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Hope all is well with you and your family. Here is this week's market recap. The equity markets continue to perform a balancing act between incoming positive vaccine news and ever-growing economic restrictions aimed at curbing the recent spike in virus cases and hospitalizations. We received a series of positive vaccine announcements, first from Pfizer on 11/9, then from Moderna last Monday, and then from Pfizer again last Wednesday on the final results of its late-stage trial. This news propelled the S&P 500 to a new all-time high, before the rally fizzled later in the week on deteriorating coronavirus trends and weak jobs data. The near-term outlook is also worsening because of the renewed restrictions on activity. The market is attempting to balance this weakened near-term outlook against an improving medium- to long-term outlook due to the vaccine developments.
Market Rotation Continues The rotation out of the technology sector and into more cyclical stocks continued, as the vaccine developments improved investor sentiment and confidence about next year's outlook. A central theme in equity markets over the last two weeks has been the so-called rotation, or change in leadership across asset classes, sectors and investment styles. Leaders and laggards trade places – Technology stocks, growth-style investments, and stocks that benefit from the "stay-at-home" trends not only held up better during the pandemic-induced bear market, but have also led the market since the March bottom. However, the recent vaccine developments acted as a catalyst for the recent shift in the investment landscape, as confidence in the economic rebound strengthened. Cyclical sectors, like energy and financials, which have been negatively impacted by the pandemic and are more sensitive to the reopening of the economy, outperformed, while sectors that have benefited from the pandemic, like technology and communication services, lagged. A similar rotation occurred across asset classes, with small-cap and international investments outpacing U.S. large-cap investments. Investment styles were affected too, with value (dividend income) outperforming growth (capital appreciation). We are coming upon the end of 2020, a year many of us will be glad to turn the calendar on. We have all likely seen the Charlie Brown Thanksgiving special at some point in our lives and no matter how we are choosing to gather on Thursday I think it's wisdom rings especially true this year. Hope all is well with you and your family. The S&P 500 closed at a new record high and global equities posted a second week of gains following news of progress in developing a COVID-19 vaccine. Stocks surged on Monday after Pfizer and BioNTech announced that their vaccine had 90% effectiveness in their large study, triggering a wave of hope and optimism that a medical solution will address the health crisis and accelerate the economic recovery. Cyclical sectors that have been negatively impacted by the pandemic and are more sensitive to the reopening of the economy outperformed last week, while sectors that have benefited from the pandemic underperformed.  We Have A Vaccine A vaccine set a healthy foundation for Monday's rally, but it won't immunize the market from volatility. Gains were solid but not steady last week, with the S&P 500 rising 2.2% in see-saw fashion. The improved prospects for a vaccine establish a bit of a safety net under the market, but they won't prevent spells of weakness.  Second Wave Of The Virus? The spike in new COVID-19 cases and hospitalizations will likely be the key instigator of market swings in the weeks ahead. The strong rally in U.S. stocks since midsummer has been driven by progress in reopening the economy. The surge in infections stunts that progress, with several areas, including Chicago and New York, imposing tighter restrictions to mitigate the spread. We'll probably NOT return to the lockdown measures of earlier this year, but the pace of the rebound in economic activity is likely to stall somewhat in the coming months. Market sentiment will oscillate between vaccine optimism and near-term infection and reopening concerns.  Road To Recovery
The decade has not had the kind of start many expected or hoped for. However, the latest data signals the pillars of the recovery remain intact. Initial jobless claims last week fell to 709,000, the fourth consecutive weekly decline and the lowest reading since the pandemic began. This signals the continued healing of the labor market, which will be one of the most influential drivers of the sustained economic recovery. We could see the pace of improvement in hiring stall somewhat due to the recent surge in virus cases, but expect unemployment to decline further in 2021, supporting household consumption and an enduring economic expansion. More positive news, third-quarter corporate earnings came in ahead of expectations, with more than 80% of companies beating estimates by an average of 17%. There are signs that better days are coming. I am here to help at any time. If you would like to schedule a phone/web conference appointment, I have included a link to my calendar below and you can self schedule. For those of you who prefer an in person meeting I am scheduling in person meetings as well, please email me if you would prefer an in person appointment. https://booknow.appointment-plus.com/b8hh5y90/ Hope all is well with you and your family. I wanted to give a brief update. A week after dropping around 6%, the major U.S. stock indexes recovered that lost ground and then some. The S&P 500 and the Dow both jumped around 7% while the NASDAQ surged more than 9%. The economy and corporate earnings continued to show signs of improvement helping to spark a rally that came as coronavirus cases continued to surge and as election results continued to be counted.  Walkin' Back to Georgia
This weekend, Joe Biden was declared the winner although the President has yet to concede. The more important news for markets is in Georgia. In the words of the Jim Croce song: "Georgia; she's the only one who knows how it feels when you lose a dream and how it feels when you dream alone." Georgia has long been a Republican stronghold but with rapidly changing demographics Republicans may lose the dream of holding the senate. The state will be the site of two runoffs on Jan. 5 to settle which party will control the Senate. The post election rally can be attributed in part to investors’ hopes that the likelihood of a continuing partisan divide over control of the White House, the Senate, and the House. The hope was that a divided Congress might keep the favorable tax and regulatory environment intact. That result seems less certain today. I am here to help at any time. If you would like to schedule a phone/web conference appointment, with Stephen Caruso, Financial Advisor; CLICK HERE. For those of you who prefer an in person meeting I am now scheduling in person meetings as well, please email me if you would prefer an in person appointment. The Dow Jones Industrial Average jumped 700 points, or 2.6%. The S&P 500 traded 3.1% higher. The tech-heavy Nasdaq Composite popped 4.1%.
The market is higher as the blue wave that was forecasted did not materialize. However, proceed with caution there is volatility ahead. If you were thinking of reducing market risk now might not be a bad time to do so. My feeling is the worst case scenario for short term market volatility has played out. The President had a significant lead yesterday evening. The lead was big enough for him to feel comfortable claiming victory. However, his claims don't seem to be supported by the vote count, as he is currently trailing in Michigan, Nevada and Wisconsin. If Biden takes those 3 states he will have won the election regardless of Pennsylvania. What that sets up for is a protracted fight and recounts in the most closely contested states. I don't think today's rally is properly considering that scenario. The next few weeks will be very volatile, I am NOT advising to get out of stocks. We will get through this election cycle and the market will be fine. What I would suggest for those who might be nervous about the weeks ahead. Take a look at your retirement account (401k, 457, TSP, IRA,etc.) and if you have had a large increase then take 5 to 10 percent of it and move it to the sidelines in something like a stable value fund or short term government bonds. I am here to help at any time. If you would like to schedule a phone/web conference appointment, I have included a link to my calendar below and you can self schedule. For those of you who prefer an in person meeting I am now scheduling in person meetings as well, please email me if you would prefer an in person appointment. https://booknow.appointment-plus.com/b8hh5y90/
Hope all is well with you and your family. Last week marked the 11th time this year that the S&P 500 has closed more than 2% lower than where it started the week. The S&P 500 fell almost 6%, it was the worst weekly decline since March 20, and the sell-off was largely driven by news that daily coronavirus cases have hit new record highs, and by less certainty that we will see another round of fiscal stimulus this year. Notably, the technology sector, which has been a leader for much of this bear-market rally, was down 6.5%, making it one of the leaders in the decline this week. Some good news was the strong third-quarter GDP growth, a labor market that is continuing to recover, and consumer spending that is continuing to exceed expectations. I have broken down this week's commentary by hit singles from the Doors.
