Crypto.com, Nexo.io and this week's special product launch, Allnodes.
Today on the Brief:
- Payrolls report underperforms expectations
- Spotify looking for crypto director
- Lame-duck crypto legislation on the way?
Our main discussion: Will we see a “Santa Claus rally” this year?
This kind of rally refers to the fact that in about two-thirds of years since 1969, late December has seen a stock market rally, averaging a 1.4% gain.
This year, vaccine optimism combined with new stimulus seems poised to once again jingle Wall Street’s bells. A piece in Bloomberg, however, provides five charts and reasons why this market rally is already overbought and overblown, so this year might be more coal than eggnog.
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Transcript
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| 0:00.0 | Welcome back to The Breakdown with me, NLW. |
| 0:09.1 | It's a daily podcast on macro, Bitcoin, and the big picture power shifts remaking our world. |
| 0:14.8 | The breakdown is sponsored by crypto.com, nexo.io, and all nodes. |
| 0:19.1 | And produced and distributed by CoinDesk. |
| 0:22.5 | What's going on, guys? It is Friday, December 4th, and today we are talking about whether |
| 0:28.2 | there will be a Santa Claus rally for the stock market. First up, however, let's do the brief. |
| 0:35.2 | First up on the brief today, the new payrolls report for November is out, and once again, |
| 0:41.1 | we have undermet expectations. |
| 0:44.1 | Bloomberg's piece says U.S. hiring rebound markedly slows amid surge in virus cases. |
| 0:50.4 | So non-farm payrolls increased by about $245,000 this month. Estimates had been for a gain of |
| 0:56.2 | $460,000. The unemployment rate dipped 0.2% to 6.7% and we saw most disturbingly a significant |
| 1:05.5 | decline of Americans actually participating in the labor force. So basically this is just |
| 1:10.0 | a group of people who have now taken themselves out of the job labor force. So basically this is just a group of people who have |
| 1:11.3 | now taken themselves out of the job search altogether. So how are markets responding? Well, |
| 1:17.2 | interestingly, the treasury yield is up. That means less demand for treasuries. That usually means |
| 1:23.5 | a sense that things are getting better. But it's complicated. Gila Bace, who is |
| 1:27.9 | Janie's chief fixed income strategist, says, non-farm payrolls this morning, we've got a classic |
| 1:33.0 | problem. A strong report is a sign of stable economic growth despite headwinds. A weak report |
| 1:38.7 | could be the catalyst needed for compromise over stimulus. It's the muddy middle that gets complicated. He then followed up once |
| 1:46.2 | the report was out. Post-non-farm payroll curve steepening is a clear bet on fiscal deal moving |
| 1:52.7 | closer. In other words, he's saying that the treasury yield curve going up is a signal that |
| 1:59.0 | people think that this means that stimulus is on the way. This was echoed |
... |
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