| Markets around the world are subdued as many economies and communities limp, quite frankly, into the end of 2020. Trading is thin, and some exchanges close early today. The story of the past quarter continues as we close out the year. In the U.S., the Dow Jones Industrial Average looks to be up on the year by 6%, the S&P 500 by 15% and the NASDAQ by an absolutely insane 43%. Looking around the world, the Euro Stoxx 50 is down 5%, the U.K.’s FTSE 100 is down 14%, Japan’s Nikkei index is up 16%, and China’s main stock index — the CSI 300 — is up 27%.|
Government bonds around the world are ending in the ranges they have been in since the spring — i.e., very, very low yields. Commodities are a crazy set of stories within the range of instruments traded around the world. Energy prices are down by more than 20% on the year, while metals like aluminum and copper, as well as agriculture, are ending the high higher by similar percentages.
And then there are currencies. The U.S. dollar ended the year at its lowest levels since February 2018 and is closing in on the worst quarterly performance since the third quarter of 2017. These last few days have seen strong performance by the commodity currencies — the Australian, New Zealand and Canadian dollars — reflecting hope for a return of consumer demand in 2021. The British pound is ending the year about 3% above where it started relative to the U.S. dollar, but the story there is fairly remarkable as well. With the trade agreement with the EU signed, tomorrow officially ends the Brexit process. It also starts the process of adjusting to a new paradigm for business and society in Europe.
So how do we end this year? It’s hard not to look back on the year with dismay if we are being honest. I heard a podcast earlier this week that reached back to the times following World War II, just as a new Cold War was being started, to get inspiration to look forward. In accepting the 1949 Nobel Prize for Literature, William Faulkner said, “I believe that man will not merely endure: he will prevail. He is immortal, not because he alone among creatures has an inexhaustible voice, but because he has a soul, a spirit capable of compassion and sacrifice and endurance.”
Happy New Year all. We’ll see you in 2021.
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