What Investors Should Be Thankful for in 2021
Contributed by Doug Walters, Max Berkovich
Around this time of year, we like to produce our list of things for which investors should be thankful. We started this tradition in 2016 but sadly missed last year. This year we bring back the fun! It has been a year of extremes in many ways, but it has mainly been smooth sailing for investors, so there is much to celebrate.
- Thank you, Federal Reserve… your low Fed Funds rate and asset purchases continue to provide stimulus to a recovering economy (let’s hope you are not behind the curve).
- Thank you, Congress (no, really!)… your pandemic stimulus has led to record high personal savings driving up demand for…well… everything (we won’t mention inflation here).
- Thank you, robust and dynamic US economy… you have once again demonstrated that you know how to take a punch (sometimes several) and get right back up. Chumbawamba anyone?
- Thank you, vaccines… you not only helped us see more of our family and co-workers in 2021 but also gave investors a shot in the arm of confidence that this to will pass.
- Thank you, US equities… at some point, we know you have to go down, but we will always enjoy years when you are hitting all-time highs. Onward and upward!
- Thank you, TIPS… in a year not built for fixed income, you have provided some much-appreciated positive performance (should we thank inflation? Nah).
- Thank you, COLA… for investors receiving Social Security, your recent increase will put some extra cash in their pocket in 2022. Spend it wisely!
But most of all
- Thank you, clients of Strategic… for the continued trust and confidence you have placed in the entire Strategic team. We are thankful to have you as part of our community!
Stocks ended the week just slightly above flat. Despite the muted performance, it was a reasonably notable week for news flow and economic data.
Consumer Resilience
Tuesday’s economic data provided evidence that rising inflation is not impacting consumer spending.
- Retail Sales data for October was released this week and were up 1.4% (ex-autos and fuel) versus expectations of a 0.8% increase. Despite the grumblings about the rising cost of goods, consumers continue to spend thanks to record levels of savings accumulated during the pandemic.
- Industrial production also came in ahead of expectations, providing a good sign that companies are seeing economic activity continue to pick up.
Building Back Momentum
Infrastructure was on the docket in Washington this week.
- The President signed the $1T infrastructure bill on Monday. This is not a direct fiscal stimulus, but it is stimulative and could spur continued economic growth. The bill includes $550B in new money to go towards transportation, broadband, and utilities.
- On Friday, the House signed the $1.75T Build Back Better social spending package. The passage in the Senate will face challenges, and we will likely see meaningful amendments before the pen is put to paper.
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