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Weekly Market Update for January 22, 2021

by Jim Ulland

The market anticipated a peaceful inauguration of President Biden and it was. Stocks went up the day before, the day of, and the day after the swearing in. The Senate went right to work and sent Janet Yellen’s nomination as the next Treasury Secretary to the Senate floor for approval. The least controversial of the other cabinet nominations are expected to follow shortly.

The market embraced another large stimulus bill proposed by the President. Since the $1.9T stimulus is all borrowed money and does not contain any liability protection for employers who acted in good faith in their handling of Covid, Republican senators were less enthusiastic. A compromise is expected.

The week’s Covid news was mostly positive. The disorganized distribution of vaccines is still an issue; however, the number of new cases and deaths have turned down. Pfizer and Moderna continue to ramp production.  As early as next month, they could be joined by J&J and AstraZeneca, if these vaccines are approved. J&J can produce large volumes of vaccines to help reduce wait times. Hospitals were relieved that the flu did not show up this winter because of all the hand washing and masks.

President Biden’s goal of bringing the country together will be complicated if the Senate goes forward with the first impeachment trial of a President who has completed his term in office.

Economic news was mixed. Unemployment filings decreased slightly although December job creation was negative because of the lockdowns. There were large job losses in bars and restaurants. This month may show weak construction numbers with the President’s cancellation of the XL Pipeline project permits and a halt to the construction of the southern border wall. Manufacturing continues to rebound as evidenced by a strong report from the Federal Reserve for the Mid-Atlantic states.

The major stock market indices set new records led by the NASDAQ. Initial corporate earnings for Q4 were above expectations. Interest rates, as represented by the 10Yr Treasury, eased, which was beneficial to our Intelligent Fixed Income strategy. For the week, the Nasdaq was up +4.19%. The S&P 500 was up +1.94%. On Monday, the market was closed, Tuesday the S&P was +0.81%, Wednesday +1.39%, Thursday +0.03%, and Friday -0.30%.

Measured remarks both to and from China helped Chinese stocks and American stocks with business in China. The reappearance of the wealthiest man in China, Jack Ma, who started Alibaba, was reassuring. Next week, earnings reports are numerous. Well-known names, not all of which we use, include Johnson&Johnson, 3M, Starbucks, Apple, Facebook, Tesla, and Visa. Each report will affect the prices of other companies in the sector.

Last year, investment performance was heavily influenced by the sector selection. Technology was the leader and continues that role in 2021. Energy was strong with OPEC’s production constraints, but this sector has under-performed for years and the new Administration is not carbon-friendly. “Green” stocks have gotten an early boost, but this year, more than most, it is a market of stocks, not a stock market. Stock selection is as critical as sector concentration. Next week, we expect to announce exceptional fixed income and strong equity performance for 2020.

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