Monday Tuesday Morning Market Insights: Last Week in Review with Rusty Vanneman, Vol. 3

Happy Monday Tuesday! Hope you had a nice long weekend. 

Last week, the global financial markets took a bit of a break, though there were plenty of notable news events to digest, along with events this coming week to consider. 

Some Good News

The COVID numbers seem to be hopefully cresting in the United States as vaccine distribution continues to ramp up. Much work is still ahead, but I hope we can finally say that the peak is behind us.

Another key event last week was a larger-than-expected stimulus package ($1.9T) being proposed by the incoming administration—although as with all stimulus packages, don’t count any chickens until the eggs are hatched. It’s not a given that this package will survive its current form either. Nonetheless, it’s bigger than what was proposed before. 

Growth on the Horizon

The market’s price action seems to not have taken too seriously a couple economic releases that showed some economic softness, including slower Retail Sales and inflation numbers that were lower than expected. And it’s easy to see why the markets looked past both of these numbers. 

Regarding consumers, there is light at the end of the tunnel given the combination of vaccines, plus consumers in the aggregate having their strongest financial position in quite some time.  That combination would suggest excellent growth prospects for the economy.  

As mentioned last week, don’t be surprised if we experience the best economic growth in the U.S. in over 30 years. There is an even a real possibility of the best growth since World War II.

As for inflation, the bulk of data is still showing a clear uptrend, albeit from COVID-induced low levels.  Higher interest rates, as evidenced by 10-year Treasuries remaining above 1%, also suggest potential reflation concerns. 

What’s Going on in the Market?

For the year, the major indices (Dow and S&P 500) have gains of less than 1%, and the Nasdaq has a loss of not quite -1%. But those returns hide some interesting YTD numbers.

For instance, small cap stocks are up about 8% year-to-date, with small cap value stocks up over 9%. Value sectors like Energy and Financials are up nearly 13% and 5% respectively.  Emerging markets (EM) are also up over 5%.  The technology sector and long Treasury bonds currently sport YTD losses*. 

And the gains don’t even include commodity prices, such as grain prices.  While many recent family holiday dinners (or Zoom calls or both) had cryptocurrencies as part of the conversation, I married into a Missouri farm family, where the hot topic was skyrocketing corn and soybean prices. 

But back to cryptocurrencies: Bitcoin nearly lost 20% off its highs last week, but is still up over 20% on the year.  Surveys show more investors are interested in buying.  Given this sort of volatility, though, it’s probably best for most investors to watch, learn, and hope the asset class matures more before acting too decisively.  

Coming Up This Week

Washington D.C. will, of course, remain in the news, including the inauguration and the first days of the new administration. There will also be notable confirmation hearings, including the Senate holding a hearing to consider the nomination of Janet Yellen for Treasury Secretary on Tuesday.  Yellen is an advocate of aggressive fiscal stimulus. 

Fourth quarter earnings will also be in the news. The week will get started with some large financial names, Netflix reports after Tuesday’s close. 

Speaking of Netflix…

I did watch two more movies that are on many “top movies of 2020” lists: First Cow and Soul. Both were worthy of being on those lists in my opinion. You could say both movies were about Memento Mori.

Your Weekly Scoreboard

Okay, Tom Brady might really be the NFL GOAT (greatest of all-time), especially if the Tampa Bay Buccaneers can beat the red-hot Green Bay Packers. What an upcoming slate of NFL conference championship games this weekend and amazing quarterback match-ups: Brady vs Aaron Rodgers, along with the Kansas City Chief’s Patrick Mahomes (hopefully) vs the Buffalo Bills’ Josh Allen. 

Finally, here’s your Big East college basketball update: Villanova nationally ranked #3 (USA Today), Creighton #11 and Xavier #34. 

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

*https://media.bespokepremium.com/uploads/2021/01/The-Bespoke-Report-011521-312jh21.pdf

 

0136-OPS-01/19/2021

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, CFA, CMT, BFA
Rusty Vanneman serves as the Chief Investment Strategist for Orion Advisor Solutions. An industry veteran with more than 30 years of investment experience, Rusty creates relevant market- and platform-related content that supports deeper, more engaging conversations with advisors and investors, educating key internal and external audiences on Orion Portfolio Solutions’ strategies and resources to help deliver favorable investor outcomes, and helps identify new investment offerings to meet growing marketplace demand.  Rusty is a host of Orion’s The Weighing Machine weekly podcast, Orion’s monthly Weighing the Risk podcast, and authored the book “Higher Calling: A Guide to Helping Investors Achieve Their Goals.” Rusty has managed multiple mutual funds and hedge funds during his career and was named one of the Top 10 Portfolio Managers to Watch by Money Management Executive.* Prior to Orion’s acquisition of Brinker Capital in 2020, Rusty was the Chief Investment Officer for Orion Advisor Solutions and prior to that was the President and Chief Investment Officer of CLS Investments.  Before joining Orion in 2012, Rusty served as the Chief Investment Officer and Managing Director for a multi-billion-dollar registered investment advisor (Kobren Insight Management) in the greater Boston area. His 11-year tenure at the RIA included a five-year span when the firm was owned by E*TRADE Financial where he also served as the Senior Market Strategist for E*TRADE Capital. Prior, Rusty was a Senior Analyst at Fidelity Management and Research (FMR Co) in Boston. Additional work experience includes Thomson Reuters, General Electric, and as a cattle ranch hand in the Nebraska Sand Hills. Rusty received his Bachelor of Science in Management from Babson College in Wellesley, Massachusetts, where he graduated with high distinction. He holds the Chartered Financial Analyst (CFA®) designation and is a member of the CFA Institute. He is also a Chartered Market Technician® (CMT) and is a member of the Market Technician’s Association (MTA). He is also a Behavioral Financial Advisor (BFA). *RUSTY VANNEMAN MONEY MANAGEMENT EXECUTIVE AWARD. Rusty Vanneman, CFA, CMT, was selected as a “Top 10 Fund Managers to Watch” in 2017 by Money Management Executive. Money Management Executive is an unbiased, third-party publication covering the asset management industry. Money Management Executive chose the list of managers to watch by screening Morningstar data from funds with a single manager, ranked as having the best three-year annualized returns in their respective categories. The list of managers was published March 27, 2017. Money Management Executive is not affiliated with OPS. Ratings and awards may not be representative of any one client’s experience and are not indicative of OPS’s future performance.