facebook twitter instagram linkedin google youtube vimeo tumblr yelp rss email podcast phone blog search brokercheck brokercheck Play Pause

The Northern Star Newsletter 1/29/21 - Optimism Stimulates Markets

Message from Jon


We are excited to bring the new newsletter to you earlier than expected!


Opinion

In recent client update meetings, I have been routinely asked what our opinion is about 2021 and why the markets have been going up despite the chaos in Washington.

Our opinion of 2021 is that the markets should produce a beneficial year in Equities. Of course, it will spend some days going down followed by days going up, but when examining the year in total, we should see more up days than down days.

That being said, right now, the markets seem to be looking past the depressing and infantile display of behavior in DC and focusing on the dissemination of the vaccines, the 1.9T-dollar stimulus plan, and what if any changes that are on the horizon to our monetary policy and interest rates. Wall Street is completely ignoring at present any political news around the impeachment, the transition of power, and the executive orders that are being signed. Inflation is being discussed on a regular and routine basis around Wall Street, giving us and you time to begin to prepare.

We have been reviewing, researching, and preparing to position portfolios to benefit from the inflation trade and also not to be victims of rising interest rates, sector rotations, and the economic impact that are to accompany it.

Monday, we have news that Moderna, who is currently introducing one of the vaccines being used here in the US, has entered into trials for a vaccine designed to treat the mutated strain of Covid-19. This helps us to relax “what-if” conversations around another strain of the virus.1,2

As we have said in the past, there are times where Wall Street and Main Street tune their respective attentions to different arenas of interest. We will always pair our attention to that of Wall Street.

Our next Informational Webinar is going to be on Wednesday, March 10th where we will dive deeper into what we are seeing as themes that matter in 2021. 

Next week I will be out of the office and will return on the 8th.

 

Till we speak again, enjoy your week,

 

Jon

Sources:

  1. https://www.telegraph.co.uk/news/2021/01/25/moderna-says-covid-vaccine-works-against-known-variants/
  2. https://www.aol.com/news/moderna-says-covid-19-vaccine-135133443-144433118.html
Hi there,

Anticipation of a new fiscal stimulus and improved vaccine distribution powered stocks to fresh record highs last week with technology stocks leading the way.

The Dow Jones Industrial Average gained 0.59%, while the Standard & Poor’s 500 picked up 1.94%. The Nasdaq Composite index led, gaining 4.19% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, rose by 1.15%.1,2,3

Stocks Scale New Heights

In a holiday-shortened week, stocks rallied as investors welcomed testimony from incoming Treasury Secretary Janet Yellen to the Senate Finance Committee that suggested lawmakers needed to “act big” on fiscal stimulus, raising hopes for a new round of federal spending.

An orderly presidential transition and the anticipation of a more effective vaccine distribution plan contributed to stocks touching multiple new highs last week. Investor enthusiasm was further supported by a strong start to the fourth-quarter earnings season.

Mega-cap technology companies resumed their market leadership ahead of a full calendar of big tech earnings reports this week. Market momentum stalled a bit into the close on concerns that any stimulus spending bill might come in lower than expected.

Earnings Beating Expectations

One of the concerns of market watchers has been the valuations of stocks. Stocks are currently trading at about 23 times 2021 earnings, above the historical range of 15 to 17 times forward earnings.4

Today’s valuations may be explained by expectations of a strong economic rebound and a concomitant rise in corporate profits. So far, this earnings season appears to vindicate the optimism; With 41 of S&P 500 companies reporting through last Thursday, 91% of them have exceeded estimates by an average of 18.5%.5

Investors are expected to continue to watch company earnings in the weeks ahead to see whether these consensus-beating results continue.

This Week: Key Economic Data

Tuesday: Consumer Confidence.
Wednesday: Durable Goods Orders. FOMC (Federal Open Market Committee) Announcement.
Thursday: Gross Domestic Product (GDP). Jobless Claims. New Home Sales.

Source: Econoday, January 22, 2021
The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.

This Week: Companies Reporting Earnings

Monday: KimberlyClark (KMB).
Tuesday: Microsoft (MSFT), General Electric (GE), Advanced Micro Devices (AMD), Verizon (VZ), Johnson & Johnson (JNJ), Lockheed Martin (LMT), Starbucks (SBUX), 3M Company (MMM), Texas Instruments (TXN), Novartis (NVS), D.R. Horton (DHI).
Wednesday: Apple (AAPL), Facebook (FB), AT&T (T), Boeing (BA), Abbott Laboratories (ABT), ServiceNow, Inc. (NOW), General Dynamics (GD), Norfolk Southern (NSC).
Thursday: McDonalds (MCD), Comcast Corp. (CMCSA), Southwest Airlines (LUV).
Friday: Caterpillar (CAT), Chevron (CVX), Eli Lilly (LLY), Honeywell International (HON), Charter Communications (CHTR).

Source: Zacks, January 22, 2021
Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.

“In the depth of winter, I finally learned that there was in me an invincible summer.”

– Albert Camus

Know and Understand Your Correct Filing Status

Taxpayers need to know their correct filing status and be familiar with each choice.

When preparing and filing a tax return, the filing status affects:

  • If the taxpayer is required to file a federal tax return

  • If they should file a return in order to receive a refund

  • Their standard deduction amount

  • If they can claim certain credits

  • The amount of tax they should pay

Here are the five filing statuses:

Single: Normally, this status is for taxpayers who are unmarried, divorced, or legally separated under a divorce or separate maintenance decree governed by the state law.

