Receive Weekly Market Updates via Email

shadow

Weekly Update Archives

Weekly Market Update for January 15, 2021

by Jim Ulland

The market spent the week being pulled in different directions by the headlines. After ignoring the world’s political events for the prior month, the market started to show some concern. The impeachment of the President added anxiety to already stressed-out investors. Rumors that the Biden inauguration would be disrupted contributed more stress.  The Covid-19 virus refused to make a graceful exit and instead renewed its attack on the public at the same time as the vaccination effort was looking disorganized.

The market’s view that things would be returning to normal by June was being rethought. President-elect Biden announced that “everyone would be paying their fair share” as he rolled out his big stimulus package. “Everyone paying their fair share” is political talk for a renewed effort to raise taxes. The market is still sorting out the ramifications of the sweep in the Georgia Senate runoff elections which gave complete government power to the Democrats, although the House and Senate are closely divided. This is good news for clean tech, electric cars, renewable energy, cities with budget deficits, retailers, and landlords who may see more rent checks.

The week’s directionless market did not disrupt the widely held belief that the vaccines would eventually win the battle with the virus. Biden’s plan does propose more money for vaccinations. Johnson and Johnson said that its vaccine was more effective than previously thought. Trial results will be released next month. Meanwhile, both Pfizer and Moderna were increasing production of their vaccines, which generally will be free to the public. Pfizer said, in a limited study, that its vaccine appeared to be effective against the new strain of the Covid virus as well as the current strain. Each day more people are getting vaccinated and those infected are both recovering and developing immunity. Soon the pandemic will become manageable, perhaps by late spring. The market knows this, and we feel it will continue to trend higher.

Earnings reports for Q4 started on Friday with several big banks reporting. Loan losses were down, profits were up, but revenues were below expectations. Bank stocks declined on the news. Higher interest rates increase bank profits, but rates too were down on Friday. On Thursday, the Fed restated its intention to hold interest rates low for quite a bit longer. The yield on 10 Yr Treasuries closed lower for the week helping fixed income securities and our IFI strategy, which uses preferreds, to end the week higher.

For the week, the Nasdaq was down -1.54%. The SP 500 was -1.48%. On Monday, the SP 500 was -0.66%, Tuesday +0.04%, Wednesday +0.23%, Thursday -0.38%, and Friday -0.72%.

Last week’s concern that Alibaba, Tencent, and Baidu would be delisted was resolved without casualties. Next week will be President-elect Biden’s inauguration. Let us hope it is peaceful. Earnings reports for Q4 will begin in earnest. Bank of America, Netflix, United Health, and US Bank are some of those who will report. We expect the earnings focus to be on next quarter rather than the past one, so any forecast CEOs provide will influence the market’s direction.

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 January 8, 2021

by Jim Ulland

What a tumultuous start to the year. The Democrats took control of the U.S. Senate by virtue of a double victory in Georgia and now control the House, the Presidency, and the Senate. The day following that election, there was a major protest at the US Capitol with loss of life. By week’s end several of President Trump’s cabinet officers had resigned and Speaker Pelosi was calling for another impeachment vote in the House. Through it all, the market powered on as if nothing unusual was happening. The market was focused on governors who were easing their lockdowns and vaccines that were being distributed more rapidly. Additionally, Pfizer’s vaccine which was judged by the company to be effective against new strains of the Covid virus.

The market feels that additional stimulus will be enacted by Congress. An infrastructure bill is now expected and likely to be bipartisan. All of this is encouraging for a recovery in corporate profits and GDP growth. Because none of the new expected stimulus spending is paid for, there is some concern about deficits triggering inflation and pushing interest rates higher. Some interest rate movement is beneficiary for our portfolios. The credit quality of banks improves as they earn more on idle deposits. Bank issued preferred stock is the core security in our fixed income strategy. Slightly higher rates mean that new issues will pay more. That said, the Fed is likely to prevail with its “lower for longer” policy approach to interest rates. Should rates continue to trend higher, we will reposition more of the portfolio to floating rate preferreds from fixed rate. This week our fixed income portfolios were negative with the rising rates. We view this as likely to be temporary.

Major market indices hit all-time highs this week. To do so, the market had to fight the headwind of the first monthly (November) job loss since April. The reimposition of lockdowns was too intense for job levels to hold. China-US tensions escalated as the State Department supported the delisting on US exchanges of several important Chinese companies such as Alibaba and Tencent, both investments in our equity portfolios. The Treasury Department opposed the delisting. Crude oil prices were higher on the news of a production cut from Saudi Arabia.

For the week, the Nasdaq was up +2.43%. The SP 500 was +1.83%. On Monday, the SP 500 was 1.48%, Tuesday +0.71%, Wednesday +0.57%, Thursday +1.48%, and Friday +0.55%.

Two weeks from now President-elect Biden will be sworn in. Prior to that, new cabinet officers will be announced. So far Biden has assembled many from his prior vice-presidential staff and from the Obama team. Lockdowns should continue to be reduced and the pace of vaccinations should increase. These are the factors feeding a positive market. We continue to see value in both equities and fixed income and encourage those with cash on the sidelines to put it to work.

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 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.

 

Ulland Investment Advisors

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