by Jim Ulland

The market anticipated a peaceful inauguration of President Biden and it was. Stocks went up the day before, the day of, and the day after the swearing in. The Senate went right to work and sent Janet Yellen’s nomination as the next Treasury Secretary to the Senate floor for approval. The least controversial of the other cabinet nominations are expected to follow shortly.

The market embraced another large stimulus bill proposed by the President. Since the $1.9T stimulus is all borrowed money and does not contain any liability protection for employers who acted in good faith in their handling of Covid, Republican senators were less enthusiastic. A compromise is expected.

The week’s Covid news was mostly positive. The disorganized distribution of vaccines is still an issue; however, the number of new cases and deaths have turned down. Pfizer and Moderna continue to ramp production.  As early as next month, they could be joined by J&J and AstraZeneca, if these vaccines are approved. J&J can produce large volumes of vaccines to help reduce wait times. Hospitals were relieved that the flu did not show up this winter because of all the hand washing and masks.

President Biden’s goal of bringing the country together will be complicated if the Senate goes forward with the first impeachment trial of a President who has completed his term in office.

Economic news was mixed. Unemployment filings decreased slightly although December job creation was negative because of the lockdowns. There were large job losses in bars and restaurants. This month may show weak construction numbers with the President’s cancellation of the XL Pipeline project permits and a halt to the construction of the southern border wall. Manufacturing continues to rebound as evidenced by a strong report from the Federal Reserve for the Mid-Atlantic states.

The major stock market indices set new records led by the NASDAQ. Initial corporate earnings for Q4 were above expectations. Interest rates, as represented by the 10Yr Treasury, eased, which was beneficial to our Intelligent Fixed Income strategy. For the week, the Nasdaq was up +4.19%. The S&P 500 was up +1.94%. On Monday, the market was closed, Tuesday the S&P was +0.81%, Wednesday +1.39%, Thursday +0.03%, and Friday -0.30%.

Measured remarks both to and from China helped Chinese stocks and American stocks with business in China. The reappearance of the wealthiest man in China, Jack Ma, who started Alibaba, was reassuring. Next week, earnings reports are numerous. Well-known names, not all of which we use, include Johnson&Johnson, 3M, Starbucks, Apple, Facebook, Tesla, and Visa. Each report will affect the prices of other companies in the sector.

Last year, investment performance was heavily influenced by the sector selection. Technology was the leader and continues that role in 2021. Energy was strong with OPEC’s production constraints, but this sector has under-performed for years and the new Administration is not carbon-friendly. “Green” stocks have gotten an early boost, but this year, more than most, it is a market of stocks, not a stock market. Stock selection is as critical as sector concentration. Next week, we expect to announce exceptional fixed income and strong equity performance for 2020.

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.

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.

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.

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.