It was weird but ominous timing: on Black Friday, the day after we’re all supposed to give thanks for what we have, a particularly viral new variant of Covid-19 leaped onto the headlines and into the public’s consciousness.
This was also supposed to be the biggest shopping day of the year – and indeed it was, though not in the way people expected. Sure, some folks were out shopping at bricks-and-mortar stores, but the real shopping sprees took place online.
With Covid-19 fears rising once again, and fewer “door buster” sales in physical stores this Black Friday, crowds were thinner than expected.
In fact, according to Cowen analysts, stores on this year’s Black Friday had the lowest level of clearance goods for sale in five years or more. At least in part, this was because many shoppers chose to pick up merchandise curbside rather and/or simply shop online, rather than venture into stores.
Traffic at retail stores on Black Friday declined 28.3% compared with 2019 levels, according to preliminary data from Sensormatic Solutions. And on the previous day, Thanksgiving Day, visits to brick-and-mortar stores cratered 90.4% from 2019 levels.
Not that people were deterred from spending money – on the contrary, consumers spent $6.6 billion through 9:00 p.m. Eastern Time on Friday, according to Adobe Digital Economy Index, with expected total spending of between $8.8 billion and $9.2 billion for the day.
Courtesy: St. Louis Fed, HousingWire.com
That magnitude of spending might surprise some of you, but keep in mind that U.S. consumers are entering the holiday season with savings from multiple rounds of government pandemic relief.
Plus, some workers have extra cash to spend due to wage increases that businesses are using to entice workers during the ongoing labor shortage.
While folks were engaging in the digital version of “shop ’til you drop,” however, an unsettling news item took over the headlines. Specifically, the World Health Organization had officially designated the newly identified omicron Covid-19 variant as a “variant of concern,” triggering worldwide alarm and a sell-off in the U.S. stock market.
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The next day, Britain, Germany, and Italy had already detected cases of the new omicron Covid-19 variant. It felt like March 2020 all over again as British Prime Minister Boris Johnson announced new steps to contain the virus, while more nations imposed restrictions on travel from southern Africa.
“We will require anyone who enters the U.K. to take a PCR test by the end of the second day after their arrival and to self-isolate until they have a negative result,” Johnson said.
When was the last time you heard the phrase “PCR test” in a front-page news headline? Yet, here we are and informed citizens should prepare for lasting ripple effects.
As the omicron variant sucker-punches the financial markets, investors should remember that mega-cap stock-market indexes can go down just as fast as they went up, if not faster. After all, 2021’s Black Friday turned out to be the Dow Jones’ worst day of the entire year, up to that point.
This was undoubtedly bad news for folks who were all-in on major market index funds – and that’s a whole lot of people with employee retirement accounts in the U.S.
On the other hand, self-directed investors with well-balanced allocations in gold, silver, uranium (through the metals themselves as well as mining-company shares) should hold up quite well during this challenging time.
Whatever supply-chain problems existed prior to the spread of the omicron variant, are only bound to get much worse now. The labor shortage will also intensify, no doubt.
These are tailwinds to metals prices. Companies that mine for gold, silver, and uranium will be asked to increase their production – and they’ll be compensated handsomely for their efforts.
Will this be a repeat of March and April of 2020? It might not be quite as severe as that, but be prepared for anything, lest you risk losing everything.
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