(Drivebycuriosity) - This year we experience a very different Thanksgiving. The US are suffering a third wave of Covid-19 infections with new records of known cases & surging hospitalizations. Smart & considerate people stay at home and minimize personal contacts to avoid infecting themselves and others. Caution & fear are curbing businesses even more than lockdowns & quarantines ( nber.org). Many industries, including physical shops, restaurants & airlines, are suffering.
But the US stock market climbed to new all-time highs anyway. The S&P 500, the gauge for the US stock market, gained 12% YTD and climbed about 15% since Thanksgiving 2019. As usual the market looks ahead. Someday the pandemic will end and a row of vaccines are in the making, creating the hope that the crisis will soon be finished.
Economy - and stock markets - are getting a lot of help from an accelerating technological revolution spurred by the Covid-19 crisis. Internet - and other software applications - are helping everyone to deal with lockdowns and social distancing. Microsoft`s CEO Satya Nadella said that “two years of digital transformation took place in two months” ( microsoft ). The CEO of Bill.com, an online clearing service, said: "We believe the ongoing pandemic has accelerated the need for businesses to focus on digital transformation” (seekingalph).
The Covid-19 Pandemic changed many habits. The crisis forces many people to work, learn, shop, educate & entertain from home which is fostering digitization and raising efficiency & productivity of the economy ( driveby ). Online sales worldwide are surging, more people are working from home, they are binge watching Netflix & Amazon Prime, listening via Spotify, reading Kindle books, surfing Facebook & Twitter and businesses are running more & more on cloud computing. Not only consumers are changing, corporations adapt as well. We are witnessing an accelerated shift toward digital technologies that are faster, less expensive, more productive and raise creativity.
I suppose that the stock market climb will continue in 2021 and beyond. During the recessions of the years 2001/02 & 2008 and the current crisis companies restructured and reduced costs significantly in order to survive. When Covid-19 is defeated they will be much fitter and more efficient than before. I believe that this learning process will continue and will translate into a long term trend of rising company profits & stock markets.
Happy Thanksgiving
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