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Weekly Market Update for December 3, 2021

by Jim Ulland

The CEO of BioNTech, Pfizer’s vaccine partner, said the current generation of vaccines will likely still protect against severe disease in people infected with the Omnicom variant. He added, people should not “freak out.” But the market did freak out this week and fashioned the biggest two day selloff in 14 months.

We think little has changed. The economic recovery grinds higher fueled by the largest government stimulus in history. The Fed insists it will keep rates low and the market saw the 10 Yr Treasury fall from 1.47% to 1.355%. Covid infections should decline into the New Year. The CDC says 81% of US residents over 12 are vaccinated. Corporate earnings have been surprisingly good and trending higher. Inflation and the supply chain bottlenecks are slightly better especially with the fall in the price of crude oil by 21% from its peak earlier in the quarter.

The Omicron variant dominated the week. There was so little data, that it was hard to disprove worst case predictions. Australia’s Chief Medical Officer said there is no evidence that Omicron is more deadly than other strains. He added that all cases in Australia have been very mild or with no symptoms. Perhaps the benefit of this latest scare is that more will become vaccinated or get the booster. The public does not have any appetite for more lock-downs, so we are in a “manage the problem” mode. The market should get to that point of view next week. Hard data will come in two weeks on vaccine effectiveness.

Other economic data was mixed. Unemployment filings were the lowest since 1969. The net new jobs report was below expectations, but this may have been caused by a reluctance for workers to return to work. That said, 210,000 jobs were added, hourly wages went up, and the unemployment rate fell. Congress even passed a bill to keep funding government, but only at the last minute. The debt ceiling drama will be next.

We expect market volatility to be less next week especially after the roller coaster this week. The market still has healthy gains for the year and December is often one of the market’s best months.

For the week, the S&P 500 was down -1.22%, and the NASDAQ -2.62%. Monday the S&P 500 was up +1.32%, Tuesday -1.90%, Wednesday -1.18% Thursday +1.42%, and Friday -0.84.

Next week should produce some facts to help guide Omicron opinions. The unknown almost always is more troublesome than the known.

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.

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