A lot has been written about how bad things are. Although vaccines are now being deployed, daily new cases continue to hit new highs. Even as testing expands, the positive rates remain way too high, signaling that the virus continues to spread. States that had the virus under control are now seeing new outbreaks.

Yesterday I appeared on Yahoo Finance’s Live to discuss the current market and outlook for 2021. Listen in to hear more.

Today, I'd like to provide an update on the coronavirus, including the economic and market implications. We had mixed news on the medical front. The third wave of the pandemic continues, although there were positive developments on vaccines. People could start getting shots in days, and recent projections suggest we could approach herd immunity as soon as June. Turning to the economy, the news got worse. Job growth dropped substantially, and layoffs rose sharply. With the employment market down, consumer confidence softened further, along with retail spending. Clearly, the third wave is acting as a significant drag on the economy, but what should we expect from the markets? Watch my latest video to learn more.

The third wave of the pandemic has not yet peaked. While we saw a significant downturn in case growth late last month, that was due to limited reporting during the Thanksgiving holiday. Since then, after an expected surge as reporting caught up, cases have continued to rise. We are now two weeks past the start of the holiday travel period, and a rise in cases is now showing up (likely due to that travel).

My colleague Sam Millette, senior investment research analyst on Commonwealth’s Investment Management and Research team, has helped me put together this month’s Market Risk Update. Thanks for the assist, Sam!!

Markets rebounded in November, as positive news on the vaccine caused markets to surge. The S&P 500 gained 10.95 percent during the month, while the Nasdaq Composite rose by 11.91 percent and the Dow Jones Industrial Average by 12.14 percent. These strong results helped break a streak of two consecutive months with declining equity markets, and all three indices set new all-time highs. Despite the strong returns in November, however, markets still face very real risks, as we discuss below.

My colleague Sam Millette, senior investment research analyst on Commonwealth’s Investment Management and Research team, has helped me put together this month’s Economic Risk Factor Update. Thanks for the assist, Sam!

The economy continued to show signs of growth in November, but the data weakened as the third wave of the pandemic slowed economic activity. Job growth slowed substantially, and service sector and consumer confidence both declined. Despite the slowdown, however, growth has continued as the economy continues to adapt. While the pandemic is indeed acting as a growing headwind, the recovery continues to be surprisingly resilient.

This morning’s jobs report was a disappointment. Total new jobs came in at 245,000. This result was well below the 460,000 expected and even further below the 638,000 we saw last month. Looking under the hood, the details were not great either. Private job growth dropped from a strong 906,000 last month to 344,000, again well below the expected 540,000. Even if we adjust for the effects of expiring temporary census jobs, at 93,000, this is still a notable weakening of what until now had been a very resilient employment picture.

We still do not know whether the third wave of the pandemic has peaked. While we saw a significant downturn in case growth in the past week, that may have been due to the Thanksgiving holiday, where cases reported dropped off, rather than to an actual decline in cases. We are now seeing cases surge again, as case reporting of earlier cases is catching up. Again, this is likely due to the holiday rather than an actual surge. There does seem to be continued improvement overall, but we need a couple of weeks for the data to normalize until we can be sure.

November was a great month for the markets. In fact, it was one of the best on record. U.S. markets were up by double digits, as were most markets around the world. We saw new all-time highs here, and even fixed income had a good month. From an investor’s point of view, things looked not just good but great—and clearly markets expect even better times ahead. But do they have it right? Let’s take a closer look.

November was a very strong month for the stock markets, with most up by double digits. With good news on vaccines and the resolution of the presidential election, investors gained confidence. But medical risks remain, and the economic risks rose. Layoffs increased, and consumer confidence declined. Business confidence remained high but has pulled back.