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December 2020
Market Update
(all values as of 01.31.2024)

Stock Indices:

Dow Jones 38,150
S&P 500 4,845
Nasdaq 15,164

Bond Sector Yields:

2 Yr Treasury 4.27%
10 Yr Treasury 3.99%
10 Yr Municipal 2.46%
High Yield 7.59%

YTD Market Returns:

Dow Jones 1.22%
S&P 500 1.59%
Nasdaq 1.02%
MSCI-Europe -0.17%
MSCI-Pacific 1.89%
MSCI-Emg Mkt -4.68%
US Agg Bond -0.27%
US Corp Bond -0.17%
US Gov’t Bond -0.23%

Commodity Prices:

Gold 2,063
Silver 23.09
Oil (WTI) 76.28


Dollar / Euro 1.08
Dollar / Pound 1.26
Yen / Dollar 147.25
Canadian /Dollar 0.74

Macro Overview

Equity markets responded positively to news that the availability of vaccinations was imminent. Major equity indices reached new highs in November as promising vaccine trials and finalized election results eased market uncertainty. With the election behind us, attention now turns back to the pandemic and its ongoing effects on the U.S. and international economies.

A lingering stimulus “cliff” has left millions of Americans in a quandary, as members of Congress failed to produce and pass a stimulus plan in order to provide essential benefit payments to struggling families. Many political analysts expect the delay in extending existing stimulus benefits and establishing new benefits to be resolved by year end and effective in early 2021.

Industries that saw the largest job gains in November were the same industries that lost the majority of jobs during the onset of the pandemic. Sectors experiencing the largest employment gains are retailers, food services, and hospitality, which also expect to experience the greatest challenges over the next few months.

The Center for Disease Control (CDC) and various other health organizations estimate that the first COVID-19 vaccines will be available as early as mid-December in the United States. High risk individuals, including first responders and hospital workers, will be among the first to receive vaccinations.

The anticipated widespread distribution of vaccines, which is expected in early 2021, should boost consumer sentiment and economic activity throughout the country. The widespread availability of COVID-19 vaccines, likely to be sourced from multiple pharmaceutical companies, is projected to positively contribute to economic growth.

Elevated unemployment continues to persist as large and small employers scale back on hiring and wage increases, creating frustrations for millions of unemployed workers nationwide. Fraudulent unemployment claims are a growing issue, as the pandemic has lowered barriers to applying for and accessing benefit payments.

Absent any fiscal stimulus or year-end pandemic relief funds, analysts expect that the Federal Reserve will provide monetary stimulus by way of bond purchases. The Fed’s ambitious purchases of long-term bonds have kept long-term rates low, helping to buoy consumer credit and the housing market.(Sources: Federal Reserve, CDC, BLS, Dept of Labor, IRS, Social Security Admin.)

online sales have exceeded 14% of total retail sales

Markets Head Higher In November – Equity Market Overview

The combination of a finalized U.S. election, effective vaccine trials, and positive earnings results from various sectors drove equity indices higher in November.

Analysts expect upcoming additions to the S&P 500 Index to produce increased volatility for the index, creating demand for customized indexing, also known as direct indexing.

Copper prices rose to a six-year high, indicating that a global economic expansion may be developing. Copper is a primary metal used worldwide in manufacturing, electronics, buildings, and infrastructure.

The Dow Jones Industrial Index reached the milestone mark of 30,000 in late November, bringing the index to new all time highs. The S&P 500 Index and the Nasdaq also saw higher levels in November, driven largely by optimism regarding promising COVID-19 vaccine trials. (Sources: Bloomberg, S&P, Nasdaq, Dow Jones)

Rates Rise Slightly In November – Fixed Income Update

Interest rates rose slightly in November, with the benchmark 10-year Treasury bond yield approaching levels not seen in nearly six months. As the yield on the 10-year Treasury neared 1%, fixed income markets braced for potentially higher bond yields, which would translate to lower bond prices. Historically low mortgage rates continue to bolster the housing market, with record numbers of mortgage refinances and home purchases expected to continue through year end. (Source: U.S. Treasury)

Online Sales Have Increased During Pandemic – Consumer Behavior

Ever since the internet gave consumers the ability to shop from home, online sales have steadily increased over the past two decades. So far this year, online sales have reached 14% of total retail sales, eclipsing the 8.6% average over the preceding five years. The growth of online sales this year has been primarily driven by the pandemic, which forced consumers out of retail stores and onto their computers.

