The Air Up There – Absurd. Insane. Flabbergasting. These are just some of the descriptors we’re hearing both internally and externally during a week that we may be looking back on in hindsight. You’d think DoorDash cured cancer rather than delivers food (amongst a crowded field I might add) and Airbnb came up with an antidote to stop aging instead of it’s actual purpose. Christmas isn’t just for kids and that’s never been more apparent as market pros and amateurs alike gobble up the latest shiny toy. Even the latest minted billionaire, ABNB CEO, could barely hold back his astonishment when he heard the first indication. This isn’t frothy – that’s a latte. This is an exploding dishwasher. It doesn’t’ hurt that these companies are releasing a pittance of their equity; FOMO is going next level. It’s the retail investor at home with spare cash driving the price via low and zero trading commission platforms like Fidelity and Robin Hood. Don’t believe me? See below – that’s a pretty sweet Buy/Sell ratio. It looks like the market has practically turned its back on Tesla by comparison. (it hasn’t) Our Airbnb guru loves the company but even at these lofty levels would have a look at Booking/Expedia as they now look cheap. And if the pricing is right, Marriott and Hilton are shorts.

Cold Water Thrown… Futures were boosted this morning by that familiar, warm feeling of “stimulus hopes”, but some less than encouraging signaling from Congress has US indices sliding lower into the afternoon. You’d think we’d have learned not to put too much faith in assertions of “progress” in negotiations (given we heard a lot of the same even back when Trump still had the incentive of an election to get a deal done) but with so many indices notching ATHs based on the negotiations, you have to take the bad with the good. And for the most part, things are still looking UP for stocks: today’s IPO menu (more below) shows investors’ appetite for risk is far from satiated. Tech is leading the way lower as the session is clinging to its Rotation-ary tilt despite the building sogginess (NDX snapping a 10-day win streak). Autos are leading, along with Telcos getting a boost from AT&T (T +1.8%) reportedly get a bid for DirecTV valuing it at over $15bn. Energy was hanging tough, but has faded as Crude falls back into the red after earlier shrugging off a larger than expected build in US stockpiles.

Jolly Old St Nicholas –  lean your ear this way because Christmas Eve is coming and it wouldn’t be Christmas without a proper Santa Rally.Early this morning, it didn’t seem like this would be the week for any sorta rally. But, Turnaround Tuesday (and Santa) find a way. Stocks are back on the ascent track, gearing towards another record (S&P above 3700 as we speak) thanks to the very two things that sent markets lower in the first place.

Like An Old Shoe – When things seem to be a bit unclear for this market, it dances with who brought it. And that means a default to the growth and technology names as investors grapple with the short-term economic, physical and mental pain wrought by COVID vs promises for a new and better day down the road. The market has done a remarkable job of compartmentalizing but the escalating headlines over increased cases, hospitalizations, deaths and lockdowns is enough to temporarily at least shove the value/cyclical trade back in its box. Why would you blame them either, when even a hint of growth/tech is like strapping a rocket booster to a stocks back. Luminar the case in point, up another 16% today. Homebuilders are on the move higher as well, but that seems more a case of mean reversion after an ugly week, ITB.US losing nearly 4%. Energy would be the biggest profit-taking target after a strong last week and absurd past month and restaurants and hotels also moving lower as California goes into nearly complete lockdown and states on the east coast feel to be on the precipice of the same. But there always seems to be a catalyst set to overcome any obstacles in the market’s way. A massive stash cash, largely by households, could be just that thing as the FDA looks to approve the Pfizer vaccine later in the week.

End On a High Note… We’ve seen some recent examples of just how jumpy investors are at these lofty heights (i.e. yesterday’s Pfizer scare / the 10-year yield’s quick bounce off .90% post-NFPs this morning) but in general the arrow continues to point higher for the market. Therefore it’s no surprise stocks are well in the green this afternoon as they put on display their ability to shrug off pretty much anything, including weaker than forecasted NFPs this morning. Ongoing stimulus talks of course make that shrugging even easier, and the “hope” springing from continued dialogue between Democrats and Republicans is helping to drum up the session’s risk-on tone. Value is back on top with Energy (crude still riding high off the OPEC+ agreement), Autos, and Banks all outperforming, but Semis are also crashing the party with several constituents (MU +5.8%, QCOM +4.5%) continuing their daily appearance son the 12-month relative high list. Utilities and Household good are lower as defensives underperform, while the USD has managed to slow its slide for today at least.

Struggle for the Spotlight… The struggle for the spotlight between stimulus and vaccine “hopes” continues as headlines on both fronts came into play in the last 2 hours of the day. US indices regathered steam after 2pm as investors digested more Republicans throwing their support behind the $908bn bipartisan bill, getting an extra boost on word that Trump ally Lindsay Graham backed the compromise and had discussed it with the President (quote below).