Riders On The Storm
The markets are experiencing a perfect storm of volatility. With days left before the U.S. election, a trifecta of worries around the political outcome, the path of the virus, and the lack of progress on another fiscal package weighed on stocks. Volatility jumped 40% from the prior weeks' level . The spike in volatility does not signal a 180-degree change in the long-term outlook for stocks, but rather reflects some nervousness around uncertainties that are likely to result in a slower, bumpier path ahead. 
Love Me Two Times
Election uncertainty persists. Will the American people love the President two times? The stock market hates uncertainty, and the presidential election poses a unique type of uncertainty in that it has a repeatable calendar-based frequency. The current political environment feels unique considering the growing partisan polarization, the pandemic and the economic backdrop. To the market the uniqueness of the election cycle matters not. Uncertainty drives volatility, and we have the prospect of a delayed outcome and claims of victory on both sides. Remember no matter what side of the political fence you're on it’s far too soon to know how close this year’s race will be. Delayed results will cause swings in the market. Not knowing who wins before midnight on Election night doesn’t mean something is wrong or that anything nefarious is taking place. It may mean only that the race is close, or that election officials are taking more time than our impatient minds might like to count the boom in advance votes. 
Break On Through
You might be tempted to try to run or try to hide but the right advice is to break on through to the other side of this election. Continue to hold your stocks through what will certainly be a bumpy couple of weeks ahead. Knee-jerk reactions are common but not necessarily smart for long term money. Since 1932 there have been 22 U.S. presidential elections. In 14 of those instances (64% of the time), stocks declined the day after the election, likely reflecting anxiety about the future because a large section of the population is unhappy with the outcome. Most of the post-election day returns have ranged between -1.5% to 0%, but there have been a few sizable declines, some of them taking place in recent history. Stocks initially dipped 5.3% after Obama's 2008 victory and 2.4% after his 2012 win. Stocks declined 4% in the early hours after Trump’s victory, as well. Historically, these post-election dips proved misleading and short-lived, with stocks quickly reversing course. Fundamental conditions set the tone for market outcomes - outside of the one-day post-election market reaction, which is inconsequential for long-term investors, stocks have risen one year after the presidential election in 16 out of the last 22 presidential elections (73% of the time). Over longer-time periods, fundamental factors such as economic growth, corporate profits and interest rate conditions are the more powerful and lasting determinant of performance. You don't need to go back too far into annals of history to find powerful examples. Since 1980 there have only been two instances where stocks produced negative returns one month, two months and six months following an election. They took place in 2000 (Republican president) and 2008 (Democrat president) with both declines being largely attributed to asset-price bubbles rather than politics. On the flip side, stocks recorded strong six-month and one-year returns following the 2012 (Democrat president) and 2016 (Republican president) elections, driven by improving economic data and rising earnings. This time around, while the range of outcomes is wide, the backdrop is positive, there is an improving labor market, record corporate profitability in the largest companies, and low interest rates. 
Touch Me
Touching is happening again and places throughout the world and the country seem like they are not afraid. The virus is spreading the resurgence of COVID-19 cases is a headwind that threatens to slow, but not derail, the recovery. The path of the virus poses unprecedented uncertainty to the economic outlook. Medical solutions (therapeutics or a vaccine) are likely necessary for a full return to normalcy and economic recovery. However, we know a lot more now about the virus and I don’t feel the recent uptick in cases will lead to a repeat of the conditions witnessed in the early stage of the pandemic. Economic damage from any new restrictions is likely to be contained, last week brought the news of renewed restrictions and lockdowns in France and Germany in order to deal with the pressure of mounting infections. Nonessential businesses like restaurants, bars, gyms and theaters will close for one month, but unlike the March and April lockdowns, schools and factories will remain open. In the US there is less of an appetite for a shutdown although I won't be shocked if we see more targeted and localized closures if the current virus trends continue. I am here to help at any time. If you would like to schedule a phone/web conference appointment, I have included a link to my calendar below and you can self schedule. For those of you who prefer an in person meeting I am now scheduling in person meetings as well, please email me if you would prefer an in person appointment.
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Hope all is well with you and your family. A three-week string of gains ended as the major stock indexes slipped around 1% entering the busiest stretch of what’s so far been a strong quarterly earnings season. Stocks couldn’t recover from a Monday decline fueled by a setback in congressional negotiations over a coronavirus relief package. The markets remain volatile and look to open down this morning. Here's what you need to know from last week broken down by Dirty Harry quotes.
You've got to ask yourself a question: 'do I feel lucky?
Treasury yields surged. Luck seems to be running out on the bond market as rates are finally starting to move higher. The yield of the 10-year U.S. Treasury bond climbed on Friday for a seventh straight trading day to an intraday peak of 0.87%, the highest level in more than four months. As recently as early August, the benchmark 10-year yield was as low as 0.52%. As I have stated numerous times before I am not a believer in bonds at this time. I think we will start to see bond prices fall as the trend interest rates will be to move higher. Borrowing money (refinancing mortgages) on the other hand at these low rates does still make sense. Go ahead. Make my day. Congress refuses to make the market's day. It was another on-again, off-again week on prospects for further congressional aid to deal with the coronavirus’ economic impact. The uncertainty extended into Friday, when a top White House economist said talks in Congress appeared to have stalled, sparking concern that another round of aid may not be approved before the November 3 election. Even without a relief package the economy appears to be regaining strength. A monthly indicator of U.S. economic activity signaled the fastest rate of expansion in 20 months for both the services and manufacturing segments of the economy. However, the survey data from the IHS Markit Purchasing Managers’ Index also showed that companies acted cautiously when it comes to spending. Evidence? What the hell do you call that? Evidence of an economic recovery worldwide is emerging. China the first economy to shut down and the first to reopen reported that its economy grew at a 4.9% annual rate in the third quarter, extending its recovery from the pandemic. The quarterly gain for the world’s second-largest economy was faster than the 3.2% rate of increase in the second quarter, when other major economies were suffering steep GDP declines. Could the U.S. report similar growth? This coming Thursday’s release of the government’s initial estimate of third-quarter U.S. economic growth is expected to be the most closely watched report of the week, as it could produce a record-breaking growth figure for a single quarter. In this year’s second quarter, GDP plunged 31.4% amid the pandemic. For the third quarter, economists are expecting a sharp reversal, with most forecasting growth of around 30.0%. I am here to help at any time. If you would like to schedule a phone/web conference appointment, I have included a link to my calendar below and you can self schedule. For those of you who prefer an in person meeting I am now scheduling in person meetings as well, please email me if you would prefer an in person appointment.
