Receive Weekly Market Updates via Email

shadow

Weekly Market Update for December 10, 2021

by Jim Ulland

Inflation is turning out to be less “transitory” than hoped.  Today’s CPI number confirmed this concern as the annualized inflation rate stayed over 6%, down slightly from October.  Labor still is in short supply, although more are returning to the workforce. Unemployment filings hit a 52 year low on Thursday and open jobs increased to eleven million. Housing is tight and rents are up.  Lumber prices are higher again.  With the continued inflation, at its meeting next week, the Fed is expected to reduce its bond buying program earlier than planned.  Bond buying has kept short-term interest rates lower than they would have been otherwise.

Of course, interest rates are influenced by more than the level of inflation.  The renewed Covid fears caused a steep drop in rates last week with some recovery this week. Pfizer announced high effectiveness of both its vaccine and its booster against the new variant.  Also, symptoms seem to be milder for those infected than from the initial Covid surge. This calmed the market.

Our preferred securities in our fixed income strategy IFI are up about 1% in December because of a stabilizing interest rate environment.  Equities also surged higher during the week.  The NASDAQ was up +3.61% and the SP 500 +3.82%.  The SP 500 exceeded its all-time high on Friday. The NASDAQ is 2.7% below its high.  Remember that if you are in cash, you are both going backward in purchasing power because of the inflation and you are missing a market that continues to move upward.

There are “black swan” events that could disrupt.  One of these apparently was resolved, an agreement to raise the government debt ceiling.  Other international events simmer.  Russia could invade the Ukraine and China could do the same with Taiwan, although probably not before the Olympics are over.  Other than these unlikely occurrences, we expect continued strong corporate profits, more stock buybacks, robust consumer balance sheets, historically low interest rates, and a gradual loosening of the supply chain bottlenecks.  Market volatility should diminish as the Omicron variant is managed.  One good result is that the increased concern about infection has encourage more to get vaccinated or boosted.

On Monday the S&P 500 was up +1.17%, Tuesday +2.07%, Wednesday +0.31% Thursday -0.72%, and Friday +0.95%.

Next week the news will focus on the Fed meeting.  Year-end tax planning is on many to-do lists.  Remember that if you are 72, you are required to take a distribution (RMD) from your IRA.  RMDs were not required last 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

shadow
 

Ulland Investment Advisors

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