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Archive for December, 2020

Weekly Market Update for December 31, 2020

by Jim Ulland

Stocks ended the year with a positive week, perhaps signaling the trend for 2021. Fixed income also was positive as interest rates stayed within a narrow range. We were delighted to produce strong performance this year in our equity strategies as well as very highly ranked performance in our fixed income strategy Intelligent fixed Income (IFI). During the week we welcomed our first bank and our first insurance company as clients. Neither could find satisfactory returns in traditional fixed income choices, so they came to us.

Monday produced new highs in the market, although the year closed slightly below these levels. The market had a hopeful feel as the latest stimulus bill was passed and Covid vaccinations started in earnest. Each state is responsible for the actual administration of the vaccination program and some were better organized than others. Also, the states will determine the order of vaccination, obviously starting with healthcare workers as well as nursing home and assisted living residents and staff. Late in the week, the UK approved the vaccine from AstraZeneca/Oxford. US approval should follow in the first quarter. Johnson and Johnson’s vaccine trial results are expected in January. The prospect of a vaccinated public has given investors confidence to commit cash to both stocks and fixed income.

Economic news turned positive led by falling unemployment filings which were the lowest in a month. Those already on unemployment (Continuing Claims) also fell. Some states were relaxing their lockdown policies as new Covid case numbers declined along with deaths. Lockdowns have been responsible for most of the job losses. Manufacturing had another positive week as shown by the Chicago Producers Manufacturing Index. Business sentiment reached the highest since Q4 2018. China also released solid economic numbers and seems to be out from under the Covid burden.

For the week, the Nasdaq was up +0.65%. The SP 500 was +1.43%. On Monday, the SP 500 was +0.87%, Tuesday -0.22%, Wednesday +0.13%, Thursday +0.64%, and Friday is New Year’s Day.

Next week is unusually important in that the US Senate runoff elections in Georgia will determine government tax and spending policies for the next two years. A reversal of the corporate income tax cut would be reflected in stock prices. Stay tuned for election results which may not be available on election night 1/5/21. But, by the end of the week, the results should be clear.

2021 is setting up for more economic recovery as lockdowns are lifted, jobs are restored, and uncertainty is reduced. We continue to see value in both equities and fixed income and encourage those with cash on the sidelines to put it to work. Finally, our year-end assets under management have set a record, for which we thank our clients. We hope to continue to earn your trust in the New Year.

The information contained in this commentary is not investment advice for any person. It is presented only for informational purposes to assist in explaining factors that may have had an impact in the past or may have an impact in the future on client portfolios or composites. All expressions of opinion reflect the judgment of the firm on this date and are subject to change. Included information has been obtained from sources considered reliable, but we do not guarantee that the foregoing materials are accurate or complete. Investors should contact Ulland Investment Advisors for individualized information prior to deciding to participate in any portfolio or making any investment decision. Ulland Investment Advisors does not provide tax advice. All investors are strongly urged to consult with their tax advisors regarding any potential investment.

Performance quoted is past performance. Past performance is not indicative of future performance. There is always a possibility of loss. Current performance may be lower or higher than performance shown. Differences in performance versus the indices/funds may be attributable, in part, to differences in the asset make-up of the strategy vs. the indices/funds. Performance calculations are based on the reinvestment of dividends and gains unless these amounts were paid out to the client. Performance is subject to revision. See www.ullandinvestment.com for important strategy disclosures.

This does not constitute a recommendation of any investment strategy or product for a particular investor. Investing involves risk; principal loss is possible. Investors should consider the investment objectives, risk, charges, and expenses of the strategy carefully before investing. This and other important information can be obtained by contacting Ulland Investment Advisors.

Weekly Market Update for December 24, 2020

by Jim Ulland

Stocks shifted into neutral for Christmas week.  But everyone seemed to be getting some type of present anyway.  Monday, hospital staffs and other frontline workers started getting the Moderna vaccine which will help get more people protected.  This vaccine adds to the doses in distribution from the Pfizer/BioNtech vaccine of the prior week.  Just to be on the safe side, the government bought another 100 million of the Pfizer vaccine doses to be delivered mid-year.  Johnson & Johnson’s vaccine trial results are coming soon, which, if positive, will add more doses.

