If you bought shares of Kensington Capital Acquisition (KCAC) along with me on October 13, you’re received a solicitation for a proxy vote to approve the reverse merger of Kensington with privately held QuantumScape, a startup solid state lithium battery company. The merger wis a way for Quantumscape to go public. (Kensington was the 14th and last pick in my Special Report: 10 Stocks for the Post-Coronavirus economy. Kensington has called a special meeting for shareholders for November 25 to approve the merger. You can vote online to 11:59 p.m. tonight. I plan to vote in favor of the merger, since that’s the whole reason for owning shares of Kensington.
Is this as good as it gets? That’s an important question today as the Dow Jones Industrial Average closes up 1.54% to 30,045.84, the first close above 30,000 ever. Other indexes were just as strong. The Standard & Poor’s 500 gained 1.62% by the close. The NASDAQ Composite was up 1.31% and the NASDAQ 100 was ahead 1.46% at the end of the session. The Russell 2000 small cap index ended the day ahead 1.78%. It’s not hard to see why stocks and investors are so ebullient: There’s just so much good news.
The returns for 2018 and 2019 for my Dividend Portfolio show the challenge facing dividend income investors during this period of extremely low interest rates.
In 2018 my Dividend Portfolio showed a yield on 3.60%. That produced $6,483 in dividend income that year. The goal of this portfolio is to beat the yield on the 10-year Treasury. On January 1, 2018 the yield on the 10-year Treasury was 2.58%. In 2019 my Dividend Portfolio showed a yield of 4.90%
Saying on Sunday that the coronavirus surge in Nevada is running at wildfire levels, Governor Steve Sislak announced new restrictions to start on Tuesday and that will run for three weeks. The new rules will require casinos, amusement and theme parks, arcades, bars, and restaurants to reduce their capacity to 25% from the current 50%. What I think is most interesting to investors, though, is the reaction of stocks with Las Vegas exposure to the news.
Thursday action by Treasury Secretary Steve Mnuchin to terminate the Federal Reserve’s access to $195 billion in backup funding on December 31 will just increase the volatility in a bond market that was already experiencing a tug of war between expectations for faster growth in 2021 (and hence higher interest rates and lower bond prices) and worries about an economic slowdown in the coronavirus economy and Congressional inaction on any virus stimulus package (and hence lower interest rates and higher bond prices.) The tug of war will play out in the short holiday week which packs big funding activities by the Treasury into the first two days of the week. Monday and Tuesday will see the auction of nearly $200 billion in 2-year, 5-year, and 7-year Treasuries.
Trick or trend: Treasury Secretary Mnuchin just undermined the Fed and the economy–how bad will the damage be?
On Thursday night, Treasury Secretary Steven Mnuchin sent a letter to Federal Reserve chair Jerome Powell announcing that he was not going to extend beyond December 31 the emergency lending support that the Federal Reserve using as a backstop in its programs to stabilize the bond market. In March, Congress ha earmarked $454 billion to support Fed lending programs as part of that months coronavirus package. The Fed, ever reluctant to take losses onto its own balance sheet, had used the Treasury cash to stand behind loan programs for medium size businessses and municipalities. Much of that money earmarked by Congress has never actually been extended to the Fed, but the Treasury did earmark $195 billion for specific loan programs at the Fed. It’s that money that Mnuchin now says will no longer be available to the Fed after December 31.
This morning on my way back from the farmers’ market, I passed a Whole Foods Market selling small Christmas trees for my “holiday table.” It’s November 20. Thanksgiving is NEXT week. You may be noticed other signs of retailers jumping the seasonal gun.
For the week ended November 14, 742,000 workers filed new claims for unemployment in regular state programs. That was an increase of 31,000 from the prior week. The increase was the first in five weeks.
Last night, I made Duke Energy (DUK) my second pick in my Special Report: “Dividend Stocks that are beating the Risky Rockets.” Today November 19, I’m adding these shares to my Dividend Portfolio.
As the day wore on, markets began to see near-term economic damage from the coronavirus as out weighing mid-term hope from vaccines
At 1 p.m. today, November 18, the Standard & Poor’s 500 was up 0.05% and the Dow Jones Industrial Average was ahead 0.06%. Supporting even these meagre gains was positive news from Pfizer that it had concluded trials of its coronavirus vaccine and would be submitting an application for an Emergency Use Authorization to the U.S. Food & Drug Administration within a few days. By the close of the day’s session, however, news of a continuing rise tide of infections and announcements of more closings around the country had extinguished most of the earlier upward momentum.
According to a report from the Century Foundation, 12 million Americans are set to lose unemployment insurance by the end of 2020 with the bulk of those 7.3 million set to lose their benefits on December 26.
This month’s survey of fund managers (with a total of $526 billion in assets under management) by Bank of America shows that cash holdings are at their lowest level since April 2015 and allocations to stocks rose in November to 36% overweight. That’s close to “extreme bullish,” according to Ban of America strategists.
Utility stocks aren’t supposed to deliver higher returns than technology stocks.Utility stocks with their higher dividends and relatively slow growth are, at most times, less risky and their stocks are supposed to deliver steady growth. Technology stocks, on the other hand, are more risky, more likely to see big losses if a quarter disappoints or a product cycle shifts unexpectedly. But as compensation for that risk, they’re supposed to deliver higher returns. But that’s not what’s happening right now.
Maybe OPEC+ didn't get the memo--you know the one that says a coronavirus vaccine is just around the corner and growth in the global economy will be strong enough to spur higher demand for oil. Today, the Joint Technical Committee of OPEC+, OPEC plus Russia in general...
Today Moderna (MRNA) announced that its coronavirus vaccine was 94.5% percent effective. Last Monday Pfizer (PFE) reported that its vaccine candidate was 90% effective. Need I say that today, like last Monday, we've seen stocks rally and stocks exposed to the recovery...