Stephen Jordan, CFP®

Cyr/Woertz Financial Group

2405 W. Cornerstone Ct.

Peoria, IL 61614

309.691.1616

stephen.jordan@lpl.com

www.cyrwoertz.com

Market Update
(all values as of 01.29.2021)

Stock Indices:

Dow Jones 29,982
S&P 500 3,714
Nasdaq 13,070

Bond Sector Yields:

2 Yr Treasury 0.11%
10 Yr Treasury 1.11%
10 Yr Municipal 0.70%
High Yield 4.31%

YTD Market Returns:

Dow Jones -2.04%
S&P 500 -1.11%
Nasdaq 1.42%
MSCI-EAFE -1.09%
MSCI-Europe -1.49%
MSCI-Pacific -0.47%
MSCI-Emg Mkt 2.97%
 
US Agg Bond -0.71%
US Corp Bond -1.28%
US Gov’t Bond -1.04%

Commodity Prices:

Gold 1,849
Silver 27.06
Oil (WTI) 52.14

Currencies:

Dollar / Euro 1.21
Dollar / Pound 1.36
Yen / Dollar 104.29
Dollar / Canadian 0.77

Volatility Returns To Markets – Domestic Equity Update

Equity indices were nearly unchanged in January following volatility that drove prices higher and lower throughout the month. Market performance for prior Januarys have historically been acknowledged as an indicator of where markets might head for the year.

Speculative trading among smaller retail investors raised concerns about how social media is influencing individual stock valuations. As a result, volatility spiked in late January. Leading sectors for the month were energy, heath care, and consumer discretionary, while materials and industrials lagged.

Sources: Bloomberg, Reuter

Macro Overview

Speculative trading among smaller retail investors raised concerns about how social media is influencing individual stock valuations. Recently popularized social news aggregation and discussion websites are driving frenzied trading behavior among inexperienced young traders while disrupting traditional stock valuation methods. Many are calling for heightened regulation and scrutiny surrounding these websites and how they operate.

Vaccination progress is being closely monitored by market analysts and economists because of the tremendous impact it has had on consumer sentiment. Consumer expenditures have been hindered by stay at home mandates and fear of infections in public locations such as retail stores and restaurants.

The pandemic has accelerated the global wealth gap between the wealthy and poor. The Rockefeller Foundation, a private foundation, tracked roughly 2,200 billionaires worldwide that saw their net worth grow by $2 trillion in 2020, while 435 million low income families globally lost jobs, homes and asset values.

The IRS won’t be accepting 2020 tax returns until Feb 12 due to staffing shortages and COVID related rules that were enacted in December 2020. Acceptance of prior year returns traditionally would have started two weeks sooner. Taxpayers due a refund may see a delay in receiving funds, yet the April 15 tax deadline will remain the same.

Economic growth for the U.S., as measured by Gross Domestic Product (GDP), rose at a 4% rate in 2020, following a contraction of over 31% in the second quarter alone. The dramatic collapse and ensuing rebound for economic growth was of historical proportion.

Since COVID vaccine distributions began on December 14, 2020, more than 29.5 million doses have been administered in the U.S. as of January 30, 2021. Total doses distributed but not yet administered are nearly 50 million as of the end of January. The federal government has delegated prioritizing and distribution of the doses to the individual states. Health care experts and economists are concerned that the sluggish pace of vaccinations worldwide will postpone any economic resurgence.

 

 

Data gathered by the U.S. Census Bureau as of January 22, 2021, reveal that millions of Americans are not spending their stimulus checks, but are instead saving the funds or paying off debt. With over 37.5 million people opting to save their stimulus payments, some believe that millions receiving stimulus checks may not actually need them.

Silver rose to its highest level since February 2013, driven by retail investors’ frenzy buying. Commodities such as oil and gold, have been steadily rising since the beginning of the year, a traditional indication of inflationary pressures.

Sources: Census Bureau, Rockefeller Foundation, CDC, Federal Reserve, IR

COLA Not Keeping Up With Medicare Premium Increases – Retirement Planning

Even before the onset of the COVID-19 pandemic, seniors were foregoing retirement until later as well as taking part-time jobs even after retiring. Living longer for millions of Americans has translated into a financial challenge resulting in dealing with the threat of dwindling assets during an extensive retirement.

The single greatest menace to retirees has historically been inflation. Over the past year, inflation expectations by consumers place inflation at nearly a 3% rate, nearing the 50-year average rate of 4%. With that in mind, housing, food, energy and healthcare expenses are all projected to gradually rise over the next few years. Since the majority of retirees live on a fixed income, the ability to keep ahead of inflation becomes more difficult as time goes on. So if the annual inflation rate is 3%, then the cost of living would essentially be 30% more over ten years.

At the center of controversy, which has been for decades, is Social Security. Even with COLA applied to Social Security payments, medical expenses not covered by Medicare are expected to rise more than the COLA increases as reported by the Senior Citizens League. The COLA increase for 2021 Social Security payments is 1.3%, while the increase in Medicare Part B premium for 2021 is 6%, a significant difference.

Sources: Social Security Administration, Senior Citizens League

Source: U.S. Census Bureau

 

 

 

What People Are Doing With Their Stimulus Payments – Consumer Behavior

Surveys done each week by the U.S. Census Bureau are detailing what Americans are doing with their stimulus payments. Data gathered from various stimulus recipients among all income levels and educational backgrounds, reveal that a large portion receiving payments are using their funds to pay off debt. The most recent data as of the week ending January 22, 2021, show that nearly 75.5 million people of the 249 million that were surveyed, used the funds to pay off debt. br>
In addition to paying off debt, recipients also saved their payments, with over 37.7 million opting to save rather than to spend their stimulus checks. Because of these statistics, many believe that millions of Americans receiving stimulus payments may not actually need it.br>
For those that actually need the funds, about 85% of those surveyed are spending it on household expenses, such as groceries, clothing, and appliances. br>

 

IRS Sets Later Date To Accept Returns – Tax Planning

The IRS announced that it will not start accepting individual tax returns for tax year 2020 until February 12. A law passed by Congress in December designed to mitigate fraud hindered the ability for the IRS to start accepting tax returns earlier in the year. As a result many taxpayers may have to wait an extra month or two before receiving tax refunds due.

The delays are also a result of changes that occurred in 2020 as the pandemic took hold. Millions of individuals who didn’t get stimulus payments from the government may be able to claim those funds through their 2020 tax returns. Also affected will be individuals that had children during 2020 and not noted on 2019 tax returns. The IRS suggests that individuals file electronically in order to receive any refunds due more quickly.

Source: I

States Lose Valuable Tax Revenue – Municipalities Update States and local government entities are struggling with a dramatic and rapid drop in tax revenues following business closures and quarantines that were set into place nearly three months ago. Stay at home mandates forced consumers to abandon retail shopping, dining out, and visiting hair salons leading numerous small businesses to close doors and layoff employees. The result has been a historical increase in unemployment leaving states with billions of dollars lost in payroll and income taxes. The dramatic loss of jobs has also led to mortgages and property taxes not being paid as homeowners struggle to meet ends. Data collected by the U.S. Census Bureau and the Tax Foundation identify that over 50 percent of state and local government revenues have come from property taxes over the past decade. Individual income taxes are significant, representing 30% of tax revenues while corporate income taxes make up roughly 5%. That’s why the dramatic increase in unemployment is so critical to state and local economies. Sources: U.S. Census Bureau, The Tax Foundation