Monday also saw the announcement of agreement on the latest stimulus package.  The 5000-page bill was passed almost unanimously and gave Congress’s present to the unemployed and to struggling businesses.  There also is a bit more in these 5000 pages.  Those voting on the legislation did not have a chance to read it generating comments from some that the Congressional system for bill passage might be just a little bit broken.

Almost unnoticed was the holiday report card to big banks.  The results of the lasted Fed stress tests were released.  Everyone passed.  As a result, banks can increase common stock dividends and renew stock buyback programs. Bank stocks showed their appreciation. Our fixed income strategy, Intelligent Fixed Income, has a vested interest in strong banks, since these are the entities that issue most of the preferred stock used to get top tier performance.  (Among 2020 year-end predictions is our expectation to retain the #1 performance spot in 2020 among ETFs and mutual funds with similar strategies). 

It was hard to find a trend in other economic news, somewhat like shaking an unopened present.  Unemployment filings were down and back within the range of the last months.  Manufacturing was a positive surprise, but consumer confidence fell largely because of the lockdowns and the virus variant that sprang up in the UK.  However, the UK was not without some gifts.  Brexit talks reached agreement Thursday, ending this long divorce. 

On a weekly basis, the market was neutral.  For the week, the Nasdaq was up + 0.4%.  The S&P 500 was -0.2%.  On Monday, the S&P 500 was -0.39%, Tuesday -0.21%, Wednesday +0.07%, Thursday +0.35%, and Friday is a holiday (we will be closed).  

Next week is New Years, which normally is somewhat slow. We expect to see a modest recovery in Chinese stocks which were battered on Thursday under the threat of more government regulation of their largest companies.    Alibaba and Tencent are in most of our equity portfolios and were down sharply.  Next week will be full of forecasts for the New Year.  We view 2021 as bringing a return to a normal growth economy by mid-year. Stocks have anticipated the recovery and moved higher even during the uncertainty and disruption from Covid-19.  As this pandemic comes under control, new market highs are likely.  If Congress can normalize spending, interest rates should stay low.  This would be favorable to both our equity and fixed income strategies.  Warmest wishes to all.

The information contained in this commentary is not investment advice for any person. It is presented only for informational purposes to assist in explaining factors that may have had an impact in the past or may have an impact in the future on client portfolios or composites. All expressions of opinion reflect the judgment of the firm on this date and are subject to change. Included information has been obtained from sources considered reliable, but we do not guarantee that the foregoing materials are accurate or complete. Investors should contact Ulland Investment Advisors for individualized information prior to deciding to participate in any portfolio or making any investment decision. Ulland Investment Advisors does not provide tax advice. All investors are strongly urged to consult with their tax advisors regarding any potential investment.

Performance quoted is past performance. Past performance is not indicative of future performance. There is always a possibility of loss. Current performance may be lower or higher than performance shown. Differences in performance versus the indices/funds may be attributable, in part, to differences in the asset make-up of the strategy vs. the indices/funds. Performance calculations are based on the reinvestment of dividends and gains unless these amounts were paid out to the client. Performance is subject to revision. See www.ullandinvestment.com for important strategy disclosures.

This does not constitute a recommendation of any investment strategy or product for a particular investor. Investing involves risk; principal loss is possible. Investors should consider the investment objectives, risk, charges, and expenses of the strategy carefully before investing. This and other important information can be obtained by contacting Ulland Investment Advisors.

Weekly Market Update for December 18, 2020

by Jim Ulland

On Friday, it became clear that the lockdowns were having an impact on the market. Unemployment ticked up a noticeable amount in Thursday’s unemployment report, although not far above that of the last several months. Stocks lost some hopefulness, at least temporarily. The lack of Congressional agreement on a stimulus package also helped create a negative end to the week.

