Current Market Observations

by William Henderson, Vice President / Head of Investments
Markets ended mixed last week with the broader markets closing higher and the technology-heavy NASDAQ closing lower on the week. For the week that ended May 7, 2021, the Dow Jones Industrial Average gained +2.7%, the S&P 500 Index rose by +1.2% and the NASDAQ fell by –1.5%. On the heels of a weak jobs report and resultant flight to quality, the 10-year U.S. Treasury Bond fell by six basis points to close the week at 1.58%. Value stocks, led by energy, materials and financials proved to be the best performing sectors, while growth stocks and utilities underperformed. While the NASDAQ struggled, we saw record levels hit on the Dow and the S&P. Year-to-date, the Dow Jones Industrial Average has returned +14.3%, the S&P 500 Index +13.3% and the NASDAQ +6.9%. 

As mentioned, the latest U.S. jobs figure, released last week, reported just +266,000 new jobs created in April 2021 vs. Wall Street Economists’ estimate of +1,000,000. In the annals of forecasting this was a huge miss, and a lot of uncertainty remains around the weak job numbers. Certainly, forecasting in the age of the COVID-19 Pandemic, is not a simple predictable science. Shortages of microprocessors and lumber could explain some of the job losses as they likely caused cancelled or delayed business production. Further, the relative generosity of unemployment insurance benefits for low-wage workers could be discouraging the jobless from accepting certain offers. Uncertainty in jobs reports will likely continue as a combination of varied openings of state economies and slowing vaccine distribution weigh heavily on hiring by leisure-related industries. 

Despite the weak job market, investors overall were pleased because the weakness further supports the Federal Reserve’s stance on interest rates, essentially assuring rates remain low for longer, which is generally good news for equities. Federal Reserve Chairman, Jay Powell, remains committed to seeing average inflation of 2% before raising interest rates. We are certainly seeing signs of inflation especially in certain building related commodities. Copper, lumber, and iron ore all hit new all-time highs last week; and Brent Crude Oil ended the week 2% higher, putting the price of a barrel of oil at just under $70.The chart below from the Federal Reserve Bank of St. Louis, shows the breakeven inflation rate derived from the yield on the 10-year U.S. Treasury and the level at which market participants “expect” inflation to be over the next 10 years. Higher or increasing spreads, as is evident in the chart, represents higher inflation expectations.    

Unsteady job reports, inflation concerns, and lingering pandemic worries weigh heavily on the markets, but the Fed remains committed to a strong recovery. We are certainly seeing healthy data from corporate America. So far, according to Goldman Sachs, 68% of first quarter results of S&P 500 companies reported earnings that beat expectations. While this is strong performance, the markets are more focused on future guidance and that is where uncertainty continues. Travel and leisure services are gaining strength and opening at faster rates than expected. To that end, the consumer remains poised to contribute to the economic recovery in a big way. Cash on hand and savings accounts remain at record high levels. Shown again in the graph below from the Federal Bank of St. Louis on M2 – Money Stock (sum of bank deposits and retail money market funds). 

Current Market Observations

by William Henderson, Vice President / Head of Investments
As is typical in any protracted bull market, major stock indices took a pause last week. As a result, we saw some selling of equities with negative returns across all three market averages. For the week that ended April 23, 2021, the Dow Jones Industrial Average fell by -0.5%, the S&P 500 Index lost -0.1% and the NASDAQ fell by -0.3%. Profit taking and selling are typical in any market especially in one that has produced such strong results since the bottom of the pandemic in March 2020. Year-to-date returns on all market indices remain solidly in the green column; with the Dow Jones Industrial Average returning +11.9%, the S&P 500 Index +11.8% and the NASDAQ +9.0%. There were whispers of a Biden-led capital gains tax increase throughout the week and demand for less risky U.S. Treasuries stayed steady. The 10-year U.S. Treasury Bond closed the week at 1.58%, unchanged from the previous week. The market still has the facets needed to sustain favorable returns going forward. Interest rates are low, fiscal stimulus is strong, corporate balance sheets are in great shape and the vaccination rate continues to increase. Quarterly earnings seasons got into full swing last week and most reports provided evidence that the economy is gradually moving to a post-pandemic environment. The last remaining market sector to continue exhibiting weakness: travel and leisure, showed a few glimmers of hope last week. Although major airlines, including Southwest, American and United, posted weak quarterly earnings, they reported seeing significant pick up in travel demand as greater numbers of people are vaccinated and therefore becoming more comfortable traveling.   

The U.S. Labor market continued to show renewed strength. According to the Department of Labor and Federal Reserve Bank of St. Louis, initial unemployment claims fell to the lowest level since the onset of the pandemic in March 2020. 

While labor and manufacturing are showing renewed strength, the recovery in services on the back of vaccination efforts and the gradual lifting of social distancing measures should lead to accelerating growth over the remainder of the year for rest of the economy.   

This week we have a rush of tech stock earnings reports including Tesla, Facebook, Amazon, and Google. These reports will give us a view forward to the full year of earnings if recent strength in the sector is able to continue its run.  

Consumers have cash on hand and healthy personal balances sheets to fuel the economic recovery well into 2022 especially if the vaccination rate accelerates and travel and leisure returns to a normal level. Market setbacks like rumors of capital gains tax increases are visible risks that always present themselves in the short run. We like to be concerned about the long run and staying invested and staying the course is the right plan. 

Quarterly Commentary – Q1 2021

View/Download PDF version of Q1 Commentary (or read text below)

Fixed Income
Fixed income securities declined, in aggregate, during Q1 2021, as interest rates rose; bonds prices fall when rates increase. The 10-year treasury bond, the most widely referenced proxy for U.S. interest rates, has nearly doubled during the first three months of the year, from 0.95% to 1.65%. While the increase has been sharp and brisk, rates remain extremely low relative to historical standards. For perspective, in the near-decade leading up to the 2008 financial crisis, the 10-year government bond resided around 5%. Rates have remained structurally lower post-2009, but in the year or two pre-COVID, the 10-year was at 2-3%.

Low interest rates facilitate economic activity because they mean that it is cheap to borrow money. Borrowed money is used to finance businesses and personal expenditures, thereby buoying economic output. Moreover, fixed income represents the prime alternative to equities; low rates are less appealing than high rates, all else equal, to investors, and therefore, when rates are low, demand for – and therefore, the price of – equities tends to be elevated. The main risk to the low rate paradigm is inflation; should inflation materialize at a rate greater than that of current expectations, the Federal Reserve will likely hike rates. Higher rates curb inflation because it boosts the expected return on savings, thereby encouraging investors to park money away rather than spend it (and hasty spending is the driver of inflation). For now, inflation expectations remain moderate, around 2%; in turn, rates are likely to remain relatively low.

Equities
The S&P 500, Dow Jones Industrial Average, and Nasdaq 100 were up approximately 6%, 9%, and 3%, respectively, in the first three months of 2021. The Dow’s leadership – and the Nasdaq’s lag – are a reversal from 2020, during which time the tech-heavy Nasdaq outperformed the industrial-laden Dow. Clearly, in 2020, tech stocks benefitted from “stay-at-home” trends; in 2021, however, travel and leisure are set to uncoil as the American population gets vaccinated.

As touched on above, stocks are benefitting from an accommodative interest rate environment in which investor demand for fixed income is muted owed to low rates. On top of this, the tremendous volume of fiscal stimulus combined with reopening trends imply a highly favorable 2021 outlook for U.S. corporations.

Outlook
As of mid-April, between 25-30% of the U.S. population has been vaccinated. The pace of inoculation is highly encouraging and suggests that sometime during the summer, a great enough portion of Americans will be vaccinated such that “normalcy” – or something resembling it – will resume. Reflecting the pent-up demand that will be truly unleashed, economists believe U.S. GDP could be as high as 6% during 2021, the most productive economic year in America since the 1980’s. While equity valuations appear high relative to historical figures, the stock market is not expensive compared to fixed income, the more salient measure. As fiscal stimulus flows through the economy and amplifies the pent-up demand, corporate earnings are likely to increase meaningfully and support current stock prices. As discussed, the key risk facing financial markets is inflation, because high inflation would likely force rates up, hindering equity valuations. At this point, though, we note that inflation expectations remain moderate and therefore, inflation is unlikely to interfere with the near-term outlook.

