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Week of October 19, 2020 Thumbnail

Week of October 19, 2020

Hi,

Hope you're doing well and staying safe. Here's a look at this week's highlights:

  • Earnings season kicked off with the big banks posting strong trading revenues and much lower loss reserves than what was expected for the third quarter.  This is a good sign that the banks look to be well capitalized for the loan losses that are to come as we enter the first and second quarters of 2021.  This week we hear from more of the regional banks that do not have the cushion of trading revenue to buffer loan losses and tighter interest margins. 
  • Rule of 72's:  By the rule of 72's, your money doubles when the interest rate you earn is multiplied by the number of years to equal the product-72.  For example, at 6% your money doubles in 12 years:  6 X 12=72.  With today's T-Bill rate at only .15%, it would take almost 500 years for your money to double.  It is no wonder investors are beginning to move more toward dividend paying stocks. 
  • The IMF(International Monetary Fund) is now calling for the global economy to shrink by 4.4% this year and to grow by 5.2% next year.  This week we will continue to see earnings announcements and for the first time since Q1 2020, we should see companies finally giving some guidance to next year.  The tug of war between the virus' re-emergence in Europe and the U.S., the possibility of a large stimulus package, and the impact the election might have on S&P 500 earnings continues to create very high volatility in the equity markets.   

View the full recap of this week's events in the link below.  We hope this note finds your family and friends well and please do not hesitate to check in with us to schedule a meeting or call to review your accounts and review your cash flow plan.

 

Market Insights - October 17, 2020 

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