Robert Krueger

Alexander Randolph Advisory Inc.

8200 Greensboro Drive, Suite 1125

McLean, VA 22102


October 2020
Market Update
(all values as of 06.28.2024)

Stock Indices:

Dow Jones 39,118
S&P 500 5,460
Nasdaq 17,732

Bond Sector Yields:

2 Yr Treasury 4.71%
10 Yr Treasury 4.36%
10 Yr Municipal 2.86%
High Yield 7.58%

YTD Market Returns:

Dow Jones 3.79%
S&P 500 14.48%
Nasdaq 18.13%
MSCI-Europe 3.72%
MSCI-Pacific 3.05%
MSCI-Emg Mkt 6.11%
US Agg Bond -0.71%
US Corp Bond -0.49%
US Gov’t Bond -0.68%

Commodity Prices:

Gold 2,336
Silver 29.43
Oil (WTI) 81.46


Dollar / Euro 1.06
Dollar / Pound 1.26
Yen / Dollar 160.56
Canadian /Dollar 0.73

Macro Overview

Worries regarding a second wave of infections heading into the fall, election uncertainties, and wavering economic indicators contributed to a dubious September.

Equities paused from their upward trajectory in September, with technology stocks repelling from their highs. Uncertainty surrounding vaccine deployment and the election are expected to influence market momentum and investor confidence. Election results will help determine the direction of fiscal policy and social program funding.

The Federal Reserve is expected to leave short-term rates near zero for up to five years in order to allow inflation to expand modestly throughout the economy. The Fed believes that inflation will be muted until economic activity picks up again as the effects of the pandemic reside.

The U.S. dollar fell to a two-year low against other global currencies, as expanding government debt issuance and uncertainty surrounding the coronavirus weighed on the currency. Credit rating agency Fitch revised its outlook on U.S. government debt from stable to negative, citing ongoing deterioration with public finances and the absence of a credible fiscal consolidation plan. Credit reporting agency Moody’s announced that it may eventually place U.S. government debt on watch for a downgrade if newly issued debt isn’t accompanied by some sort of tax revenue increase. Fixed income analysts believe that this may drive demand for corporate bonds even higher.

A growing number of pharmaceutical companies, universities, and biotech firms are introducing and testing various forms of vaccines to combat COVID-19. According to the Regulatory Affairs Professional Society (RAPS), there are currently over 40 COVID-19 vaccines in trial phases worldwide.

Comments by Fed Chairman Jerome Powell indicated that additional aid to small businesses and unemployed individuals was critical for economic expansion during the pandemic. The Fed Chair urged for the passage of a second stimulus package, which has been delayed due to a Congressional impasse. The Paycheck Protection Program had issued 5.2 million stimulus loans totaling $525 billion as of August 8th, when the program closed. Another round of stimulus funding for businesses may be included in a new bill drafted by Congress.

Banks and finance companies have been imposing more stringent standards for consumer and business borrowers, as noted by the Fed’s Senior Loan Officer Survey. The survey identified reductions in credit card limits, as well as tougher qualifications for auto and home loans.

(Sources:, CDC, Federal Reserve, World Bank)

The fed purchases $120 billion of Treasury and mortgage bonds each month

Equities Taper Off In September – Domestic Equity Overview

Despite a pullback in September, equities managed to end the third quarter with gains. The technology sector was the primary contributor to the S&P 500 Index, which was up 8.93% for the third quarter. Consumer discretionary and industrial stocks also performed well during the quarter, exemplifying some economic recovery characteristics.

Following an upward surge during this summer, September witnessed a tapering of equity momentum, leading to lower valuations. The three major equity indices, Dow Jones Industrial, S&P 500 Index, and the Nasdaq were off in September, but positive for the third quarter ending September 30th. (Sources: S&P, Bloomberg, Dow Jones, Nasdaq)

Rates Vacillate As Stimulus Efforts Unresolved – Fixed Income Overview

The Federal Reserve continues to purchase $120 billion of Treasury and mortgage agency bonds each month, expanding its balance sheet to over $7 trillion as of the end of September. The monumental buying is meant to facilitate bond market activity while maintaining a relatively low-rate environment.

Yields on government and corporate bonds vacillated in September as uncertainty surrounding additional stimulus efforts influenced rates. Analysts and economists expect higher long-term rates to result from the incremental debt issuance to pay for the next stimulus package. (Sources: U.S. Treasury, Federal Reserve, Bloomberg)

Gold Hits New High On Tensions – Commodity Update

Gold prices reached their highest level in July since 2011, eclipsing $1,897 an ounce. Nervousness surrounding the global pandemic, as well as geopolitical concerns between the U.S. and China, have steered buyers towards the precious metal, driving prices higher. The ultra-low interest rate environment has also made gold more appealing even though it offers no income, yet is still used as a store of value during times of geopolitical turmoil. Enormous stimulus efforts led by the United States is leading analysts to expect that inflation will eventually evolve, boosting the value of the metal due to its hedge against inflationary pressures.