Current Market Observations

by William Henderson, Vice President / Head of Investments
The market continued its hot streak with yet another week of positive gains across all three major indices. For the week that ended April 16, 2021, the Dow Jones Industrial Average returned +1.2%, the S&P 500 Index gained +1.4%, and the NASDAQ moved higher by +1.1%. Year-to-date gains moved higher as well, with the Dow Jones Industrial Average returning +12.3%, the S&P 500 Index +11.9% and the NASDAQ +9.2%. Strong demand from international investors for U.S. Treasuries pushed bond yields lower again even as the economy is exhibiting considerable evidence of a powerful rebound in 2021. The 10-year U.S. Treasury Bond closed the week at 1.58% down another eight basis points from the previous week.   

The past week’s gains were widespread with the market showing strength and breadth of performance across several industry sectors including healthcare, retail, and industrial names. Widespread gains across industry sectors is a sign that the market is healthy with strong participation by many companies and industries rather than just a few names. See the chart below from Cornerstone Macro showing the Breadth of the Market in terms of the percent of stocks in the S&P 500 above their 150-day moving average.

Evidence of the economic rebound was present in several places last week. According to Bloomberg, retails sales rose by 9.8% in March compared with February; this was the one of the largest paced gains in 30 years. The jump in sales was driven by consumer spending as stimulus checks continued to hit personal bank accounts. The more favorable news was that easing of COVID-19 lockdown restrictions and progress in vaccinations allowed consumers to resume their old spending habits. Spending was spread among many retail sectors such as clothing stores, motor vehicle sales, and restaurant and bars. 

The green shoots in consumer spending could be just the beginning of a spending juggernaut that will unfold as more sectors of the economy open and the vaccination rate increases. The U.S. personal saving rate, as reported by the Federal Reserve Bank of St. Louis, currently 14%, stands nearly twice its pre-pandemic level of 8%. If consumers simply reduce their savings to the former level and resume historic spending patterns a strong economic rebound is on the near horizon.  

Lastly, corporate earnings releases for the first quarter of 2021 began last week with several major banks reporting their first-quarter results. According to Bloomberg, profits for all 13 major banks easily exceeded Wall Street analysts’ expectations, driven by lower credit costs, active trading, and investment banking activity. Banking is the backbone of economic activity as lending to companies allows for growth and investment. Federal Reserve Chairman Jay Powell is committed to keeping rates low for as long as necessary to force an economic recovery. Low rates allow banks to borrow low and lend high – a simple equation for success and growth.

Low rates, consumers flush with cash, and widespread COVID-19 vaccine distribution continue to propel the economic recovery. The breadth of the recovery among economic sectors and across equity markets is pointing to the next phase of our economy when we move from recovery to expansion. 

Current Market Observations

by William Henderson, Vice President / Head of Investments
We saw another strong week of positive returns across all three major market indices, adding to already solid year-to-date gains. For the week that ended April 9, 2021, the Dow Jones Industrial Average returned +2.0%, the S&P 500 Index gained +2.7%, and the NASDAQ moved higher by +3.1%. As noted, the gains in all three broader market indices added to decent returns thus far for the full year. Year-to-date, the Dow Jones Industrial Average has returned +10.4%, the S&P 500 Index +9.9% and the NASDAQ +7.9%. Following a full quarter where we saw value stocks, best represented by the Dow Jones Industrial Average, out-perform growth stocks, markets came closer into balance with growth stocks posting a strong finish. Lastly, after commentary by Federal Reserve Chairman, Jay Powell about keeping rates lower for longer, the 10-year U.S. Treasury Bond fell six basis points to 1.66%. As recently as March 31, 2021, the 10-year U.S. Treasury Bond stood at a one-year high of 1.74%, as investors believed the strong economic recovery would push interest rates higher.  

We continue to see investor assets flow into the equity markets. The so called “TINA” trade – There Is No Alternative – certainly seems to be playing out in full force right now. With interest rates so low and returns on fixed income securities anemic, cash is flowing only one place – the equity markets. See the chart below by CNBC using data from Bank of America, where inflows to global equity funds over the past five months exceed those of the prior 12 years. 

The markets are taking their cues from strong monetary support by the Fed and record fiscal report by the government in the form on multiple trillion-dollar stimulus packages. Further, JPMorgan Chase CEO, Jamie Dimon, said in his annual shareholder letter that an economic boom could easily run into 2023. The combined impact of stimulus support, vaccine distribution and record amounts of cash on the sidelines held by investors and consumers is fueling an economic rebound that could be as strong as +9% in GDP growth in 2021.

In a nod to adding validity and importance to cryptocurrencies, Coinbase Global, Inc., the fastest growing cryptocurrency exchange announced its intent to go public this week with a massive $100 billion valuation. If the IPO goes as planned, Coinbase will cement itself at the “Big Board” of U.S. cryptocurrencies. Coinbase has 56 million verified users and has been adding as many as 13,000 new retail customers a day. Coinbase isn’t a cryptocurrency itself like Bitcoin, rather it is simply an exchange where cryptocurrencies are traded and thereby producing trading fees. Cryptocurrencies and exchanges are not yet regulated like banks or trading firms and carry a higher degree of risk and complexity. Watch for regulators to continue to pay very close attention to this market and eventually impose a needed level of regulation.  

The economy has all the tools for the continued strong rebound from the COVID-19 pandemic recession in 2020. Retail and institutional investors are “all-in” on the market and massive piles of cash fuel the markets and the economy. As vaccine distribution reaches more consumers, the last sectors of the economy, travel & leisure, will explode and could create a labor shortage as those sectors require a lot of employees to operate effectively. Inflation seems like a distant pipe dream of Fed Chairman Powell, and he wants to see it before raising interest rates. 

We covered a lot this week. Please reach out to your Financial Advisor to discuss any topics further, or for specific market-related questions.   

Current Market Observations

by Maurice (Mo) Spolan, Investment Research Analyst

The S&P 500 and Dow Jones Industrial Average were both up modestly last week, 1.6% and 1.4% respectively, while the tech-heavy Nasdaq 100 was flat and International and Emerging Market equities trended lower. Bond prices rose as interest rates declined slightly; interest rates have risen quite a bit in 2021 but remain very low from a historical perspective. The 10-year U.S. Treasury note ended the week at 1.66%.

The blockage in the Suez Canal is disrupting as much as 12% of global trade. This supply constraint has also facilitated a rise in the price of oil, which is now above $61. Oil prices have recovered considerably since the pandemic’s outset and may settle at this higher level as demand for travel accelerates upon reopening throughout 2021. The giant container ship bocking the Suez Canal seems to have finally been cleared but the impact to the global supply chain is unclear.

President Biden is increasing his vaccination target, up to 200 million doses administered in his first 100 days in office, from an initial goal of 100 million. Estimates show that 14% of Americans are fully inoculated and 26% of residents have received at least one dose.

The economic outlook remains extremely favorable as both monetary and fiscal stimulus are highly accommodative, and the vaccine roll-out accelerates. As pent-up demand is unleashed, 2021 may end up being one of the most lucrative years in American economic history.

Current Market Observations

by William Henderson, Vice President / Head of Investments The markets took a pause last week with a brief pull back, and all three indices posted negative returns.  For the week that ended March 19, 2021, the Dow Jones Industrial Average returned –0.5%, the S&P 500 Index lost –0.8%, and the NASDAQ fell by –0.8%. The minor pull back did not reverse the positive returns across the market on a year-to-date basis. Year-to-date, the Dow Jones Industrial Average has returned +6.6%, the S&P 500 Index +4.2% and the NASDAQ +2.5%. We continue to see the natural divergence occur between growth (technology) and value (industrial) stocks as the economic recovery gets underway. Treasury yields continue to put pressure on the markets as yields are slowly moving higher each week, which is another typical pattern seen as the economy comes out of a recession. Last week the 10-year U.S. Treasury Note moved higher in yield by six basis points to 1.69%. At year-end 2019, prior to the pandemic and during a very strong and growing economy, the 10-year U.S. Treasury Note stood at 1.91%.  As the economy recovers from the “Black Swan Event,” of COVID-19, the markets are simply reverting to their traditional patterns of performance. 

The Federal Reserve concluded its two-day meeting last week and announced a widely expected continuation of its policy to keep interest rates unchanged at zero to 0.25%.  Relative to the December Fed meeting, more committee members expected higher rates by 2023 year-end. Still, the majority anticipate a policy hold through 2023. On the economic front, the Fed upgraded its near-term economic growth and recovery outlook to 6.5% in 2021. The Fed is seeing all the positive headwinds behind an already strengthening and recovering economy and adjusting their estimates higher. As we have written repeatedly, there is $20 trillion of cash in bank deposits, commercial accounts, and money market funds; fiscal and monetary policy are fully behind the economy; and the COVID-19 vaccine is being widely distributed nationwide. A primed consumer is ready to spend! 