Consumers are expected to at least partially resume previous in-person spending patterns when retailers slowly start to reopen as the pandemic diminishes. Even as consumers return to retail stores, most analysts expect online sales to gradually continue rising as an increasing number of consumers became comfortable with that mode of shopping. (Source: Federal Reserve)

the U-6 rate is 12.1%, nearly double of the traditional U-3 rate

Homeowner Equity Reaches New Highs – Housing Market Update

Homeowner equity as a percentage of home values reached an all time high in the 2nd quarter of 2020, surpassing the most recent previous highs in 2001. Federal Reserve data revealed that homeowners hold about 65.5% equity in their homes on average, a level not reached since the early 2000’s. Low interest rates have enabled mortgage holders to pay down their mortgage balances rapidly over the past twenty years. Homes rank as the single largest asset held by households nationwide.

The high percentage of home equity has enabled many homeowners to borrow against their homes, enhancing household spending power even amid elevated unemployment and increased wage uncertainty. Many economists and market analysts are becoming concerned about the risk of default on the payments required on home equity lines of credit (HELOC) in the event of a sustained economic downturn. (Source: Federal Reserve)

True Unemployment – Labor Market Overview

The unemployment rate is a closely-followed economic statistic by economists and market analysts, and the Department of Labor has several different versions of unemployment rates that it compiles and reports. Of the various rates, the U-3 is referred to as the traditional or official rate, which came in at 6.9% in its most recent release. The U-3 rate is considered incomplete and inaccurate by many economists and analysts, since it only accounts for people actively seeking employment. Another available version of the unemployment rate is the U-6 rate, which is considered the “true rate” for unemployment. In addition to those people actively seeking employment, the U-6 rate also includes part time workers, underemployed workers, and discouraged workers. The U-6 rate is considered a more accurate assessment of the labor market and a true measure of unemployment. The most recent release for the U-6 rate is 12.1%, nearly double the traditional U-3 rate. (Source: Bureau of Labor Statistics)

medicare Open Enrollment for 2021 is November 1, 2020 to December 15, 2020

Nearly Half of U.S. Labor Force Is Working From Home – Employment Trends

As workers vacated entire office buildings and left conference rooms unoccupied, the pandemic work culture evolved. Hundreds of thousands of workers migrated home to establish a new work environment worthy of shorts and sweatpants. Many individuals and firms have embraced the work from home culture as a current necessity and possibly as a new norm as well.

Income level and industry are significant determinants of which workers made the transition to working remotely. Recent data gathered by the U.S. Labor Department identified that higher wage earners and technology-related jobs accounted for a disproportionate number of work-from-home positions, as one might expect.

Cities with large concentrations of technology-related jobs, such as San Francisco and Boston, are experiencing the largest amount of work at home positions. Conversely, cities with greater hands-on, labor-intensive industries like Riverside, CA and Houston, TX have seen fewer employees work from home. (Source: U.S. Census Bureau, Household Pulse Survey)

Medicare Coverage Heading Into 2021 – Retirement Planning

With open enrollment upon us, millions of Americans will be deciding on what changes, if any, to make to their Medicare coverage. The Open Enrollment Period for 2021 coverage is from November 1, 2020 to December 15, 2020. Coverage for any changes or new plans begins on January 1, 2021.

Since Medicare doesn’t cover all medical expenses, the decision to buy supplemental insurance coverage or to obtain a Medicare Advantage Plan is an important one for millions of Medicare recipients.

Medicare Advantage Plans enable a recipient to get both Medicare Part A and Part B coverage. Medicare Advantage Plans are sometimes called Part C Plans, and are offered by Medicare-approved private companies.

Medicare Supplemental Insurance or Medigap helps pay for gaps in coverage not paid for by Medicare. Even though Medicare does pay for many procedures and services, some remaining expenses such as copayments, coinsurance, and deductibles are covered by supplemental plans. Some Medigap policies also cover services that are not covered at all by Medicare, such as coverage while traveling abroad. So it’s worth shopping and determining which expenses are covered by the various supplemental insurance policies. (Source: