The Week In Review: Nov 20 – 26

This will be a brief note, since last week was a short one. We hope everyone had a happy, safe, pleasant and relaxing Thanksgiving — the markets sure did. While people were on the move in one of the busiest travel seasons in recent memory, Wall Street was pretty quiet (in a good way). Volumes are typically thinner during these short trading weeks, and Thanksgiving week is notoriously the slowest of weeks, rivaled only by the week between Christmas and New Year’s. At least Christmas week has the urgency of year-end hanging over it, plus it’s the tail end of the holiday season and people are gearing up for a fresh start in the New Year.

Thanksgiving week doesn’t have any of those constraints or concerns; instead, it has all the relaxed tendencies of a pair of oversized sweatpants. This holiday season comes on the heels of a brutal summer and fall, so any source of enthusiasm is welcomed. Last week’s bright spot was the release of the minutes from the latest Federal Reserve meeting. The minutes (already weeks old) showed that most Fed officials favored slowing rate increases sooner. Never mind that numerous officials have delivered hawkish and aggressive remarks regarding their commitment to fighting inflation since the last meeting.

So what was really driving markets week: the stale minutes or the most recent comments? It seems the holiday spirit and lack of higher-ups in the office allowed the elves to drive markets upward on thin volumes and little “new” news. Given the type of year we’ve had, it’s good they are happy elves focused on pushing markets upward, rather than nasty little gremlins who would choose to add to an already miserable year.

As we head into the holiday season, consumers will make or break the fourth quarter. If Americans get out and spend, we may well continue to rally into year-end. If consumers falter (and there are signs they may be nearing exhaustion), we could have a challenging end to a year we would already like to forget.