A brief glance at the chart below shows the Gross Domestic Product of the United States since 1950 as reported by the Federal Reserve Bank of St. Louis. The pandemic dip in GDP is clear, but so is the recovery. Plus, the Fed is on the low side of GDP estimates for 2021 when compared to most Wall Street economists who are predicting numbers as high at 9-10%.   

Our VNFA Founder and Chairman, Tom Riddle, recently mentioned a market anecdote to me that I thought was interesting: “The stock market is like a Yo-Yo on an escalator, and the media wants you to focus on the Yo-Yo but you should focus on the escalator.” Remember to speak with your financial advisor often so you remain focused on the escalator. 

Current Market Observations

by William Henderson, Vice President / Head of Investments
The markets posted a strong week with all three major averages gaining last week. For the week that ended March 12, 2021, the Dow Jones Industrial Average returned +4.1%, the S&P 500 Index gained +2.6%, hitting a new record, and the NASDAQ gained +3.1%. With last week’s positive returns included, year-to-date, each index stands well into positive territory. Year-to-date, the Dow Jones Industrial Average has returned +7.1%, the S&P 500 Index +5.0% and the NASDAQ +3.1%. The Dow and S&P 500 continue to diverge from the NASDAQ as value stocks shine a bit more than traditional growth stocks. Higher yields on U.S. Treasury bonds are also impacting growth stocks as they weigh heavily on price/earnings multiples – a gauge of equity valuations. These returns are indicative of a strong recovery as growth stocks, which are best represented by the NASDAQ, initially lead the market out of a recession; and value stocks, represented more closely by the Dow Jones Industrial Average, tend to accelerate once the recovery is well under way. Last week, the 10-year U.S. Treasury Note moved higher in yield by three basis points to 1.63%. 

The latest $1.9 trillion stimulus package is in the books and direct deposits will be hitting consumer bank accounts as early as this week. The Federal Open Markets Committee (FOMC) under the leadership of Fed Chairman Jay Powell, holds it two-day meeting this week but there is no indication that Powell will lift the pedal off the monetary stimulus in the form of zero interest rates. Beyond stimulus, we are seeing the pace of COVID-19 vaccine distribution accelerate. As of last Friday, more than 100 million doses had been administered to Americans. President Biden is committed to May 1 as the date for states to make vaccine shots available to all Americans. It is getting harder for investors to bet against a very strong and sustained economic recovery throughout 2021. The economic recovery is evident in new sectors of the economy. Last week’s market winners included retailers such as Macy’s, L Brands, and Kohl’s, big airlines, and some of America’s stalwart manufacturers, including Boeing, Caterpillar, Ford, and GM. Several economists, including Cornerstone Macro, are predicting 9%-10% GDP growth in the second half of 2021. 

According to the Federal Reserve Bank of St. Louis, the Financial Stress Index has moved well below pandemic levels. This Index is the weekly average of yields, credit spreads, interest rates and other financial indicators. A higher index level suggests severe market disruptions (see chart). The value was close to zero again, thus indicating a return to normal financial market conditions.   

SOURCE: Federal Reserve Bank of St. Louis, St. Louis Fed Financial Stress Index [STLFSI2], retrieved from FRED, Federal Reserve Bank of St. Louis, March 13, 2021.

Everything seems in place for a mid-summer reopening of the economy and herd immunity reached nationwide around the same time. The markets clearly recognize that fact and are looking to continue EPS growth and a solid performance in 2021. Stock market corrections and repricing are common in long bull markets, but they are also indicative of a healthy market.

Current Market Observations

by William Henderson, Vice President / Head of Investments

Markets ended mixed last week with the broader indices posting slight gains while the tech-heavy NASDAQ posted a loss. For the week that ended March 5, 2021, the Dow Jones Industrial Average returned +1.8% and the S&P 500 Index gained +0.8%, while the NASDAQ fell by -2.1%. Year-to-date, each index remains just in positive territory. Year-to-date, the Dow Jones Industrial Average has returned +3.3%, the S&P 500 Index +2.6% and the NASDAQ +0.4%. These returns are indicative of a strong recovery as growth stocks, which are best represented by the NASDAQ, initially lead the market out of a recession; and value stocks, represented more closely by the Dow Jones Industrial Average, tend to accelerate once the recovery is well under way. 

