The Contagious Joy of Generosity: This special time of year gives our entire firm the exciting opportunity impact across dozens of non-profit organizations around the world. This opportunity is an outgrowth from what seemed like a rather insignificant decision by our partners at our founding: to gift a meaningful percentage of our net income as a firm every year. (Turns out we have had net income every year but one in our history. We have the recession of 2008-09 to thank for that.) With thanks to One who has given us everything we have in this life, we have been able to gift well over one million dollars of capital to caring for the homeless, education in urban centers, shelters for the abused, toys for kids at the holidays, support of those formerly incarcerated—the list goes on and on. Again and again we discover the true joy there in giving and having a role in freeing others to do likewise. As we often field questions this time of year as to how to give as well as where to give, we welcome the chance to help in this way. Reach out to us if that sounds like you.
Another Round of Stimulus: US lawmakers completed negotiations for a coronavirus relief package approximating $900 billion. The package includes another round of direct checks ($600 per adult + $600 per child) to Americans with $75k in individual income ($150k for couples), enhanced federal unemployment benefits of $300/week for 11 weeks, aid to small businesses and schools, and funding for the distribution of the Covid-19 vaccine.
Stocks Rise in Response to Forthcoming Stimulus: Last week, in response to negotiations for a stimulus package, stocks rose to record levels. The DJIA, S&P500, and Nasdaq all marked gains. This sort of news was welcomed after states reinstituted Covid safety restrictions on businesses (Pennsylvania among them), retail sales took a hit for the news of rising Covid cases, and unemployment claims rose for a second, straight week to 885,000. Again, as we have observed since early 2020, there is a gap between market sentiment and the real economy. A phenomenon that seems to happen historically in market backstopped by as much fiscal intervention and monetary policy measures as we have had. Think mortgage meltdown circa 2008-2009 and then add all the speculation taking place in the market and you witness the sort of upside we have seen since our bottom in the market on March 23rd.
The Third Wave: We have all heard plenty about the latest surge in Covid cases. November 8, the daily average of new cases hit 100,000. The global score of cases reached 60 million by the end of November. Still, we thought it worth sharing the poignant graphic below visualizing the latest Covid wave’s magnitude alongside the previous two (charting February to date). To al the visual learners out there, you are welcome!
[Graphic sourced from Reddit]
Eviction Moratorium Coming to an End: The 2020 moratorium on evictions will lift at the end of December. The US Census Bureau recently conducted a survey estimating 17 million Americans were behind on rent/mortgage payments and that 33% of them could face eviction or foreclosure. A stunning number which again demonstrates the sort of concern we have when we see market pricing where it is and the real economy doing what it takes to have this many people in this tough of a position financially.
Startup Boom: Amidst all the changes of 2020, an interesting one to note is the record applications for startup businesses. John Haltiwanger, an economist at the University of Maryland, works regularly with the US Census Bureau, specifically to measure new business creation. He noticed six weeks into the pandemic, new business applications started rising. At first, he says, they had to double-check the data were correct. “We were, like, what’s going on here?” Then, applications kept rising. “The third quarter of 2020 is the highest quarter of applications we’ve ever seen.” This appears to be due to a phenomenon economist call ‘creative destruction’—the implicit opportunities being seized upon amidst societal/economic/market disruption. Similar dynamics are happening in R&D in the technology space. A modest silver lining of sorts in a year like 2020.