Monday, healthcare workers started getting Pfizer’s Covid vaccine. Thursday, the Advisory Committee of experts unanimously recommended FDA approval of the Moderna vaccine, which seems even better than Pfizer’s. FDA approval is expected over the weekend and these additional doses will start into distribution by next Monday. There is a lot more vaccine coming from Moderna.

The stimulus package, which is designed to get the country from now until the vaccines have subdued Covid-19 this spring, is stalled. An agreement is possible over the weekend. Also unresolved is the control of the US Senate. The two runoff Senate elections in Georgia take place January 5th. That election will determine whether tax policy in 2021 will be bipartisan or not.

The Fed meeting this week was uneventful. The Fed’s policy of keeping interest rates low into 2023 was not changed. The Fed Chairman did forecast falling unemployment rates in 2021, which would be realistic if the vaccines have their expected positive impact. Interest rates trended slightly upward almost to 1% on the 10 Yr Treasury. Some of this rise could be attributed to the renewed concern over the ballooning federal budget deficit. Interest rates remain favorable for our awardwinning fixed income strategy Intelligent Fixed Income (IFI).

As is said, the stock market is a market of stocks. Banks continue to consolidate as shown by the acquisition of TCF by Huntington. Wells Fargo is selling its asset management business which is somewhat of a surprise as other banks see this area as a growing source of stable profits. Chipotle was acknowledged as one of the few restaurant chains, besides McDonalds, that have figured out how to do takeout. Their stock was upgraded. Crude oil hit a six-month high and boosted those beleaguered stocks. Our equity strategies continue to have strong performance.

On a weekly basis, the market was still hopeful that the vaccines will prevail. For the week, the Nasdaq was up 3.05%, proving that growth and tech are still good positioning. The S&P 500 also was up but less at +1.25%. On Monday, the S&P 500 was -0.44%, Tuesday +1.29%, Wednesday +0.18%, Thursday +0.58%, and Friday -0.35%.

Next week is Christmas. Since many are working from home and few are traveling or vacationing, the market activity may not be as slow as usual. Year-end tax selling may dampen stock prices. Those who fear an increase in the capital gains tax, as proposed by President-elect Biden, may sell for that reason. Passage of the stimulus bill could be the present that makes the week for the market. Enjoy the short week but do not forget to eat nutritiously and get your exercise. There might be a Peloton with a ribbon on it in your living room.

The information contained in this commentary is not investment advice for any person. It is presented only for informational purposes to assist in explaining factors that may have had an impact in the past or may have an impact in the future on client portfolios or composites. All expressions of opinion reflect the judgment of the firm on this date and are subject to change. Included information has been obtained from sources considered reliable, but we do not guarantee that the foregoing materials are accurate or complete. Investors should contact Ulland Investment Advisors for individualized information prior to deciding to participate in any portfolio or making any investment decision. Ulland Investment Advisors does not provide tax advice. All investors are strongly urged to consult with their tax advisors regarding any potential investment.

Performance quoted is past performance. Past performance is not indicative of future performance. There is always a possibility of loss. Current performance may be lower or higher than performance shown. Differences in performance versus the indices/funds may be attributable, in part, to differences in the asset make-up of the strategy vs. the indices/funds. Performance calculations are based on the reinvestment of dividends and gains unless these amounts were paid out to the client. Performance is subject to revision. See www.ullandinvestment.com for important strategy disclosures.

This does not constitute a recommendation of any investment strategy or product for a particular investor. Investing involves risk; principal loss is possible. Investors should consider the investment objectives, risk, charges, and expenses of the strategy carefully before investing. This and other important information can be obtained by contacting Ulland Investment Advisors.

Weekly Market Update for December 11, 2020

by Jim Ulland

Healthcare workers and assisted living staff and residents may start lining up for Pfizer’s Covid vaccine as early as Monday. The FDA still must give final approval after the Advisory Committee signed off Thursday. Covid cases and deaths have spiked, thus, everyone has a sense of urgency to get vaccinations started. The second leading vaccine is from Moderna. An FDA Advisory Committee will meet to vote on Moderna’s vaccine next Thursday 12/17. Approval in the committee is almost a certainty. After that, the FDA will take a day or two to give its blessing, making more vaccine available.

