Monday Morning Market Insights: Last Week in Review with Rusty Vanneman, Vol. 4

Happy Monday! This week is bringing perhaps the biggest snowstorm Omaha has seen in 15 years—grateful to be working from home! 

Onto the Markets

The global stock markets pushed to yet another round of new all-time highs last week. The bull market is alive and well. However, it was notable that the past week showed a change back to Big Tech market leadership, which had lagged considerably the first few weeks of the year, but basically caught back up last week. Expect more relative gains for Big Tech to start the week.  

Two possible reasons for Big Tech outperformance:

  • First, it appears that the incoming administration might not be as tough on Big Tech as initially expected.  
  • Second, while the current COVID data (still very high in absolute terms) has peaked in terms of cases, hospitalizations, and deaths, new strains are appearing and new economic restrictions and lockdowns are being announced. Therefore, the work-from-home environment might last a bit longer than assumed just a few weeks ago.

Feeling Bullish? Just Proceed with Caution.

Regarding a market outlook, there are still great arguments to be bullish: We’re in a bull market (until we’re not), interest rates are at historically low levels, the economy is expected to expand at its fastest pace in decades this year, the Federal Reserve is keeping money supply high and short-term interest rates low, and more fiscal stimulus is coming.  

There are also, however, plausible reasons to be cautious on the market right now. Valuations are high (highest ever in some cases), interest rates and inflation expectations have been moving higher in recent months, and investor sentiment by some measures is too giddy—think late ‘90s dot.com too giddy.  

All things considered, what’s the best outlook?  Stay diversified!

What to Watch

As for what to watch for this week, it starts with corporate earnings. Earnings season activity gets heavy this week, including a lot of technology names and a lot of economic reports, with one of the more interesting being the early read on 4Q GDP (estimated around 4.5%).

What Else to Watch

It looks like new movies being released are starting to get bigger and better again. This weekend’s fare in the Vanneman household included the new Tom Hanks’ “News of The World” and the dark comedy thriller “Promising Young Woman.” Both deserved their high Rotten Tomato scores in our opinions, but neither was as good as “Soul” was! 

Do we really have to wait two weeks for the Super Bowl? It’s an incredible story of the timeless Tom Brady and the Tampa Bay Buccaneers defense vs the amazing Patrick Mahomes (and cast) and Kansas City Chiefs.   

College basketball fever is picking up, and we know plenty of fans that follow the current Top 5 of Gonzaga, Baylor, Villanova, Iowa and Texas. By the way, did you know that last week was the first time since the weekly NCAA Men’s Basketball poll went to 25 teams that Duke, North Carolina and Kentucky were all unranked? That did happen in 1961, but back then the weekly poll was only ten teams.

Have a great week! For more insights and commentary, visit our Financial Advisor Success Hub.

0208-OPS-01/25/2021

The CFA is a globally respected, graduate-level investment credential established in 1962 and awarded by CFA Institute — the largest global association of investment professionals. To learn more about the CFA charter, visit www.cfainstitute.org.

The CMT Program demonstrates mastery of a core body of knowledge of investment risk in portfolio management. The Chartered Market Technician® (CMT) designation marks the highest education within the discipline and is the preeminent designation for practitioners of technical analysis worldwide. To learn more about the CMT, visit https://cmtassociation.org/.

About Rusty Vanneman
Rusty Vanneman, CFA, CMT, serves as Chief Investment Strategist of Orion Portfolio Solutions. He has been with Orion since 2012, previously serving as President and Chief Investment Officer of CLS Investments. Prior to joining the Orion organization, Mr. Vanneman served as Chief Investment Officer and Managing Director for an RIA in the greater Boston area. His 11-year tenure at the RIA included a five-year span during which the firm was owned by E*TRADE Financial, where he also served as Senior Market Strategist for E*TRADE Capital. He also served as a Senior Analyst at Fidelity Management and Research in Boston. Mr. Vanneman received a Bachelor of Science degree in Management from Babson College, where he graduated with high distinction. He is a CFA charterholder and member of the CFA Institute. He also holds the Chartered Market Technician® (CMT) designation and is a member of the CMT Association.