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Weekly Market Update for December 31, 2021

by Jim Ulland

The week and the year ended on a positive note as the S&P 500 booked a couple more records.  News was light on everything but Omicron.  The variant was characterized by research from South Africa as having milder symptoms and fewer hospitalizations than its predecessors. The same limited data suggests that those who have had Omicron have strengthened immunity to the Delta variant. This gave cover to government officials who, knowing the public would not tolerate another set of lockdowns, did not announce them.  Holiday sales figures came in very solid and added to a positive quarter-end.  Unemployment filings continued to bounce along a fifty-year low.  The number of workers already on unemployment fell to low, pre-pandemic levels.  For those worried about a market crash or a recession, it is improbable to have either when everyone and their dog are working, inventories are low, and eleven million jobs are unfilled.

Fourth-quarter earnings reports will start in two weeks.  They will be good, although supply chain pressures will hurt some company results.  Consumer savings are high and some of these dollars have boosted demand.  Low inventories mean fewer mark-downs and expanded margins. Expanded margins mean better profits.  Better profits result in higher dividends, additional stock buy-backs, and more valuable share prices.  If interest rates stay in check and only move higher gradually, the market should do well as 2022 starts once it shakes off the drag of Omicron.  This week the 10-Yr Treasury hovered around 1.5%, still historically low and continuing to provide a favorable tailwind.

Intelligent Fixed Income (IFI), our popular fixed income strategy, ended the year with a return solidly over 5%, remarkable in this yield-starved environment. We will have comparative rankings soon and we expect to be very near the top for performance once again.  Today’s low interest rates have put a lot of pressure on those trying to generate meaningful income from their portfolio.  If you have an acquaintance or friend in this circumstance, we are delighted to explain the IFI strategy to them.

On Monday, the S&P 500 was up +1.38%, Tuesday -0.10%, Wednesday +0.14%, Thursday -0.30%, and on Friday -0.26%.  For the year the S&P 500 was up 26.89% and the NASDAQ +21.39%.   Quite a year.

Next Tuesday we will get some important information from the ISM Manufacturing Index followed on Thursday by the ISM Non-Manufacturing Index.  On Friday, the biggest economic news of the week will come from the December jobs report.   The jobs numbers may be pressured by the Omicron impact on travel, entertainment, and food and beverage.  Another chapter will be written in the inflation story in January.  With crude oil headed back up, don’t expect any relief at the gas pump.

Warmest wishes to all in this New Year.  We appreciate and value the opportunity to work with you.

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 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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