Married filing jointly: If a taxpayer is married, they can file a joint tax return with their spouse. When a spouse passes away, the widowed spouse can usually file a joint return for that year. 

Married filing separately: Married couples can choose to file separate tax returns, when doing so results in less tax owed than filing a joint tax return. 

Head of household: Unmarried taxpayers may be able to file using this status, but special rules apply. For example, the taxpayer must have paid more than half the cost of keeping up a home for themself and a qualifying person living in the home for half of the year.

Qualifying widow(er) with dependent child: This status may apply to a taxpayer if their spouse died during one of the previous two years and they have a dependent child. Other conditions also apply.

* This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax professional.

Tip adapted from IRS.gov6

Keeping Your Heart Rate Up (When Temperatures Are Down)

Colder weather can steal our motivation to leave the warmth of our homes unless we have to. But your workouts don’t need to stop during the winter. Here are a few ways you can feel the burn indoors, while Mother Nature keeps it cool outside.

Hop to it with a rebounder (a mini trampoline) or a jump rope. If you have neither, fake it by keeping your hands to your sides and rotate them as you mimic the rest of the exercise sans equipment.

Find a YouTube video or other streaming guided workout. Can’t squeeze in a full half hour at once? Pause it and return when you’re ready.

If you can afford it, invest in a piece of workout equipment you know you’ll use. If you run or hike, consider a treadmill with an adjustable incline. Like to ride your bike? Consider getting a stationary one.

There are lots of ways to stay fit while winter rages on outside. But don’t forget to always make sure to discuss any medical concerns with your health care provider before beginning any fitness routine; the information provided is not a substitute for medical advice.

Tip adapted from Real Simple7

A man claims he was 88 years old two days ago, and yet he also tells you that he will turn 91 next year. How can this be?


Last week’s riddle: Four cars approach an intersection with four-way stop signs simultaneously, each car coming from a different direction. After stopping, the drivers all accelerate at the same time. However, there is no accident. How is this possible?  Answer: All four cars made right turns.

Lake Crescent, Olympic National Park, Washington State.

Footnotes and Sources


1. The Wall Street Journal, January 22, 2021

2. The Wall Street Journal, January 22, 2021

3. The Wall Street Journal, January 22, 2021

4. CNBC, January 21, 2021

5. Earnings Scout, January 21, 2021

6. IRS.gov, October 1, 2020

7. RealSimple.com, December 12, 2018

Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost.

The forecasts or forward-looking statements are based on assumptions, may not materialize, and are subject to revision without notice.

The market indexes discussed are unmanaged, and generally, considered representative of their respective markets. Index performance is not indicative of the past performance of a particular investment. Indexes do not incur management fees, costs, and expenses. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results.

The Dow Jones Industrial Average is an unmanaged index that is generally considered representative of large-capitalization companies on the U.S. stock market. Nasdaq Composite is an index of the common stocks and similar securities listed on the NASDAQ stock market and is considered a broad indicator of the performance of technology and growth companies. The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) and serves as a benchmark of the performance of major international equity markets, as represented by 21 major MSCI indexes from Europe, Australia, and Southeast Asia. The S&P 500 Composite Index is an unmanaged group of securities that are considered to be representative of the stock market in general.

U.S. Treasury Notes are guaranteed by the federal government as to the timely payment of principal and interest. However, if you sell a Treasury Note prior to maturity, it may be worth more or less than the original price paid. Fixed income investments are subject to various risks including changes in interest rates, credit quality, inflation risk, market valuations, prepayments, corporate events, tax ramifications and other factors.

International investments carry additional risks, which include differences in financial reporting standards, currency exchange rates, political risks unique to a specific country, foreign taxes and regulations, and the potential for illiquid markets. These factors may result in greater share price volatility.

Please consult your financial professional for additional information.

This content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG is not affiliated with the named representative, financial professional, Registered Investment Advisor, Broker-Dealer, nor state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and they should not be considered a solicitation for the purchase or sale of any security.

Copyright 2021 FMG Suite.

Summit Financial Group of Indiana
https://summitfinancialgroupofindiana.com/

Licensed in these states: Florida, Illinois, Indiana, Kansas, Kentucky, Maryland, New Hampshire, New Jersey, Ohio, Pennsylvania, South Dakota, Texas, Minnesota, North Carolina, Montana.


Securities offered through Regulus Financial Group, LLC. Member FINRA/SIPC. Investment advisory services offered through Regal Investment Advisors, LLC, an SEC Registered Investment Advisor. Registration with the SEC does not imply any level of skill or training. Regulus Financial Group, LLC and Regal Investment Advisors are affiliated entities. Summit Retirement Advisors, LLC and Summit Financial Group of Indiana are affiliated entities. Summit Retirement Advisors, LLC and Summit Financial Group of Indiana are independent of Regulus Financial Group, LLC and Regal Investment Advisors.

This informational email is an advertisement and you may opt out of receiving future emails. To opt out, please click the "Unsubscribe" link below.
This message was sent by
Summit Financial Group of Indiana
(765) 447-1330
4050 Britt Farm Drive
Lafayette, IN 47905
Unsubscribe
Check the background of this firm/advisor on FINRA’s BrokerCheck.