For years gold has been a safe haven for investors looking to hedge against inflation, political crisis, and currency issues. The idea is that a country’s currency has a tangible backing, thus creating a sense of value that is accepted by the international markets. Gold has been for centuries, and continues to be, an accepted store of value worldwide.

For thousands of years, gold has been one of the most sought after metals in the world. It was first used as jewelry as early as 2600 BC in ancient Mesopotamia, what today is Iraq. Gold was introduced to dentistry in 600 BC, and has since then been introduced to various other applications. Several industries such as electronics, food, medical, and manufacturing all utilize gold in some fashion. Most notably, gold plays a significant role in the international monetary markets, where countries worldwide hold gold as a reserve. Holding gold as a reserve provides diversification among assets, economic security, and liquidity.

Gold is a unique asset in that it is no one else’s liability and, is not directly influenced by the economic policies of any individual country. Its status cannot, therefore, be undermined by inflation in a reserve currency country.

Sources: Congressional Research Service, Bloomberg



17% of all FHA-insured loans were delinquent in July of this year

What’s In Store For The Housing Market – Housing Market Update

Euphoric media reports about the housing market are starting to come into question, as the fragility of the housing market is gradually being exposed. The FHFA House Price Index revealed that housing prices nationwide rose a paltry 5.4% in the past year, with some regions seeing much slower growth.

The onset of the pandemic in March brought about a flurry of stimulus efforts meant to ease the financial burden for millions of Americans. Housing was a primary concern as the unemployment rate spiked and paychecks dwindled. In response, the Federal Housing Finance Administration (FHFA) announced a moratorium for both evictions and foreclosures through August 31, 2020. That moratorium has since been extended to the end of the year to allow homeowners additional time to sort out and catch up on their rent and mortgage payments.

Any federally backed loans, such as FHA-insured loans, have allowed homeowners to skip their mortgage payments by means of forbearance. According to the Mortgage Bankers Association, roughly 3.5 million home loans were in forbearance as of September 6th, representing 7.01% of all FHA-insured loans. In addition to homeowners in forbearance, there are those homeowners that are delinquent on the loans. It is expected that millions of homeowners on forbearance will become delinquent on those loans by the end of 2020, including many who have not made a payment since March of this year. Another government housing entity, the U.S. Department of Housing and Urban Development (HUD) tracks loans in delinquency via its Neighborhood Watch list. The data reported that 17% of all FHA-insured loans were delinquent in July of this year. The figure includes mortgages in forbearance as well as those not in forbearance.

Sources: Federal Housing Finance Administration, Mortgage Bankers Association, U.S. Department of Housing and Urban Development



current savings rate of 25.7% is nearly triple of the 60-year average

Americans Saving More Amid Pandemic – Consumer Behavior

Store and restaurant closures have prompted consumers nationwide to stay home, spend less, and save more. Dwindling consumer confidence along with uncertainty surrounding the job market, has shifted many from a spending mode to a saving mode. The average savings rate for the past 60 years since 1959, has been 8.9%. The savings rate jumped from 8.4% in February this year to 32.2% in April as the pandemic took hold of the U.S. economy. The most recent data release shows the savings rate at 25.7% for the quarter ending June, nearly triple of the 60-year average.

Economists view the heightened level of savings as restrictive to a sustained economic expansion. Since nearly 70% of GDP is represented by consumer expenditures, higher savings tend to take away from spending throughout the economy. Consumer confidence is also a factor as a lack of confidence tends to increase savings while minimizing spending. (Source:



Inflation Even Higher For Those Over 62 – Retirement Planning

Data compiled by the government via the Bureau of Labor Statistics (BLS) maintains a separate tally of inflation for people over 62. The rarely heard of index, known as the CPI-E, is a variation of the traditionally recognized CPI (Consumer Price Index), but with an emphasis on goods and services mostly used by those over 62 years of age. This past month, the recent release of the CPI-E and the CPI reveled an inflation rate of 1.3% for the CPI-E versus a 1% rate for the traditional CPI over the past year.

The modified index has actually been increasing at a faster pace of inflation over the past decade versus the CPI. The CPI-E assigns a larger weight to senior related expenses such as medical services and housing. The index was first created in 1987 when Congress directed the BLS to help identify inflationary pressures among seniors. The index represents roughly 25% of all U.S. consumers.

Source: Bureau of Labor Statistics