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Hope all is well with you and your families. The major U.S. stock indexes climbed for the third week in a row, but at a far slower pace than in the previous two weeks, as the indexes’ weekly gains were less than 1%. Earnings season began with several of the major U.S. banks reporting that their third-quarter results were boosted by strong trading and investment banking revenue. Overall, companies across the S&P 500 are expected to report a roughly 20% decline in earnings, according to FactSet. I have chosen to break down this week's market news using quotes from the movie The Big Lebowski.
"Well, sir, it’s this rug I have, it really tied the room together."-The Dude
Americans are shopping again for rugs, clothes and many other items. U.S. retail sales rose by a better-than-expected 1.9% in September. The latest gain marks the fifth consecutive monthly increase—a string that has returned retail sales to pre-pandemic levels and then some. 
"Are you employed sir?"-The Big Lebowski
The number of people filing new applications for unemployment benefits has remained stubbornly high, despite recent months’ progress in reducing the U.S. unemployment rate. The latest weekly report showed that unemployment claims climbed to a higher-than-expected 898,000, the most since late August. 
"You see what happens! This is what happens when.."-Walter Sobchak
Globally, we will see what happens when you can't agree on economic decisions during a pandemic. In the UK we are on the brink of Brexit. Prime Minister Boris Johnson said on Friday that the United Kingdom will prepare to leave the European Union’s single market at year end without a Brexit trade agreement in place. Continued uncertainty over terms of the U.K divorce from the EU weighed on European stocks throughout the week, as did rising coronavirus cases. Here in the US, politicians are unable to put their differences aside as prospects diminish for virus related economic relief. The next round of stimulus remained elusive, as the White House and leaders of the House and Senate continued to disagree over details. I continue to believe that the uncertainty will lead to volatility in the short term but longer term stocks will continue to offer the most growth opportunity long term. I am here to help at any time. If you would like to schedule a phone/web conference appointment, I have included a link to my calendar below and you can self schedule. For those of you who prefer an in person meeting I am now scheduling in person meetings as well, please email me if you would prefer an in person appointment.
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Hope all is well with you and your family. The major U.S. stock indexes each rose more than 3%, and the S&P 500 posted its best weekly result in three months. The NASDAQ Composite’s nearly 5% rise was the biggest gain among the indexes, leaving it just 4% shy of the record high it set in early September. Here's a quick recap of the week that was.
Investing In The Unknown
As third-quarter earnings reports start to come in, an unusually large number of companies remain reluctant to offer financial guidance for their full-year 2020 and 2021 results, owing largely to uncertainty from the pandemic. Globally, the pace of COVID-19 cases continued to rise, weighing on prospects for economic growth. As of Friday, 147 companies in the S&P 500 that have traditionally issued annual earnings guidance had done so, compared with 138 that hadn’t, according to FactSet. 
Coronavirus Relief Coming??
Markets dropped initially on news the President was linking the aid package to the election. Market sentiment was later boosted by signs that White House officials and congressional leaders were bridging differences on measures to help airlines, small businesses, and households. These measures are unlikely to take effect before the election, but the resumption of coronavirus relief talks fueled optimism. 
Fed Chair's Plea
U.S. Federal Reserve Chairman Jerome Powell issued a warning to Congress and the White House, saying the risks of not doing enough to provide further coronavirus-related economic relief are greater than the risks of doing too much. Powell said that the economic recovery is still at an early stage and the current expansion is “far from complete.” I am here to help at any time. If you would like to schedule a phone/web conference appointment, I have included a link to my calendar below and you can self schedule. For those of you who prefer an in person meeting I am now scheduling in person meetings as well, please email me if you would prefer an in person appointment.
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Hope all is well with you and your family. The major U.S. stock indexes rose this week. The gain snapping a string of four consecutive weekly declines. At Friday’s close, the S&P 500 was down 6% from its early September record high, the NASDAQ was down 8%, and the Dow was 4% lower. Last month’s 3.9% decline in the S&P 500 snapped a string of five monthly gains in a row.
Job Growth Slowing Although the U.S. economy added 661,000 jobs in September, the latest monthly employment report provided further evidence of a slowdown in the pace of the economic recovery and in the labor participation rate. Of the 22 million jobs lost in March and April, roughly half have since been recovered. Coronavirus Relief The U.S. House of Representatives on Thursday narrowly passed a Democratic bill that proposes a $2.2 trillion coronavirus relief package. However, the bill failed to win backing from House Republicans, and prospects in the Republican-led Senate remained uncertain. Markets remain optimistic that Congress will overcome their differences and pass a relief package. President Tests Positive President Donald Trump and First Lady Melania Trump after they tested positive for COVID-19, as well as several other high-profile politicians, thoughts and prayers go out to the first family and all those infected by this terrible virus. Global and U.S. stock markets fell modestly on Friday following the announcement of the positive tests. The stock market continues to hold up despite all the negative news this year. At the moment there is a lot of uncertainty about the direction of our economy and our country. This will lead to continued volatility in the short run but I remain positive on stocks longer term. I am here to help at any time. If you would like to schedule a phone/web conference appointment, I have included a link to my calendar below and you can self schedule. For those of you who prefer an in person meeting I am now scheduling in person meetings as well, please email me if you would prefer an in person appointment. https://booknow.appointment-plus.com/b8hh5y90/
Hope all is well with you and your family. The NASDAQ managed to post a small gain, the broader S&P 500 fell for the fourth week in a row―the longest such streak in more than a year. The bulk of the indexes’ weekly losses came on Wednesday, when the NASDAQ dropped 3.0% and the S&P 500 fell 2.4%. With the latest weekly decline, the S&P 500 was down 8% from its early September record high, the NASDAQ was down almost 10% from its peak, and the Dow was 7% below a recent high. The Dow’s record was set in February of this year, when it was 8% above Friday’s closing level. I broke down this week’s market news using quotes from Lewis Carroll’s classic Alice in Wonderland.
"A slow sort of country! …Now, here, you see, it takes all the running you can do, to keep in the same place.” -The Red Queen
The economic recovery seems to be running in place. U.S. Federal Reserve Chair Jerome Powell told Congress that the U.S. economy has a long way to go before it can fully recover from the coronavirus pandemic, and he said it needs further support. He noted that employment and overall economic activity remain well below pre-pandemic levels and said that the path ahead “continues to be highly uncertain.” 
“Oh, you can’t help that…we’re all mad here. I’m mad. You’re mad.” -The Cheshire Cat
Markets will see the week if Congress can remain focused on getting relief to Americans in need or if they get distracted and descend into partisan bickering over the nomination of Amy Coney Barrett to the Supreme Court. Hopes for another congressional relief package were renewed on Thursday as U.S. House Speaker Nancy Pelosi changed course and resumed efforts to write a new measure that could serve as the basis for negotiations with the White House. 
