We are excited to introduce the new YourFinancialChoices.com website. The updated site has the complete archive of the show’s 10+ years on WDIY 88.1FM so you can listen any time.
The show is live on WDIY and wdiy.org on Wednesday evenings from 6 p.m. to 7 p.m. During live shows, Laurie Siebert takes calls with questions on any financial topic. She also accepts questions via the website to address during the show.
Head of Investments Bill Henderson and CEO Matt Petrozelli discuss the current forecast as we prepare to step into 2021. WATCH NOW
by William Henderson, Vice President / Head of Investments
Last week’s holiday-shortened trading week allowed markets to close the week with mixed results. The Dow Jones Industrial Average and the S&P 500 Index both show negative returns for the week at -0.34% and -0.52% respectively, while the NASDAQ closed in positive territory at +0.31%. Year-to-date, the Dow has returned +8.3%, the S&P 500 +16.7%, and the NASDAQ Composite +44.0%. 2020 continues to provide investors with strong returns across the broader markets despite historic headwinds.
President Trump signed the $900 billion COVID-19 Stimulus Bill which eventually sends $600 to eligible Americans as part of the relief package. This recent stimulus package coupled with the distribution of the COVID-19 vaccine and a willing and able FED providing market liquidity continues to fuel the strong economic recovery. These obvious tailwinds will be present in 2021 as well, and many economists are now predicting a strong GDP growth estimate for 2021. We talk more about this in our 2021 Outlook video above. Short trading days, second-string trading desks and actions like tax lost harvesting and window dressing by portfolio managers could move this week’s thinly traded markets lower even in the face of positive news. At worst, results will be confusing.
THE NUMBERS
Sources: Index Returns: Morningstar Workstation. Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. Three, five and ten year returns are annualized. Interest Rates: Federal Reserve, Mortgage Bankers Association.
MARKET HEAT MAP
The health of the economy is a key driver of long-term returns in the stock market. Below, we assess the key economic conditions that we believe are of particular importance to investors.
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US ECONOMY |
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CONSUMER HEALTH |
NEUTRAL |
GDP increased at a 33.1% annualized pace in Q3. The U.S. economy has now recovered about 2/3 of its output lost to the COVID-19 pandemic. |
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CORPORATE EARNINGS |
NEUTRAL |
In Q3, S&P 500 earnings were down 7-8% from the year-ago period. This compares to Q2 2020, in which S&P 500 earnings were down by 1/3 from the comparable 2019 quarter. |
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EMPLOYMENT |
NEGATIVE |
In November, the unemployment rate declined to 6.7%. This continued the month-over-month improvements seen since April, when the metric was above 14%. However, the pace of hiring slowed greatly in November as COVID-19 cases surged. |
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INFLATION |
POSITIVE |
The Fed plans to allow inflation to temporarily overshoot its 2% target such that the long-term average is 2%. Inflation has been tame since the Great Financial Crisis, less than 2%. |
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FISCAL POLICY |
POSITIVE |
Congress passed its second major fiscal relief package of 2020, the most recent one amounting to $900 billion in stimulus. President Trump, after a minor delay, signed the Stimulus Bill into law. |
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MONETARY POLICY |
VERY POSITIVE |
The Federal Reserve supported asset markets with unprecedented speed and magnitude in response to COVID-19. |
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GLOBAL CONSIDERATIONS |
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GEOPOLITICAL RISKS |
NEUTRAL |
There are few, if any, looming geopolitical risks that could upset the economic recovery. |
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ECONOMIC RISKS |
NEUTRAL |
Although economic activity mostly remains below 2019’s levels, improvement has occurred across nearly every measure since the April nadir. With multiple vaccines in distribution, a second fiscal package in place, and interest rates low, 2021 is positioning to be a strong economic year. |
The “Heat Map” is a subjective analysis based upon metrics that VNFA’s investment committee believes are important to financial markets and the economy. The “Heat Map” is designed for informational purposes only and is not intended for use as a basis for investment decisions.
“Resolve to keep happy, and your joy and you shall form an invincible host against difficulties.” – Helen Keller
Tune in Wednesday, December 30, 6 PM for a recorded episode of “Your Financial Choices” on WDIY 88.1FM: Laurie will return live on air in the new year on January 6, 2021, at which time she will take your questions live on the air at 610-758-8810, or address those submitted prior via yourfinancialchoices.com.
Recordings of past shows are available to listen or download at both yourfinancialchoices.com and wdiy.org.