by Louis Navellier

November 10, 2020

Thanksgiving Table Image

Now it is time for the U.S. to unite – as well as grow and prosper. I expect that much of the cash on the sidelines will continue to pour into the stock market when all the election uncertainty ends. November is a seasonally strong month, since this is the beginning of the season for a lot of year-end pension funding. Furthermore, Thanksgiving is a happy time of year as we gather with family and friends. When we are in a good mood, it tends to rub off on investor sentiment, so Thanksgiving rallies are also a holiday tradition.

Investor sentiment tends to rise when we are happy. Due to the closeness of the Presidential election, it will be interesting to see if the news media change their largely negative tone. For example, the ongoing Covid-19 coverage suddenly diminished to almost nothing last week! New presidents also typically get a 100-day window before the news media get too critical. As a result, the New Year could start on an optimistic note. Optimism is contagious and it could rub off on investor confidence and the stock market.

Confidence will grow sharply if we see a vaccine for Covid-19 become available in the upcoming months. That will help reduce the impact of all the negative news related to the coronavirus. In the meantime, the President remains the top Repligen salesperson, since he credits that company’s antibody treatment for his quick recovery from Covid-19. Clearly, we are learning to live with Covid-19, but early treatment remains crucial. As we develop effective treatments, it will be interesting to see if President-elect Biden will remain overly cautious of Covid-19 and recommend shutdowns, like Europe has recently imposed.

Navellier & Associates owns Repligen in managed accounts.   Louis Navellier and his family own Repligen via a Navellier managed account personally.

The Economic News Continues to be Encouraging

The economic news last week continued to be mostly encouraging. First, the Institute of Supply Management (ISM) reported that its manufacturing index surged to 59.3 in October, up from 55.4 in September, reaching its highest level in almost two years (since November 2018). Economists were only expecting a modest increase to 55.8, so this was a massive surprise, indicating that a V-shaped economic recovery persists. The details were especially encouraging, such as October’s new orders at 67.9 (up from 60.2 in September), new export orders at 55.7 (up from 54.3), imports at 58.1 (up from 54), employment at 53.2 (up from 49.6) and other improvements in the backlog and inventory components of the ISM manufacturing index. Overall, the October ISM manufacturing index was simply stunning!

On Wednesday, ISM reported that its service sector index declined to 56.5 in October, down from 57.8 in September. Any reading over 50 signals an expansion, so this is still positive, and this was the fifth straight monthly expansion in the ISM service sector index. Due to ongoing Covid-19 restrictions in many states, I do not think that a small deceleration in the ISM service sector index should be a surprise.

On Thursday, the Labor Department reported that new claims for unemployment dropped to 751,000, down from a revised 758,000 the previous week. Continuing unemployment claims declined to 7.285 million vs. a revised 7.823 million in the previous week, so the unemployment situation keeps improving.

Finally, the Labor Department on Friday reported that 638,000 private payroll jobs were created in October, significantly higher than the economists’ consensus estimate of 530,000. Private payrolls soared by 909,000 in October, while 268,000 government jobs were lost, most due to 147,000 census workers.

The unemployment rate declined to 6.9% in October, down from 7.7% in September. The labor force participation rate rose by 0.3% to 61.7%, which is encouraging, but it’s still below the 63.4% rate back in February. Average hourly earnings rose 0.1% by 4 cents to $29.50 per hour. Overall, the October payroll report was very encouraging and indicative that a V-shaped economic recovery remains underway!

All content above represents the opinion of Louis Navellier of Navellier & Associates, Inc.

Please see important disclosures below.

Also In This Issue

Global Mail by Ivan Martchev
Coronavirus Won the Presidential Election

Sector Spotlight by Jason Bodner
The Hidden Stories Amid Last Week’s Election News

View Full Archive
Read Past Issues Here

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Louis Navellier
CHIEF INVESTMENT OFFICER

Louis Navellier is Founder, Chairman of the Board, Chief Investment Officer and Chief Compliance Officer of Navellier & Associates, Inc., located in Reno, Nevada. With decades of experience translating what had been purely academic techniques into real market applications, he believes that disciplined, quantitative analysis can select stocks that will significantly outperform the overall market. All content in this “A Look Ahead” section of Market Mail represents the opinion of Louis Navellier of Navellier & Associates, Inc.

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