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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.

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