“Contrariwise,…if it was so, it might be; and if it were so, it would be; but as it isn't, it ain't. That's logic.” -Tweedledee
This week markets will be watching Tuesday evening’s Presidential debate and Friday’s jobs report. Never has there been so much build up to a debate and never have we expected so little in the way of coherent logical thought from either of the debate participants. The winner will likely be judged on who makes the fewest mistakes as opposed to who articulates the best ideas. While the debate may move markets the monthly labor market update likely will. It will be the final jobs report before the U.S. election. The new release will show whether September’s recovery of nearly 1.4 million new jobs extended into October. I am here to help at any time. If you would like to schedule a phone/web conference appointment, I have included a link to my calendar below and you can self schedule. For those of you who prefer an in person meeting I am now scheduling in person meetings as well, please email me if you would prefer an in person appointment.
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Hope all is well with you and your family. The major U.S. stock indexes fell for the third week in a row, retreating again from the record highs that the S&P 500 and the NASDAQ achieved early this month. The latest week’s decline was much smaller than the previous week’s pullback. The big technology stocks that had led the broader market for most of this year extended their more recent run of underperformance, and the tech-oriented NASDAQ trailed the Dow for the third week in a row. As of Friday, the NASDAQ was down more than 10% from the record high it reached on September 2. The drop has me looking at signs.
Markets Signals Improving Economic Health Small company stocks usually lead coming out of a recession. U.S. small-cap stocks had a breakout week, outperforming large caps by a wide margin. The Russell 2000 Index, a small-cap benchmark, gained nearly 3%. On a year-to-date basis, however, small caps continue to lag far behind large caps. The outperformance this week could be indicative of markets starting to believe that the economy has turned and we are exiting the recession. Near-Zero Rate Outlook The U.S. Federal Reserve does not have enough visibility on the economy or the virus to raise rates any time soon. They kept interest rates unchanged and signaled that it expects to keep its benchmark rate near zero for at least three more years. All 17 Fed officials who made projections said they expect to keep rates near zero at least through next year, and 13 projected rates would stay there through 2023. Supreme Court Vacancy This election was already shaping up to be one of the most bitterly contested in modern history, and filling the vacancy on the Court could lead to further division and only increases the uncertainty about the results. Volatility has been rising lately as the presidential election draws closer. That isn’t unusual: Stocks typically sells off an average 2% from September to November in presidential election years. What’s different now is the reactions to political events cause larger short-term movements in the markets than years past. What Should You Be Doing With Your Money With long term money that is invested in the stock market, it is best to hold and do nothing during periods of volatility. If you have money on the sidelines then the steep sell off in the stocks with the biggest gains like Apple and Microsoft (the two largest companies in terms of valuation) has created a great buying opportunity. These company’s earnings are not really linked to the election. With the Federal Reserve promising years of low rates stocks like Apple and Microsoft which offer growth potential and dividends which are higher than money market rates will continue to see money flow in from investors as bonds and banks offer little to no return. I am here to help at any time. If you would like to schedule a phone/web conference appointment, I have included a link to my calendar below and you can self schedule. For those of you who prefer an in person meeting I am now scheduling in person meetings as well, please email me if you would prefer an in person appointment. https://booknow.appointment-plus.com/b8hh5y90/ Hope all is well with you and your family.
Here is what you need to know from this week using football terminology since the NFL season started this week. Tech Stocks Drop the Ball The major U.S. stock indexes fell for the second week in a row, retreating again from the record highs that the S&P 500 and the NASDAQ achieved on September 2. The market was turbulent in a holiday-shortened week, with the NASDAQ posting a 4% decline on Tuesday followed by a nearly 3% gain on Wednesday. The NASDAQ on Tuesday fell into a correction, as the index was down 10% from the record high that it had set just six days earlier. Several of the market’s biggest technology stocks weighed on the NASDAQ, posting weekly declines of more than 5%. Inflation Rising Up Prices are rising. Inflation remains below the U.S. Federal Reserve’s 2.0% target, but it’s rising even as unemployment remains high. The Department of Labor on Friday reported that consumer prices rose 0.4% in August compared with July, or 1.3% from a year earlier. In contrast, the year-over-year rise was just 0.2% as recently as May. Congress Keeps Relief Package On The Sideline Prospects for approval of another congressional stimulus package before the November election appeared to dim, as a GOP-authored coronavirus relief package failed to secure enough Senate votes to move forward. Democrats said the measure doesn’t go far enough, and the sides remained at odds over issues such as state aid and another round of direct payments to Americans. Fed Meeting Next Week To Determine The Game Plan While no major policy moves are expected when the U.S. Federal Reserve Board concludes a two-day policy meeting on Wednesday, Chairman Jerome Powell could offer some further details on a recent shift in how the Fed views inflation. Powell said last month that the Fed won’t worry as much as it previously had about the prospect of low interest rates triggering rising prices. I am here to help at any time. If you would like to schedule a phone/web conference appointment, I have included a link to my calendar below and you can self schedule. For those of you who prefer an in person meeting I am now scheduling in person meetings as well, please email me if you would prefer an in person appointment. https://booknow.appointment-plus.com/b8hh5y90/ Here’s what you need to know from last week. Markets Remain Strong S&P 500 recorded its sixth positive week out of the past seven, but it's gain was small, and it underperformed the Dow for the second week in a row. The NASDAQ rose slightly, eclipsing its record high set the previous week. The S&P 500 on Wednesday closed within a tenth of a percentage point of its record high set six months earlier, but the index couldn’t quite climb above its prior peak of 3,386 points. At Friday's close, it remained about 0.4% below the record. Economy Healing U.S. retail sales rose 1.2% in July, marking the third consecutive monthly gain, as shopping surpassed pre pandemic levels. In the labor market, 963,000 unemployment claims were filed in the latest weekly count, ending a string of 20 consecutive weeks in which claims topped 1 million. Gridlock Prevails Democratic congressional leaders and the Trump administration concluded negotiations without agreement on an additional pandemic relief package. They rejected overtures to return to the table, and both the House and the Senate were scheduled to be out of session through the rest of August. As the week ended, U.S. and Chinese officials opened a new round of trade talks in the wake of rising tensions that have put investors on edge. Election Season Could Present Opportunities The election season is officially underway with Biden choosing a running mate. Market predictions will flow regularly on TV between now and the election with people saying the markets will soar or crash depending on the results. The truth is the presidential election has very little impact on the long-term growth of the stock market. For example, the market was up 27% during the Carter administration. Markets will likely experience volatility over the next two months, drops in the market should be considered buying opportunities not reasons to sell. We often hear that we live in unprecedented times but many of the issues we fret over today are not new. These issues just lay dormant for a period and resurface. To illustrate I picked 5 Time Magazine covers that reflect issues we face today (president v press, capitalism v socialism, rising medical costs, police practices, and the US Postal Service in crisis). All of the covers you will see below are at least 40 years old.
