December 2020 – Reasons to be Cheerful

<p>One of my childhood heroes, Ian Drury (who overcame being born with Polio to do what he wanted and always believed in himself), sang of <strong>Reasons to be Cheerful, Part 3</strong>. Trading in December can often be like that – here are my thoughts for the month ahead.</p>
<p><iframe title="Ian Dury and The Blockheads – Reasons To Be Cheerful, Pt. 3 (Official HD Video)" width="696" height="392" src="https://www.youtube.com/embed/CIMNXogXnvE?feature=oembed" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture" allowfullscreen></iframe></p>
<ol>
<li><strong>New President, Fiscal Stimulus &amp; Pandemic Response </strong>– December 14 should see the Electoral College confirm its election results. Jan 5 is the final run-off for control of the Senate – likely to remain Republican. Janet Yellen as the new Treasury Secretary should see more cooperation between Government &amp; FED – biases a bigger overall Fiscal package. New pandemic response will be implemented from Jan 20. Restart of relationship with China, EU and even Iran. Vaccine rollout in USA before yearend.</li>
</ol>
<ol start="2">
<li><strong>Global Stock Markets</strong> <strong>traditionally rise in December</strong> – especially in BULL years.
<p>During November all US equity markets posted new all-time highs. This week the key <strong>USA500</strong> pushed over <span><strong>3675.</strong></span> – the SANTA RALLY looks set.</p>
</li>
</ol>
<p>Since 1970, the equity markets (UK100 &amp; USA500) have risen almost every December – 42 years out of 49, or 85.7% of the time¹.  2020 is the 11th year of the equity market Bull Run and the USA500 has risen close to 11% during November. The USA30 had its best November since 1987, and many European &amp; Asian equity markets also had their best November on record.</p>
<p>Since 1987, the USA500 has logged gains in 25 out of 33 years from the close on Friday after Thanksgiving to yearend.³</p>
<ol start="3">
<li><strong>Five</strong> of the <strong>best</strong> (positive) <strong>trading days</strong> for stock markets (UK100 &amp; USA500) for the <strong>entire year</strong> occur in December – <strong>All</strong> <strong>of them after December 21.²</strong></li>
</ol>
<table width="420">
<tbody>
<tr>
<td colspan="2" width="420">
<p><strong>The Year’s 10 Best Days</strong></p>
</td>
</tr>
<tr>
<td width="126"><strong><em>Date </em></strong></td>
<td width="294">
<p><strong><em>% Chance of Prices Rise</em></strong></p>
</td>
</tr>
<tr>
<td width="126">June 6th</td>
<td width="294">
<p>77</p>
</td>
</tr>
<tr>
<td width="126"><strong>December 27th</strong></td>
<td width="294">
<p>76</p>
</td>
</tr>
<tr>
<td width="126"><strong>December 22nd</strong></td>
<td width="294">
<p>75</p>
</td>
</tr>
<tr>
<td width="126">August 5^th</td>
<td width="294">
<p>73</p>
</td>
</tr>
<tr>
<td width="126"><strong>December 24th</strong></td>
<td width="294">
<p>72</p>
</td>
</tr>
<tr>
<td width="126">January 4^th</td>
<td width="294">
<p>70</p>
</td>
</tr>
<tr>
<td width="126">April 27^th</td>
<td width="294">
<p>70</p>
</td>
</tr>
<tr>
<td width="126"><strong>December 23rd</strong></td>
<td width="294">
<p>70</p>
</td>
</tr>
<tr>
<td width="126"><strong>December 29th</strong></td>
<td width="294">
<p>70</p>
</td>
</tr>
<tr>
<td width="126">August 3rd</td>
<td width="294">
<p>70</p>
</td>
</tr>
</tbody>
</table>
<ol start="4">
<li>The <strong>FED, ECB, BOJ, BOE, <span>RBA</span>, BOC, &amp; SNB</strong> – All have Interest Rate decisions &amp; Press Conferences. No changes expected, but surprises cannot be ruled out. Outlook tweaks and even upgrades and downgrades from any of the central banks could be key.</li>
</ol>
<ol start="5">
<li><strong>UK–EU – Deal or No Deal – </strong>Whatever the outcome, and the market is pricing in an 80/20 chance of a deal – it must be imminent if it is going to happen at all. <strong>Sterling,</strong> <strong>Euro </strong>and associated <strong>Equity</strong> and <strong>Bond </strong>markets all in focus.</li>
</ol>
<ol start="6">
<li><strong>OPEC</strong> – Meet December 1 – market expecting more production cuts for 2021 and Russia claiming to be closer to OPEC than ever. USOil has rallied over $11 a barrel in November. Can OPEC deliver and keep production in check? – Will the sentiment rally continue and support demand?</li>
</ol>
<ol start="7">
<li><strong>USD</strong> close to 3-year lows, <strong>BTC</strong> at all-time highs, Copper at record highs, <strong>NZD</strong> at 3-year highs, <strong>AUD</strong> at 2-year highs, <strong>GOLD</strong> down close to 50% of 2020’s gain.</li>
</ol>
<p>¹The Stock Market Handbook – David Schwartz</p>
<p>² The Stock Market Handbook – David Schwartz</p>
<p>³The Stock Trader’s Almanac – <a href="https://jeffhirsch.tumblr.com/">https://jeffhirsch.tumblr.com/</a></p>
<p><strong>Click </strong><a href="https://www.hotforex.com/en/trading-tools/economic-calendar.html"><strong>here</strong></a><strong> to access the Economic Calendar</strong></p>
<p><strong>Stuart Cowell </strong></p>
<p><strong>Market Analyst</strong></p>
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