February 1, 2021
January begins a new year and hopefully brighter prospects for the economy than 2020. Vaccine distribution is now in full swing and seem to be handling the latest virus mutations well. As more states open up businesses and schools, we expect economic activity to follow suit.
Main Street and Wall Street are not often connected, so despite an expected tick up in economic activity, we expect the equities markets to take a breather from its march to record levels. This always represents opportunity at our quarterly portfolio rebalancing to redeploy cash and gains into other asset classes. We continue to monitor liquidity in portfolios and ask that you notify us of any upcoming cash needs.
The political environment will bring a certain degree of apprehension to investors as new stimulus and additional taxes to pay for new and past stimuli are expected. Some tax hikes may be in the form of elimination of deductions, particularly those taken by the wealthy. Markets dislike uncertainty, so until the direction is clearer the volatility will continue.
Small local businesses continue to be the most effected by past lockdowns and many have borrowed personally in addition to PPP funds. Fortunately, the Federal Reserve has signaled that rates will remain at record low levels for the foreseeable future.
Many of you have already seen “Important Tax Information” arriving in your mail. Our suggestion is to gather information in a single location or file to ease the stress of tax time. If you have a Client Portal setup you will also see your TD Ameritrade Tax Documents posted there.
For the month of January the Dow and S&P 500 are both slightly negative at -2.04% and -1.11% respectively while the technology heavy Nasdaq is up 1.42%. The 10-year Treasury is currently yielding 1.11%.
*Disclaimer: This report is a publication of Marchand Faries Financial Management, Inc. Information presented is believed to be factual and up-to-date, but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgement of the author as of the date of publication and are subject to change.