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The S&P 500 recorded its fifth positive week out of the past six, moving within 1% of its record high set less than six months ago, and the NASDAQ surpassed its record set in the previous week topping the 11,000-point threshold for the first time on Thursday. The nation’s wounded labor market continues to heal, albeit at a slower pace than in the late spring and early summer. The government reported the economy added 1.8 million jobs in July.
Washington Gridlock Stocks’ weekly gains came despite a rise in anxiety over the lack of conclusive progress toward an additional congressional package targeting the coronavirus and its economic impact. Talks between White House officials and Democratic leaders ended without a breakthrough prompting the President to issue an executive order on Saturday. if t order withstands the legal challenge it most certainly will receive then the unemployed will receive an additional payment $300/week of Federal funds through the end of the year. He also ordered a payroll tax holiday which means no deduction for Social Security and Medicare Tax. What Does A Payroll Tax Holiday Do? The 4 month tax holiday will defer collections of payroll tax. It has a positive short term effect for many. If you make less than $104,000 per year, your paychecks will probably be a little bigger for the rest of 2020. What it really does is improve the liquidity of struggling business and helps keep them solvent. It is not a great fiscal stimulus but is an effective way to keep more businesses open until we get through the pandemic, with the hope that when we do those businesses start making money and hiring again. Will Social Security Last Through My Retirement? A potential payroll tax holiday brings up the question of Social Security's future solvency. Understanding the facts are critical. No doubt, Social Security faces funding challenges, but not immediately and not bankruptcy. Benefits are paid through payroll taxes collected from current workers and their employers, and the program currently operates with a surplus of about $2.9 trillion. The tax holiday will reduce the surplus and with a rising percentage of retirees to workers that surplus will be gone soon enough. The latest projection has the combined Social Security trust funds that pay retirement and disability benefits running out of cash reserves by 2034. A fact they make you aware of on your Social Security statement. Running out of cash reserves does NOT leave Social Security bankrupt and unable to pay any benefits. Even if Congress does nothing to shore up the system by 2034, Social Security will be able to pay out 79 percent of promised benefits until 2090. The last time Social Security nearly depleted its reserves was in the early 1980s, when Congress shored up the program by gradually increasing the full retirement age from 65 to 67 and started to tax benefits based on income levels. The takeaway is Social Security in not going away. Changes will be made eventually but they are unlikely to impact those currently eligible to receive benefits.. Stephen Caruso is here to help at any time. If you would like to schedule a phone/web conference appointment, he has included a link to my calendar, click here. For those of you who prefer an in person meeting, financial advisor Stephen Caruso is now scheduling in person meetings as well, please email him if you would prefer an in person appointment. This was an important week for the markets, with key economic data released and four of the five biggest companies in the S&P announcing earnings. Stocks finished higher this week as the S&P 500 is now positive on the year following the biggest four-month gain in the S&P 500 since 2009. With baseball season starting back up, I have chosen to break down this week’s market news using quotes from Baseball themed movies and shows.  There’s No Crying in Baseball – A League of Their Own Market shrugged off terrible news without so much as a tear. GDP growth data was released, showing the sharpest quarterly downturn on record, driven by shutdown policies aimed at combating the spread of the coronavirus. The negative GDP growth, however, was better than expected. On the earnings front, half of the S&P 500 companies have now reported earnings with 84% thus far topping expectations. Big tech held the earnings spotlight, with three big tech names (Facebook, Amazon, and Apple) reporting results that were significantly better than expected.  You're Killing Me, Smalls - The Sandlot Congress devolved into partisan bickering causing negotiations over a fifth coronavirus relief bill to stall. The Fed calmed markets by again acting as the grown up in the room leaving no doubt that they will make good on their "whatever it takes" promise to support the economic recovery. Federal Reserve officials acknowledged that the path of the virus is the most central driver of the economy and activity is well below pre-pandemic levels. As a result, they will continue to hold interest rates near zero and maintain their bond purchases at least at the current pace.  You didn't come into this life just to sit around on a dugout bench, did ya? – Bad News Bears Sitting on the bench in bonds is not the right call. At current interest rates it will take you 140 years to double your money in bonds. Now is the time if you haven’t already to reduce or even eliminate bonds from your portfolio. Nervousness about the negotiations over the next round of fiscal relief, along with concerns about the sustainability of the rebound, pushed the 10-year yield to its third-lowest closing level (0.54%) on record and the five-year yield to a new record low. Rates may stay around these levels until we get through the pandemic and right now there are far more attractive income oriented investments than bonds.  Sometimes when you bring the thunder you get lost in the storm -Eastbound and Down
The speed and power of this 4-month market rally should have you feeling good about your investments. We escaped the bulk of earnings season, the Federal Reserve's (Fed) policy meeting, and the release of the economic figures from the shutdown unscathed, finishing the week up for the year. Economic data in May and June improved at a fast pace, which reflects the transition from recession to reopening. Housing appears to be on solid footing driven by a jump in the U.S. homeownership rate and record low interest rates. The good news is that this historic decline (more than twice the magnitude of the 2008-2009 contraction) seems to now be in the rearview mirror. Or is it? Better check your sideview as “objects in the mirror are closer than they appear”. The recovery seems to be losing some momentum in July, as coronavirus cases are rising in different parts of the U.S. with Dr. Deborah Birx this morning saying the virus is more widespread than when it first took hold in the US earlier this year. Reopening measures are being rolled back and timely, high-frequency data like credit card spending, restaurant reservations and trips taken show that the resurgence of the virus is having an impact on consumer confidence and spending. The labor market, a critical element for a sustained recovery, appears to be stalling. The number of U.S. workers applying for jobless benefits increased for the second week in a row and enhanced unemployment benefits which was helping prop up spending expired Friday. What does it mean for you? I don't think the market will be as volatile as some are forecasting so continue holding your existing stock positions. To the extent you have money on the sidelines waiting to deploy it is the prudent choice. A better opportunity will likely present itself in the next month or two, when it does add to the growth names that have led the market higher like Apple, Microsoft and Amazon. My name is Stephen Caruso and I am a Financial Advisor who is here to help at any time. If you would like to schedule a phone/web conference appointment, I have included a link to my calendar below and you can self schedule. For those of you who prefer an in person meeting I am now scheduling in person meetings as well, please email me if you would prefer an in person appointment. https://booknow.appointment-plus.com/b8hh5y90/  This week the stock market adjusted lower on fears of a fading economic recovery and the need for further massive stimulus springing from the growing spread of COVID-19. The S&P 500 and the Dow slipped, breaking a string of three weekly gains in a row, while the NASDAQ underperformed its peers, recording its second consecutive weekly decline. Momentum shifted, as the market’s gains early in the week were offset by declines on Thursday and Friday. We could see a move back into the high flying stocks as Apple, Google, Amazon and Facebook all report earnings this coming week.
