January 1, 2021
Wow, what a year! 2020 is over and for most of us it has upended many short and long-term plans. The deployment of vaccines beginning this month shows some light at the end of the pandemic tunnel. While investors are certainly looking ahead to better days in 2021, the economy cannot escape the impact the virus is having on current economic activity and the impact it is likely to have through the winter months.
Online sales are expected to be strong while the biggest declines are in activities involving travel, large gatherings and dining out, which have been banned or discouraged by various lawmakers.
The financial toll has been particularly hard on those who lost their businesses and/or jobs and had no financial safety net to carry them through the tough months. Although Wall street has continued to prosper, Main Street, particularly those in a lower socioeconomic segment of the population, have not fared well. It could take quite some time to recover with certain segments of the country continuing to experience lockdowns.
We expect companies to adjust earnings expectations considering a friendly Federal Reserve who we expect will maintain their ‘lower for longer’ mindset. Technology will continue to play a part in the “work from home” economy and the online and drive-up economy will likely continue well into the future. We also expect to see value stocks start to recover more throughout the year, particularly in the small and mid-cap sectors.
The election aftermath continues into January with all eyes on Georgia as the runoff elections will determine the Senate majority. History infers that financial markets prefer split party control between the White House and Congress.
Year to date all the indices have finished a volatile year in the positive with the Dow, the S&P 500 and Nasdaq in the black at 7.25%, 16.26%, and 43.64% respectively. The 10-year Treasury is currently yielding 0.95%.
*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.