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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.

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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