Week of November 16, 2020

Greetings.  

We hope this note finds you and your family well as we approach the holiday season.

• Pfizer's vaccine announcement drove markets to new highs last week.  It was a big week for "economic recovery stocks", as energy, industrials, and financial stocks outperformed consumer discretionary and technology names-the stay at home stocks.  Note the attached weekly summary where you will see the difference in the year to date performance of the S&P 500 Index, driven more by the "stay at home" trade vs. The DJIA(Dow Jones Industrial Average), which represents the more cyclical "recovery" stocks.   We highlited this difference in our latest quarterly newsletter, where over 70% of the S&P 500's return is tied to 5 of these "stay at home" stocks.
• Inflation came in pretty much unchanged for the month of October.  We suspect that will change as all of the stimulus and liquidity that is sloshing around the economy eventually leads to higher prices.
• Important:  Year to date corporate profits are actually only down 8% vs the estimated 20% decline that was predicted earlier in the year.  The very large cap companies are doing well, but there is real pain being felt on main street by small businesses that were hit hard by this pandemic.  As the economist Martin Wolf reminded us in a recent piece, profits are actually only a small part of the economy, and profits can be good while real incomes stagnate.  We are seeing this disconnect now and the real feel of the health of the economy from the view of main street is not good.  Yet profits and interest rates remain favorable for wall street.

View the full recap of this week's events in the linked summary below.  

As always, please do not hesitate to contact us on any questions you may have.  Please let us know if you would like to update or review your retirement cash flow plan as we approach year end.

Sincerely,

The FMA Advisory Team