Covid On the Rise Since mid June, the five-day moving average of new confirmed cases has jumped from just over 20,000 to just over 73,000. Markets are not reacting the way they did in March to the spike in cases because of the positive developments on the vaccine front. The resurgence of the disease is slowing, stalling and, in some cases, reversing, the staged reopening of the economy and will likely continue to hobble the restaurant, hotel, travel, entertainment and retail industries. The pandemic slows business investment, hiring and lending decisions across the economy, which is why we will get another stimulus package from the government. Money being spent to pump stimulus into the economy today could eventually lead to higher taxes and inflation in the future which could potentially reduce your purchasing power in retirement. Results Aren't as Bad as Feared The S&P 500 nearly unchanged for the year which suggest a risk of a correction. There are however still opportunities over the longer term, maintaining equity exposure allows you take advantage of an economic surge once COVID-19 has been tamed. Although corporate earnings are in sharp decline, second-quarter earnings are coming in a bit better than expected, based on results from the roughly one-quarter of S&P 500 companies that had released numbers as of Friday. Quarterly earnings are now projected to decline of about 42%, compared with the 44% drop that had projected a week earlier. Is it Time to Sell Your Home or Refinance? The U.S. housing market is posting record month-to-month growth after falling sharply in the spring as a result of the pandemic. Sales of existing homes jumped 21% in June, compared with the previous month, according to the National Association of Realtors. That’s the largest monthly increase since tracking of the data began in 1968. That coincides with the yield of the 10-year U.S. Treasury bond falling on Thursday to its lowest level in three months, dropping to 0.58%. The recent decline in yields is a key reason why mortgage rates have been setting record lows. I am Stephen Caruso, Financial Advisor and I am here to help at any time. If you would like to schedule a phone appointment. I have included a link to my calendar below and you can self schedule. For those of you who prefer an in person meeting I am now scheduling in person meetings as well, please email me if you would prefer an in person appointment. https://booknow.appointment-plus.com/b8hh5y90/ The S&P 500 continued higher marking its third consecutive week of gains and reached intraday levels not seen since the market sell-off began in late February; at its Wednesday peak, the index was also briefly in positive territory for the year. Outperformance of smaller-cap stocks, which have considerably lagged in recent months is also an encouraging sign.
Earnings season starts. The week marked the unofficial start of what is likely to be the ugliest earnings season in recent memory. Several major banks reported steep drops in profits as they set aside billions of dollars in anticipation of writing down bad loans. Analysts expect overall profits for the S&P 500 to contract 44% in the quarter relative to a year before—if confirmed, it would be the worst performance since the 69% earnings drop amid the financial crisis in the final quarter of 2008. Early vaccine trials are fueling hope. Wall Street opened the week with worries about the resurgence of the coronavirus across much of the U.S.. Midweek positive vaccine data sparked optimism. Tuesday, Moderna Therapeutics announced that its vaccine had produced high levels of antibodies in all test participants in an initial safety trial. On Wednesday, Oxford University researchers announced that their vaccine candidate through AstraZeneca, had produced not only antibodies in participants, but also “killer” T-cells that may offer prolonged immunity. Both vaccine candidates are receiving support from the U.S. government’s “Operation Warp Speed” program, which means the vaccines may be available in limited quantities as early as the fall if further test results are positive. The positive news prompted Dr. Fauci, to say he believes the U.S. will meet its goal of having a coronavirus vaccine by year-end. Finally, the term resilient is often used to describe the comeback we are experiencing in the market. Resilience is a universally admired trait. We use catchphrases like "New York Tough" as a rallying cry to get through tough times like the ones we are experiencing today. Yesterday, the world lost two of its best examples of real life resilience with the passing of C.T. Vivian and John Lewis. I will close with a quote from C.T. Vivian: "Leadership is found in the action to defeat that which would defeat you." I am here to help at any time. If you would like to schedule a phone appointment. I have included a link to my calendar below and you can self schedule. For those of you who prefer an in person meeting I am now scheduling in person meetings as well, please email Stephen Caruso, Financial Advisor if you would prefer an in person appointment. https://booknow.appointment-plus.com/b8hh5y90/ Happy Independence Day. In the holiday-shortened week, the Dow Jones Industrial Average DJIA, +0.35% added about 3.3%, bringing its year-to-date decline to 9.5%, while the S&P 500 SPX, +0.45% gained about 4%, and is now down 3.1% for the year. The Nasdaq Composite COMP, +0.52% is nearly 14% higher in the year to date, after taking another 4.6% leg up. What happens next with the market will largely depend on the direction of the virus. If we get the spread back under control or we get a vaccine then likely the markets will continue higher. The other wild card for the markets is the current unrest. This 4th of July let's hope our nation can heal its divisions. Perhaps that starts, with remembering the important contributions of all those who made our nation possible. If you have been Prospect Park perhaps you have seen this monument of Marquis de Lafayette (below) at the 9th Street entrance. Perhaps, you have never heard of the man on the left, James Armistead, without whom our victory of Yorktown may not have been possible. Armistead, a slave, who volunteered for service with Lafayette during the siege of Richmond in 1781. Before long, he was performing important espionage service behind enemy lines, masquerading as an escaped slave while he obtained information about the plans and movements of the British. He continued his spying as a servant in Cornwallis’s camp during the Yorktown Campaign and relayed intelligence to Lafayette that helped bring about the American victory at Yorktown. When Lafayette returned to America in 1784, he wrote a special testimonial about Armistead’s service and was instrumental in helping win his win his freedom from slavery from the Virginia assembly in 1787. In tribute to Lafayette, James Armistead adopted the surname Lafayette, which he used for the rest of his life.  I am Stephen Caruso, Best Selling Author and Financial Advisor, here to help at any time. If you would like to schedule a phone appointment. I have included a link to my calendar below and you can self schedule. For those of you who prefer an in person meeting I am now scheduling in person meetings as well, please email me if you would prefer an in person appointment.