The urgency for approval of vaccines is triggered by both the spike in infections and the unemployment caused by added lockdowns. The unemployment filings were up over 100,000 this week. This is before the full impact of the lockdowns has been felt. New York City will close all indoor dining on Monday. California and New York have a long list of businesses forced to close, mostly those that took the brunt of past closures: restaurants, bars, fitness centers, some schools, social gatherings, Broadway shows, and movie theaters. Most states are imposing some restrictions but not as severe as New York or California.

Another stimulus package is in limbo as the legislative leaders negotiate. A bridge seems to be needed to get the country from now to the time when vaccines succeed in controlling this pandemic. Congress is set to adjourn soon, so there is little time to reach a stimulus agreement.

For the rest of the month, headlines, which often influence the market, should herald the number of people being vaccinated and the increased number of doses available. This should return a positive tone to the market after this week’s pause. The market wants to look through the lockdowns to the time when the pandemic will be controlled and the lockdowns completely lifted, probably mid-summer. For example, Airbnb went public this week. The stock price doubled the first day on the expectation that things will return to normal. All-time highs for the NASDAQ and the SP 500 were made early in the week as well. By the week’s conclusion, the Nasdaq was down 0.7%. The SP 500 also was down 1.0%. On Monday, the SP 500 was -0.19%, Tuesday +0.28%, Wednesday -0.79%, Thursday -0.13%, and Friday -0.13%. Interest rates stayed relatively flat.

Our fixed income strategy, Intelligent Fixed Income (IFI), run by Nat Beebe, is receiving a lot of interest after its #2 ranking among 1180 fixed income managers in Q3 and for our continued #1 ranking among preferred stock managers per Morningstar Direct by Lipper (disclaimers below). We are likely to have a bank and an insurance company as new clients by yearend. We love referrals.

Ranking per Lipper in US Fixed Income (“All Styles” category). Performance is net of fees and inclusive of cash.

**Ranking per Morningstar Direct in Publicly Traded Peer Group. Publicly Traded Peer Group Requirements: Minimum $150 million in ETF/Fund; Excludes low-duration funds; Excludes closed-end funds; Includes share class with largest AUMs; Excludes real estate preferred funds; Minimum 3-year track record. Performance is gross of fees and inclusive of cash.

The information contained in this commentary is not investment advice for any person. It is presented only for informational purposes to assist in explaining factors that may have had an impact in the past or may have an impact in the future on client portfolios or composites. All expressions of opinion reflect the judgment of the firm on this date and are subject to change. Included information has been obtained from sources considered reliable, but we do not guarantee that the foregoing materials are accurate or complete. Investors should contact Ulland Investment Advisors for individualized information prior to deciding to participate in any portfolio or making any investment decision. Ulland Investment Advisors does not provide tax advice. All investors are strongly urged to consult with their tax advisors regarding any potential investment.

Performance quoted is past performance. Past performance is not indicative of future performance. There is always a possibility of loss. Current performance may be lower or higher than performance shown. Differences in performance versus the indices/funds may be attributable, in part, to differences in the asset make-up of the strategy vs. the indices/funds. Performance calculations are based on the reinvestment of dividends and gains unless these amounts were paid out to the client. Performance is subject to revision. See www.ullandinvestment.com for important strategy disclosures.

This does not constitute a recommendation of any investment strategy or product for a particular investor. Investing involves risk; principal loss is possible. Investors should consider the investment objectives, risk, charges, and expenses of the strategy carefully before investing. This and other important information can be obtained by contacting Ulland Investment Advisors.

 

 

Ulland Investment Advisors

4550 IDS Center · Eighty South Eighth Street · Minneapolis MN 55402 · Telephone: 612-312-1400 · Facsimile: 612-204-3464