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.
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
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