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Weekly Market Update for December 23, 2021

by Jim Ulland

On Monday, the market thought Omicron was the Black Plague.  By Tuesday, it looked more like the flu.  And that was the story of the week.  The S&P 500 overcame Monday’s loss and ended the week up a net +2.28% for a record high.  The NASDAQ did even better this week, up a net +3.19% but fell just short of a record.  Part of the turnaround news came out of South Africa where Omicron cases dropped sharply.  Their researchers suggested that the rapid spike up and now the spike down might be the pattern other countries will experience.  Pfizer provided some support to the market when its drug for the newly infected got FDA approval.  The drug can be taken at home, another advantage.

The public has no appetite for more lockdowns and school closings.  The Biden administration seemed to sense this public sentiment and encouraged schools to stay open.  Also the administration announced that new home Covid rapid test kits will be available to the public free.  Unfortunately, these were just ordered, so the delivery on this program may come well after the Holidays.

Economic news was on balance positive. Consumer confidence was higher than expect.  Unemployment filings stayed unusually low.  November existing-home sales were higher than October.  Durable goods orders were up.  November personal spending and income were both up. There was also some relief when Senator Manchin said he could not support the large spending bill Congress is considering.  His concern, shared by many, was that the spending was inflationary and would raise the deficit.  Also the bill contained an endless list of tax increases, which normally are a drag on the economy.  However, as they say in Washington, no bill is ever dead, so stay alert to this one.

Interest rates, as reflected in the 10-Yr Treasury, rose during the week, but still stayed in the 1.4-1.5% band.  There are some signs that the supply chain bottlenecks are diminishing, and that inflation may have peaked.  More data is needed to draw any hard conclusions.  30-Yr Treasury bonds are below 2%, which implies that the bond market does not anticipate runaway inflation.

Even with the rise in the 10-Yr Treasury, our fixed income strategy, Intelligent Fixed Income (IFI) was up.  With a week to go, it looks probable that the total return in our fixed income strategy will be between 4.5% and 5% for the year.  We expect these returns to be near the top of all managers of preferred stock strategies.  Our equity strategies generally were ahead of the market as well.

On Monday, the S&P 500 was down -1.14%, Tuesday +1.78%, Wednesday +1.02%, Thursday +0.62%, and on Friday the market will be closed all day.   Our office also will be closed.  We will be back on Monday for the last week of the year.  It should be quiet, but then that was supposed to happen during the tumultuous Thanksgiving week.

Warmest wishes as the year comes to close.  Give yourself a “booster” for a present.  There is little to be said for running unnecessary risks.

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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Ulland Investment Advisors

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