Here’s my video presentation for today. For details, read my article below.

Positive coronavirus vaccine news from Pfizer (NYSE: PFE) and Moderna (NSDQ: MRNA) in the early part of last week propelled stocks to new record highs, but the alarming spike in COVID-19 cases throughout the country caused the rally to fizzle. As of this writing on Monday, the United States is averaging over 1,300 deaths per day from the coronavirus.

Nonetheless, sector rotation accelerated last week as investors gained greater confidence in economic prospects for 2021. The U.S. presidential election is being contested, but business and financial leaders have moved on. Wall Street sees the election in the rear view mirror, with the assumption that Joe Biden will be the next president.

Cyclical sectors, such as energy and financials, outperformed last week. Oil prices rose amid expectations that economic recovery would boost energy demand. Rotation also occurred across asset classes, with small-cap and international investments outperforming U.S. large-caps. Investment strategies were affected as well, with value outperforming growth (see table).

I expect the movement into economically sensitive industries to accelerate in 2021, with an emphasis on value stocks.

A bleak holiday?

Economic prospects for next year are indeed bright. But until then, brace yourself for a rough fourth quarter. Investment conditions may get worse, before they get better.

The crucial holiday shopping season is upon us. As retailers reimpose social distancing strictures due to rising COVID-19 cases, it’s unclear how many people will actually show up at physical stores. The combination of a rampant plague and high unemployment is likely to dampen consumer spending across the board, perhaps even the e-commerce activity that has increasingly supplanted bricks-and-mortar shopping. We’ll get a better idea about consumer spending, after the occurrence of “Black Friday” on November 27.

Also keep an eye on the following economic reports that are scheduled during this holiday-shortened week: consumer confidence (Tuesday); and jobless claims, consumer sentiment, and consumer spending (Wednesday).

By the end of December, millions of Americans could lose their unemployment benefits unless Congress agrees on new coronavirus relief legislation as a follow up to the Coronavirus Aid, Relief, and Economic Security (CARES) Act passed in late March.

In addition to the expired Federal Pandemic Unemployment Compensation program (FPUC), which provided an additional $600 per week to individuals collecting regular jobless benefits, the CARES Act also enabled states to provide Pandemic Unemployment Assistance (PUA) to individuals who are self-employed, or who otherwise would not qualify for regular unemployment compensation and to extend unemployment benefits by up to 13 weeks under the Pandemic Emergency Unemployment Compensation (PEUC) program. Both programs are slated to expire at the end of the year.

According to the U.S. Department of Labor on Thursday, more than 20 million Americans still received unemployment benefits in the week ended October 31. To be sure, the number of people receiving unemployment benefits through regular state programs has declined to 6.45 million, from a peak of 22 million in May. However, 13 million Americans still rely on aid provided through either the PUA or PEUC programs, because many who lost their jobs during the first wave of the pandemic have exhausted their conventional unemployment benefits.

As coronavirus infections and deaths soar at an exponential rate throughout the U.S., it’s improbable that those relying on federal aid will be able to return to their previous jobs before emergency assistance expires.

The top leaders of both parties in Congress seem aware of the crisis and they’re expressing a new willingness to restart relief legislation negotiations before the end of this year. If their efforts fail, President-elect Joe Biden will inherit a lot of human misery (see table).

However, the news isn’t all gloomy. Corporate earnings in the third quarter have been surprisingly resilient.

According to research firm FactSet, the S&P 500 is reporting a year-over-year decline in earnings of -6.3% for the third quarter, far better than feared. Among the S&P 500’s 63 industries, 36 are reporting year-over-year growth in Q3 earnings.

The top five industries reporting the largest year-over-year dollar-level increases in Q3 earnings are Interactive Media & Services (+$5.2 billion); Software (+$4.1 billion); Automobiles (+$2.8 billion); Pharmaceuticals (+$2.6 billion); and Biotechnology (+$2.5 billion). Take a look at the following chart:

Even if Congress in the waning days of 2020 can’t get its act together, the Biden team already has vowed to push for new fiscal stimulus as soon as possible, with substantial unemployment assistance and infrastructure spending.

The exigencies of the pandemic are likely to boost enormous spending next year in the health services sector as well, providing a windfall for the best-situated drugmakers.

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And if Republicans retain control of the Senate after the Georgia run-offs? History shows that divided government isn’t necessarily an impediment to getting major initiatives passed. FactSet (the data provider for Investing Daily) expects 2021 to be a record year for S&P 500 profitability, marking the fastest return to new-high earnings since the Reagan boom of the 1980s.

Calling Dr. Copper…

Copper is a widely used commodity so sensitive to economic conditions, it’s viewed as a leading indicator. Because copper is a time-proven predictor of economic trends, the metal is said to have a PhD in Economics. Hence the metal’s nickname “Dr. Copper.”

Stimulus and a concomitant return to economic growth in early 2021 would be favorable for copper demand. The price of copper is poised to soar next year and beyond, which is great news for copper producers.

The industrial world can’t function without the “red metal.” Copper is vital for building construction, power generation and transmission, electronics, industrial machinery, and transportation vehicles. Copper wiring and plumbing are mainstays of heating and cooling systems, appliances, and telecommunications links.

Next year, as the world economy resumes growth and infrastructure spending explodes, so will demand for copper. For our favorite investment play on this crucial commodity, click here now.

John Persinos is the editorial director of Investing Daily. You can reach John at: mailbag@investingdaily.com. To subscribe to his video channel, follow this link.