https://booknow.appointment-plus.com/b8hh5y90/  It has been a few weeks since my last update but as volatility has returned in a major way this week I thought another update was in order. This second round of volatility got me thinking of sequels. So I will break down this week's news with quotes from arguably the greatest sequel of all time, the Godfather Part II. Good health is the most important thing. More than success, more than money, more than power. -Hyman Roth Reopening doesn't mean the virus is gone. Precaution is still necessary. Infections nationwide have risen 65 percent over the past two weeks, including in several states that were among the first to reopen. By Saturday evening, more than 41,000 cases of the coronavirus had been announced across the U.S., including single-day records in Nevada, South Carolina and Florida.  Yeah, but only the rich guys... The little guys got knocked off and all their estates went to the emperors -Frank Pentangeli Is the stock market really reflecting a rebound in the economy? Maybe not. The S&P 500 is a market cap-weighted index, meaning the more valuable your company the larger percentage of the index you are. The top five stocks (Facebook, Amazon, Google, Apple, Microsoft) now represent 21% of the index (the last time this happened was 1999) and thus account for 21% of the returns. In an equal weighted S&P 500 index these stocks have a weight of 1% (they’re just 5 out of 500 stocks). SPY is the market weighted index ETF it is down 6% for the year, where RSP the equal weighted index ETF is down 16% – remember, same stocks. It’s just that SPY is heavily weighted toward those 5 tech names and RSP treats each stock in the index equally. What this tells you is that maybe only a very small percentage of the economy is recovering. The market can continue to shake off bad news if money continues to flow into the handful of stocks that have led it higher. This gives the impression the stock market is disconnected from reality, but it's not, it's reflecting the haves getting richer and the have-nots losing ground.   But it occurred to me, the soldiers are paid to fight. The rebels aren't.-Michael Corleone Does social unrest reverberate through the markets? Normally no, this time certainly feels different. Here in my neighborhood some stores are still boarded up. This week I saw police standing guard in front of statues in the Central Park Mall. We can't erase our history but we can use this unrest as an inflection point to make things better going forward. The good news is most Americans think that will happen. A recent NY Times poll found that 61% of the people polled felt hopeful about the state of our country and more than 70% thought the economy will have improved by next year. Financial Advisor Stephen Caruso is here to help at any time. If you would like to schedule a phone appointment. I have included a link to my calendar below and you can self schedule. For those of you who prefer an in person meeting I am now scheduling in person meetings as well, please email me if you would prefer an in person appointment. https://booknow.appointment-plus.com/b8hh5y90/  The stock market looked past the pandemic and nationwide protests, moving higher on surprisingly optimistic employment news. I have chosen to break down this week's market news using lyrics from Bob Dylan's Times They Are A Changin'. For the loser now will be later to win For the last two months the rally has been predominantly in a handful of stocks that changed this week as we’re beginning to see broader participation in the market rally. As the industries that have been crushed by the pandemic: airlines, cruise ships and retail companies finally saw their stocks rally. Don't speak too soon for the wheel's still in spin The jobs report on Friday showed the economy added jobs in May, most economists expected a staggering number of job losses, so the fact that we added 2.5 million jobs in May caused euphoria in the market. Markets are pricing in a quicker return to normal. A deeper dive into the numbers shows that more of a mixed economic result. While the unemployment rate dropped from April, May’s 13.3% unemployment rate is still historically high—well above the 10% reached at the height of the 2008 financial crisis. Furthermore, claims for continuing unemployment benefits increased to 21.5 million last week, a sign that the pace of hiring is still well below normal. Better start swimmin' or you'll sink like a stone European central banks and governments have been slow to take the large scale fiscal and monetary policy action that we have done here in the US. That changed this week as both the European Central Bank and the German government expanded stimulus measures showing a willingness to go beyond traditional comfort zones to bolster their economies.  Financial Advisor Stephen Caruso is here to help!
If you would like to schedule a phone appointment. I have included a link to my financial advisor calendar below and you can self schedule. For those of you who prefer an in person meeting I am now scheduling in person meetings starting the week of June 22nd. https://booknow.appointment-plus.com/b8hh5y90/  Before, giving a brief update on the markets. I wanted to start with a quote from Dr. Martin Luther King as here in NYC and in many other cities throughout the country tensions have reached a boiling point.
“I refuse to accept the view that mankind is so tragically bound to the starless midnight of racism and war that the bright daybreak of peace and brotherhood can never become a reality… I believe that unarmed truth and unconditional love will have the final word.” Now to the week that was in the markets, the S&P 500 closed above 3,000 for the first time since early March. The Nasdaq ended the month less than 4% below its all-time high. The Russell 2000 small-cap index, which was slow to join the market rally, ended up gaining more than 6% in May. Markets continued to positively greet every bit of optimistic news on vaccine and therapeutic developments. As more businesses reopen continuing jobless claims actually fell from 25 million unemployed to 21 million. Amid the positive news there remains many reasons to be cautious. We still have seen no sign that the economy is improving, the latest reading on first-quarter U.S. GDP showed a decline of 5%, the worst quarterly performance since the Great Recession. The President was careful with his speech on Friday about China and White House officials maintain that the rising tensions haven’t yet affected the U.S.-China trade deal reached at the end of 2019, which has been reassuring markets. But with tensions rising, a market response could happen suddenly, causing the markets to give back some of their recent gains. Stephen Caruso is a Financial Advisor and here to help! I am here to help at any time. If you would like to schedule a phone appointment. I have included a link to my calendar below and you can self schedule. For those of you who prefer an in person meeting I am hoping to begin having face to face again starting the week of June 22nd. https://booknow.appointment-plus.com/b8hh5y90/ This week the market has had some of its biggest rallies since the 1930's. The Dow Jones Industrial Average on Tuesday bounced more than 11% in its best day since 1933. This generated optimism that the bottom is in. More likely, the market is going to bottom when the number of Covid 19 cases starts to peak, and between now and there will be a lot of volatility. Those who want to invest money at these reduced levels should do so in a disciplined manner investing in indexes not individual companies and smaller fixed increments. The next few weeks we will see more terrible news from a public health standpoint and terrible news from an economic standpoint as well. We saw the beginning of that bad economic news this week with the largest number of new unemployment claims ever recorded. Warren Buffett famously wrote: “Only when the tide goes out do you discover who's been swimming naked. ” We are seeing this currently playing out with businesses and no doubt companies with too much debt and not enough cash will fail and the government can't bail them all out. Mr. Buffett's logic can also be applied also to individuals during this tumultuous time. To protect yourself when the tide goes out it's important to also look at your cash on hand and your spending and make sure you are also well insulated. Cash on hand or your liquid bucket allows you to ride out this storm without having to sell stocks at an inopportune time. Keeping tabs on spending is also critical. It is easy to rack up credit card debt in difficult times being disciplined about spending is essential in times of uncertainty. Finally, If you suddenly find yourself with more time on your hands use that time to organize make sure your important documents are in order, review your beneficiary designations, wills, health care proxies, etc. We are all trying to stay safe but with this virus our health can change in an instant as I have unfortunately seen in my own family as wife's cousin is currently hospitalized with the virus. Senior Wealth Manager, Stephen Caruso is there to help... anytime! If you would like to schedule a phone