Treasury bond yields continued to rise last week as the 10-year U.S. Treasury Note moved higher in yield by six basis points to 1.60%. Improving economic data and the imminent passing of the $1.9 trillion stimulus program both contributed to the sell-off in Treasuries. Last week saw a sharp reversal of equities on Friday as the US Bureau of Labor Statistics released a strong jobs number on Thursday. The domestic economy added 379,000 jobs in February, exceeding Bloomberg-surveyed economists’ forecasts for a 200,000 gain. The strong rebound in jobs, even before the economy fully reopens, is showing the full depth and breadth of the economy’s V-recovery. Further, Cornerstone Macro’s economist is predicting job gains in 2021 to average 500k per month and for Real GDP to approach 8-10% this year.

Inflations remains benign even in the face of higher oil prices. The spot price of WTI (West Texas Intermediate Crude) reached $52/barrel last week, a six-month high. This is what happens when you turn off or shrink the U.S. oil production spigot (think Keystone XL Pipeline, fracking and limited further drilling on federal lands.) 

Conversely, solar and wind projects continue to set a rapid pace as the U.S. Energy market slowly but deliberately converts to renewable sources of energy from fossil fuels. Cornerstone Macro expects combined energy output from wind and solar to move from 12% in 2020 to 30% in 2030.   

It is important to remember that a strong economy is always more important than oil prices and the fear of rising interest rates. Fed policy of near zero on short-term rates coupled with continued fiscal stimulus assistance are aiding the strong economic recovery we are seeing in 2021. The strong jobs number we saw last week is just the beginning. As the COVID-19 vaccination reaches more and more people, the travel and leisure sector of the economy is expected to bounce back as consumers are finally offered the opportunity to spend their squirreled away savings.   

Current Market Observations

by William Henderson, Vice President / Head of Investments
It was a rough week for Wall Street as higher bond yields caused investor concern. U. S. Treasury yields moved to their highest level since January 2020. U.S. Treasury Note closed the week at 1.54%, up 17 basis points from last week. For the week that ended February 26, 2021, the Dow Jones Industrial Average fell by -1.8%, the S&P 500 Index fell -2.5% and the tech-heavy NASDAQ fell by -4.9%. However even considering last weeks loses, all three averages remain in positive territory for the year. Year-to-date, the Dow Jones Industrial Average has returned +1.4%, the S&P 500 Index +1.7% and the NASDAQ +2.5%.

Rising bond yields generally point to an economic recovery, however, a rise in rates also increases corporate and consumer borrowing costs, which when taken alone can undermine the recovery, especially if rate rise too quickly. Last week’s move in the 10-year U.S. Treasury Note to 1.54% was a notable one because its yield now matches the yield on the S&P 500 Index.  This so called “inflection point” often causes a move from risky stocks to risk-free treasuries, where an investor can get the same yield without the gyrations that accompany investments in the stock market. On the other hand, increasing yields and a steepening yield curve (the measure of yields between overnight rates and the 10-year U.S. Treasury) helps banks, insurance companies, and other financial institutions as they now borrow low (based on short-term rates) and lend high (based on long-term rates). Last week, Fed Chair Jay Powell, committed to keeping short-term rates anchored at 0% for as long as needed to assure the economy fully recovers.

Vaccine distribution, production, and the release of an additional vaccine from Johnson & Johnson, are stifling the COVID-19 headwinds and cases worldwide dropped again last week. The Biden Administration is on track to deliver another whopping $1.9 trillion stimulus package as early as this week, while talking up yet another stimulus package shortly thereafter. Fiscal and monetary stimulus is unparalleled in response to the pandemic and we expect it to continue even as we move to a “normally” functioning economy.

We would be remiss if we did not point out the performance of the consumer. The Personal Saving Rate according to the Federal Reserve Bank of St. Louis, stood at 20%, significantly higher than pre-pandemic levels which were closer to 7%.

Further, again as reported by the Federal Reserve Bank of St. Louis on February 26, 2021, Real Personal Consumption Expenditures on Durable Goods reached a record $2.2 billion in January 2021. Durable Goods are represented by longer-lasting items, such as cars and washing machines; and personal consumption drives almost 70% of the U.S. economic output.

When the vaccine gets more widely distributed and herd immunity is reached, the consumer will be released to impact the hardest hit sectors of the economy such as travel and leisure. 

Some Wall Street economists are predicting second half GDP growth estimates well above 6%. Corrections in the markets like we saw last week, are expected and healthy for a well-functioning stock market. The best antidote for market corrections is a long- term outlook and a well-diversified portfolio.