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Weekly Market Update for November 5, 2021

by Jim Ulland

Pfizer rode to the rescue on Friday.  It announced a treatment for those with Covid symptoms that is 89% effective if administered within three days and 85% effective if within five days.  Pfizer’s drug can be taken in pill form.  It is targeted at those who are not vaccinated and become infected as well as “break-through” cases of those who have been vaccinated.  A week earlier, Merck had announced a treatment that was about half as effective.  These are the first two oral treatments as contrasted with more cumbersome and expensive injections.  Having a treatment may provide a pathway out of the current conflict where the government is mandating that employers essentially fire workers who are not vaccinated by the New Year.  The government mandate may be extended to employers with less than one hundred employees.  These employers and economists fear a loss of workers as a result, which would have a negative impact on the recovery.  In summary, the Pfizer treatment has the potential to end the pandemic.

Stocks trended up all week boosted by positive news.  Corporate earnings reports continued to be impressive.  CEOs stated that demand remains strong, margins have improved, and most have been able to manage supply shortages, a problem they see as peaking.  This was the last big week of earnings reports.

Other positive economic news came from the Fed, which implied it would not raise interest rates until the last half of 2022, if then.  They did say they will reduce their bond buying, which the market had expected.  Interest rates trended down after these remarks and continued down for the rest of the week.  Low interest rates are generally favorable for business, particularly if inflation can be kept under control.  The surge of inflation may be moderating as the supply chain starts to normalize slightly.

531,000 more jobs were reported for October and another 100,000 were added as figures from September were revised.  More jobs means more consumers to support the recovery.  Consumer savings remains high and will provide strength for future spending.

Congress insisted on staying in the news, but not because of its efficient or collaborative work.  Some House members took the position that they wanted to know what the new safety net legislation would cost before voting on it.  They were roundly criticized for such rational behavior.

The market focused on the good news and propelled the SP 500 and the NASDAQ to new highs.  For the week, the SP 500 was up +2.00% and the NASDAQ +3.05%. Monday the SP 500 was +0.18%, Tuesday +0.37%, Wednesday +0.65%, Thursday +0.42%, and Friday +0.37%.  Our recommendation is for investors to stay in this market and resist the urge to go to cash.

Next week earnings season largely will conclude.  Expect more positive results.  Firms have been buying back their shares and this too will help the market’s upward track. Don’t look for relief in gas prices since OPEC will only increase production slightly and US production has been slowed by government restrictions.  Last Tuesday’s elections have concluded but expect Congress to stay in full battle gear for now.

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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