appointment. I have included a link to my calendar below and you can self schedule. https://booknow.appointment-plus.com/b8hh5y90/ To add a little levity this week as we enter month 3 of shelter in place I have broken down the market news using quotes from Game of Thrones (a worthwhile binge watch if you haven't seen it). “No one mind me. All I’ve ever done is live to a ripe old age.” — Ser Davos  Legendary investor Warren Buffett and his company (Berkshire Hathaway) continue to sit on a record stockpile cash, Buffett says he has not been on a buying spree, because there hasn’t been anything “that attractive.” He went on to say "the best thing to do is owning the S&P 500 index fund, If you bet on America and sustain that position for decades, you’d do far better than buying Treasury securities, or far better than following people ... Perhaps with a bias, I don’t believe anyone knows what the market is going to do tomorrow, next week, next month, next year,” In his 89 years on this earth Buffett has more often been right than he has been wrong, we should probably pay attention when he speaks. “If you think this has a happy ending you haven’t been paying attention.” — Ramsay Bolton  Trade war part two? Tensions with China continued to flare, with the U.S. Senate unanimously passing a bill requiring companies to certify that they are not owned or controlled by a foreign government as a condition of listing on a U.S. exchange. The bill would also limit foreign companies’ access to U.S. financial markets if they fail to meet certain accounting and auditing standards. While the legislation would affect any foreign company, China is seen as a main target. “Winter is coming.” — Ned Stark   Government officials continue to try to temper the market expectations for economic recovery. Federal Reserve Chairman Jay Powell told senators on Tuesday, “The scope and speed of this downturn are without modern precedent and are significantly worse than any recession since World War II.” He suggested again that another round of fiscal stimulus may be necessary. Other Fed officials echoed his view, including Boston Fed President Eric Rosengren, who said in a speech, “Now is the time for both monetary and fiscal policy to act boldly to minimize the economic pain from the pandemic.” The Treasury Secretary, Steve Mnuchin warned of “the risk of permanent damage” if businesses remain closed for an extended period of time. Amazon Best Selling Author, Stephen Caruso is ready to meet with you. I am here to help at any time. If you would like to schedule a phone appointment. I have included a link to my calendar below and you can self schedule. https://booknow.appointment-plus.com/b8hh5y90/ The shift to caution that I discussed in my previous emails is starting to occur. Equity markets slid this week as concerns about the outlook for the U.S. economy moved to the
foreground. Markets continued to be pushed and pulled by the conflicting forces of unprecedented monetary and fiscal stimulus versus difficult underlying economic conditions and staggering job loss. Here's what you need to know from the week that was. Interest Rates Not Going Negative Federal Reserve chairman Jay Powell pushed back on the prospect of negative interest rates. The Fed chairman will be on 60 minutes this evening and his comments could potentially move markets on Monday. Cases Not Spiking But Caution Still Necessary Health Secretary Azar delivered some positive news this morning saying "We are seeing that in places that are opening, we're not seeing this spike in cases." Though, Dr. Anthony Fauci took a more cautious tone warning states against reopening economies too soon. Stephen Caruso is a Senior Wealth Manager at Laurel Wealth Management and here to help at any time. If you would like to schedule a financial consultation phone appointment. I have included a link to my calendar below and you can self schedule. https://booknow.appointment-plus.com/b8hh5y90/ Equity markets looked past historically bad employment data and ended the week in positive territory. The S&P 500 rose 3.5%, and the Russell 2000 and Nasdaq were both up over 5% for the week. While I am ecstatic that the markets are coming back with such ferocity I remain cautious. I have broken down what you need to know from the week that was categorized by old sitcoms, hopefully it adds some levity. Temporary lay offs. Good Times.  U.S. Department of Labor reported April’s unemployment rate at 14.7%, the highest level since records began in 1948 and well above the previous high of 10.8% in 1982. Separately, the government reported another 3.1 million initial unemployment claims, taking the total over 33 million in the past seven weeks. Remarkably, the S&P 500® index is now at the same level it occupied last summer, when the U.S. unemployment rate was 3.7%, indicating that equity markets have discounted negative near-term data. Thursday, Friday, Happy Days  Health news is pushing markets higher. Stocks rose on Thursday and Friday following an announcement that pharmaceutical company Moderna’s potential COVID-19 vaccine is moving quickly to a phase 2 and, potentially, a phase 3 trial. The positive reaction was similar to last week’s encouraging news about a potential therapeutic from Gilead. Market optimism could be tested, however, if negative results emerge from the dozens of vaccine and therapeutic trials currently underway. Technology stocks have been clear near-term winners, the Nasdaq is now positive for the year. Danger Will Robinson!   When you have drastic out performance by one market segment it is tempting to chase performance and move a substantial amount or your stock allocation into that sector. Don't do it. I believe there is a real danger in abandoning long term disciplined principles like diversification to chase returns in Nasdaq stocks like Netflix, Zoom, Tesla and Shopify that appear to be in vogue at this moment. Watching the Nasdaq continue on its torrid pace higher reminds of 1999-2000 in that the move seems disconnected to the economic reality. Today’s winners may not continue their persistent outperformance, as people are paying for unrealistic earnings growth on these stocks. The 1999 bull run in tech ended 2 months after AOL purchased Time Warner a move which at the time had people like myself scratching their heads wondering how it was AOL became more valuable than Time Warner? A similar head scratcher happened in March of this year when Netflix became more valuable (higher market capitalization) than Disney. On Friday, Disney passed back ahead of Netflix in terms of overall value but the fact that they have roughly the same overall value makes no sense to me. Disney consistently earns over ten billion dollars a year.
Stay Safe and Schedule a metting with your Financial Advisor Stephen Caruso! As always, stay safe and I look forward to meeting with you once things get back to normal. I am here to help at any time. If you would like to schedule a phone appointment. I have included a link to my calendar below and you can self schedule. https://booknow.appointment-plus.com/b8hh5y90/ |
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STEPHEN CARUSO
President & Founder
Laurel Wealth Solutions
President & Founder
Laurel Wealth Solutions
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Stephen Caruso is an Investment Advisor Representative offering investment advisory services through Belpointe Asset Management, LLC, 125 Greenwich Avenue, Greenwich, CT 06830 (“Belpointe"). Belpointe is an investment adviser registered with the Securities and Exchange Commission (“SEC”). Registration with the SEC should not be construed to imply that the SEC has approved or endorsed qualifications or the services Belpointe Asset Management offers, or that or its personnel possess a particular level of skill, expertise or training. Insurance products are offered through Belpointe Insurance, LLC. Important disclosures related to Belpointe are available at http://www.belpointe.com. Additional information pertaining to Belpointe’s registration status, its business operations, services and fees and its current written disclosure statement is available on the SEC’s Investment Adviser public website at https://www.adviserinfo.sec.gov/.
AR-4241 | 18296-2018/12/11
Stephen Caruso is an Investment Advisor Representative offering investment advisory services through Belpointe Asset Management, LLC, 125 Greenwich Avenue, Greenwich, CT 06830 (“Belpointe"). Belpointe is an investment adviser registered with the Securities and Exchange Commission (“SEC”). Registration with the SEC should not be construed to imply that the SEC has approved or endorsed qualifications or the services Belpointe Asset Management offers, or that or its personnel possess a particular level of skill, expertise or training. Insurance products are offered through Belpointe Insurance, LLC. Important disclosures related to Belpointe are available at http://www.belpointe.com. Additional information pertaining to Belpointe’s registration status, its business operations, services and fees and its current written disclosure statement is available on the SEC’s Investment Adviser public website at https://www.adviserinfo.sec.gov/.
AR-4241 | 18296-2018/12/11