Buy While You Wait?… US equities once again feel like they’re waiting for more catalysts to restart the rally party, but in the meantime why not grind out some more ATHs? A green finish is no sure thing however, as the S&P just blipped into negative territory momentarily with 2 hours left in the trading day. Stimulus talks continue to reassert themselves as the apple of investors’ eyes as vaccine excitement wears off, but that doesn’t mean much progress is being made. The latest back and forth today saw Senate leader McConnell say a deal is “within reach” but excitement has waned in the last hour or so as the two sides remain apart on key issues after a phone call between Pelosi and McConnell this afternoon. The mood this morning was boosted by more comforting eco data, with lighter than expected jobless claims providing a nice appetizer for NFPs tomorrow and Markit Services PMIs and ISM Services data both healthily in expansion territory. The Nasdaq is outperforming the S&P thanks to a few high flying software earnings (CRWD +14%, ZS +23%) but SPX has more of a Value tilt with Energy applauding OPEC+ reaching a deal to taper supply increases gently. Solid results from PVH (+8.7%) are leading Apparel names higher, while the cruisers (CCL +10%, NCLH +10%, RCL +5%) tow Hotel/Leisure higher following broker upgrades (we also hosted Carnival CEO yesterday, ask for more!). Hard to complain about a lack of action considering where stocks currently stand… especially when US daily COVID hospitalizations and death both marked their own records yesterday…

V is for Vaccine, not Value – US equities have shrugged off a lower than expected ADP number and indexes are trading near their highs (albeit still in the red).  The UK’s approval for the Pfizer/ BioNTech vaccine for distribution starting next week) should eb the driver for the Value names (which are outperforming again), but the sectors that are associated as value have their own reasons for their outperformance.  Energy (XOP +4.3%) is getting a lift from Oil’s +2% move ahead of the OPEC meeting tomorrow (another push out of output hikes?), and Banks (KBE +1%) is moving as the 10-Treasury is trading at 0.95%.  The vaccine news IS helping the Transportation sector, with airlines and cruises up about 2%.  While banks are benefitting from the higher rates, Homebuilders (ITB -2.1%) are getting hurt, and that sector is now testing its 100 day moving average (54.72) on the downside.

Back to Business… Not much has changed but the calendar, but after an impatient rebalancing pause yesterday US stocks are back to doing what they did through most of November. The fresh highs are nothing new for the S&P and Nasdaq, but even usually stagnant Treasuries are getting in on the risk-on mood today, with yields moving higher on word a bipartisan group of senators is putting forth a $908bn proposal to Pelosi/Mnuchin (which the two are currently discussing on an ongoing call). Solid ISM data this morning pitched in as well. The dollar continues its slide today, getting an extra midday kick from the Euro and GBP gaining on headlines that Brexit trade deal negotiators have “entered the tunnel” (this really could be a day of loosening stalemates). It’s no doubt a Rotation-ary day (VLUE +1.5% vs MTUM +0.4%), but Tech/Media have overtaken Banks and Autos at the top of the sector table amid a busy conference schedule that includes AWS Reinvent (AMZN +2.2%). Fellow Value space Energy is well in the green but held back by crude’s preoccupation with OPEC+ talks. Defensives Telcos and Household Goods are lagging, along with Commercial Services space getting dragged lower by HIS Markit (-5.2%) giving back some of yesterday’s merger fueled gains. It’s a very cheery start to the holiday season, but with so much euphoria abound, what’s left for Santa to contribute?

Choco Advent Calendars and Shelf Elves – Lucky for me (throat clear), my husband starts playing Bing Crosby the very minute our Halloween costumes come off. But for the rest of the (more sane) world, the acceptable time to start ALL the Christmas is tomorrow, December 1. Between now and then when anything can happen (like the Tesla inclusion into the S&P?!), stocks are suffering a bit of a post one holiday / pre another exhaustion, just slightly curtailing the furious November moves. This past month has been fueled by investors hopes over the finalization of a vaccine and slightly less concerns over the presidential transition. Fun fact: for four straight Mondays a different drug maker reported advances on vaccine trials. Conspicuous. The momentum faded today thanks to headlines claiming surging levels of infections and an MSCI reweight, though equities still remain on track for historic gains. The Dow is up nearly 12% for the month, the biggest gain since January 1987. The S&P +10% and Nasdaq +11%, aren’t far behind. And one mustn’t forget the small caps – a record for them too! After today, we have 22 trading days left for 2020 (probably more like 14 real ones). Far too early for Santa rallies and plenty of ground to cover between now and Jan 1. Gulp.