Today

You may notice something different about the Launch Pad this morning. Our company has changed its name to Richardson Wealth. With the launch of Richardson Wealth, we are proud to extract the best from the past, when the name on the door meant something, and usher in a forward-thinking approach to wealth planning and investment management.
 
The S&P begins this week having closed at a record on Friday. Similar to last week we’re kicking off the trading session with good news on the vaccine front.  Moderna Inc. said its Covid-19 vaccine was 94.5% effective in a preliminary analysis of a large late-stage clinical trial. Seems like a repeat from a last week when markets received a booster shot on a Monday morning. Unlike the Moderna vaccine that requires two shots 28 days apart, the market is getting its second dose of positive vaccine news just 7 days apart.
 
We’re seeing a similar but more muted reaction this time around. The NADAQ futures sold off on the news and DOW futures rallied. The U.S. dollar is weaker against more cyclical currencies such as the loonie and bond yields are slightly higher.
 
Calculated risk shares 8 high frequency indicators to monitor the economy. These indicators are mostly for travel and entertainment, and most are rolling over. Restaurant bookings, hotel stays are all back trending lower. It will be interesting to see how fast these sectors recover as the vaccine is distributed.  
 
Fifteen countries that make up nearly a third of the world's population and gross domestic product formed the world's biggest trading bloc over the weekend. Asian shares are strong this morning on news that the deal is now completed. The Regional Comprehensive Economic Partnership, or RCEP, was signed by China, Japan, South Korea, Australia, New Zealand and the 10 ASEAN member countries, wrapping up eight years of negotiations before the next U.S. administration comes into office. The deal aims to strengthen supply chains with common rules of origin, reduce tariffs and codify new e-commerce laws.

Some alarming new COVID-19 projections for Ontario have forced several regions to enter the red alert lockdown level. New projections show the possibility of breaking 6,500 daily cases by Mid-December. While death totals have decreased significantly, the mass spreading is still trending in the wrong direction. 


Diversion: Kim Ng has become the first female general manager in all of the big 4 American sports. Congratulations on an amazing accomplishment!
 

Connected Wealth™ Tactical Primer

Some years it really pays to be tactical, and 2020 was certainly one of those years with multiple all-time highs and a very deep multi-year low.   Of course the hard part is how to be tactical.  The Purpose Tactical Asset Allocation Fund / ETF is a quantitative rules-based portfolio best used as a sidecar strategy to add a tactical component to a portfolio. The main goal of Tactical is to get defensive quickly when markets turn negative, providing a stabilizer for the overall portfolio, while still capturing reasonable upside in rising markets. The asset allocation can range from 100% equity to 100% fixed income / cash. In the Primer we share our models, sensitivities, how and why we developed the strategy, analytics on what kind of market it works best, and what kind of market it does not work as well.
 
To learn more about how Tactical Asset Allocation can help your business please enjoy our most recent Tactical Primer authored by Craig Basinger.

Around Richardson Wealth

Introducing Richardson Wealth
Our name has changed, but you can still expect the same excellent service! The name change to Richardson Wealth reflects a new ownership structure that proudly highlights our focus on wealth management. We remain committed to providing all of our Clients with an exemplary service that enables you to grow and protect your wealth for generations. Visit our website for more information.
 
Visit RichardsonWealth.com
Read more about this change

Commodities

Oil prices extended gains in New York and in Europe as Moderna reported a highly effective COVID-19 vaccine; at the time of writing, NYM WTI Crude futures were up +4.4% to US$41.88/bbl while ICE Brent Crude futures were up +3.8% to US$44.39/bbl.  China saw refinery activity rebound to match a monthly record ahead of holiday sales and on the back of a recovery in broad consumption.  Iraq oil exports are expected to jump to 2.5mn bpd in 2022, according to FGE.  At that point, OPEC+ should be able to absorb the extra output.  The big news today comes from Saudi Aramco, who’s poised to tap into the bond market for the first time since April of last year; the state-owned oil giant is seeking a US$75bn dividend commitment and has hired Goldman to run the sale. 
 
Elsewhere, gold prices edged lower by -60bps to US$1,877.62/oz as risk on activity took hold.  Indian gold-purchasing for Diwali fell short of expectations as higher prices and virus concerns dulled consumer appetite.

Fixed income and economics

The only major data release today is the Empire Manufacturing survey which saw November disappoint at 6.3 versus 10.5 prior. Consensus had also forecast a much stronger sentiment reading of 13.5 which many believe the shortfall stemmed from increased lockdown measures in the New York state. Within the details of the release we see new orders falling to 3.7 from 12.3 and shipments down to the lowest level since June. On the flip side, employment gained to 9.4 from 7.2 prior while prices received increased to 11.3 from 5.3 (cue the inflation hawks). Nonetheless, it's difficult not to characterize the print as on the weaker side of expectations and surely reflecting the apprehension associated with the recent rise in covid-19 cases as the winter approaches.

Global monetary policy action last week was light save for Mexico’s central bank surprising markets by holding rates unchanged as many had expected Banxico to were expecting yet another easing move. The official benchmark rate remained at 4.25% and most analysts with an accompanying hawkish lean making it more likely the next change in rates will be an increase rather than a decrease. Annual inflation is also expected to remain around 3% over the coming two to three years, which is above target. Peso traders, who managed to catch a strong bid on the currency, will take a wait and see approach to the rebooted relationship between Mexico and the new incoming Biden administration that could see further strength.

The British pound was the big winner in currency land last week, ending Friday on a stronger note after it was announced that two of PM Boris Johnson’s senior cabinet members have resigned. Markets translated the action as signs for a renewed Brexit deal for the E.U. as both officials were viewed as Brexit hawks who were too willing to walk away with no deal rather than compromise on some key issues (such as a level playing field for businesses on both sides, rights of E.U. vessels to fish in U.K territorial waters, and the mechanism to settle future disputes). Pound sterling gained +0.4% against the dollar to end the week as the GBP hovers near a 52 week high.

Chart of the day
 

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Quote of the day
 

The power of imagination makes us infinite. – John Muir