A Month To Remember

November 2020 will go down in the history books for a variety of reasons.

First, this was the month when science apparently triumphed over “a great and powerful plague” (to quote a certain outgoing US president), as pharmaceutical companies and biotechnology firms said their vaccines are capable of protecting humanity from a virus that killed nearly 1.5 million people globally in just 10 months.

Second, America’s first experiment with soft-autocracy ended, as Donald Trump stopped short of resorting to any “science fiction” scenarios to retain power. (Don’t get me wrong — some of the voter fraud scenarios conjured by the president, and especially by lawyer Sidney Powell, have a sci-fi feel to them, but what I mean here is just that Trump didn’t try to declare the results void by decree).

Third, global equities staged one of their best months in history. That’s in part attributable to the first two November notables mentioned above, and while I’ve documented various related factoids, I thought it was worth pointing out a few more. November’s equity rally favored cyclical value, despite the brief, post-election tech rally redux (predicated on the read-through from divided government). The figure (below) underscores the point. Value shares were on track for their best month ever.

The outperformance versus growth stocks is dramatic. One defining characteristic of equity markets over the past decade has been growth’s perennial outperformance, a phenomenon tied to the “slow-flation” macro backdrop and the vaunted “duration infatuation” in rates.

Although November 2020 may ultimately prove to be just another false start/ head fake, the rotation was dramatic.

You likely already know that flows into equity funds have approximated a deluge. If not, you’re encouraged to peruse “Stocks Are Really Enjoying Themselves In November.”

But Bloomberg’s ETF maven Eric Balchunas rolled out some additional statistics that are well worth mentioning. For example, he notes that “ETFs have taken in a record $90 billion in November.” That, he wrote, “is an unheard of $5 billion per day pace, [with] the extra kick coming from previously unloved areas like small-, value, and international.” 

Gold, meanwhile, has been less fortunate. The yellow metal, which staged a euphoric rally over the summer on a combination of plunging US real rates and debasement concerns, had a terrible go of it.

For the month, gold was lower by more than 5%, making November the worst month since late 2016 or, if you prefer, since Donald Trump was elected.

The bull thesis is still intact, but that assumes you believed it in the first place. I always have trouble (psychologically) adding to my gold position — it makes me feel like I’m a child, buying collectibles.

Speaking of children buying collectibles, Bitcoin managed to shake off its Thanksgiving plunge, which, for those who were too busy eating to notice, found “digital gold” diving some 13% over the space of several hours. That is now history.

As of Monday morning in the US, everyone’s favorite digital token hit a new record, rising more than 7% to near $20,000.

One starry-eyed individual summed it up in remarks to Bloomberg: “Bitcoin’s moment has arrived.”