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Mosaic Weekly Article 01/15/2021

January 18, 2021
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As we close out the first two weeks of 2021 and race towards inauguration day, there remains plenty to talk about. We have received many phone calls and emails from clients asking about our thoughts on our President-elect, the new administration’s agenda, the roll-out of the vaccines and the economic impacts to our financial markets. That’s a mouthful to consider for sure! Let me tackle a few of these items and layout our thoughts.

 

There is no question that we remain a country divided. That much is evident from the actions that took place at our Capitol last week. We have to remember that nearly 47% of voters supported President Trump, like him or not. This country will need time to heal, but we must move forward, and President-Elect Biden is as moderate a Democrat as possible and his long political record generally shows that. His agenda will most likely attempt to move the country back towards the “middle”, if that is even possible given the current state of affairs.

 

So where does that leave us from a financial standpoint? STIMULUS. This will be front and center in the weeks ahead. Last night President-Elect Biden released his $1.9 Trillion stimulus plan which is at the top end of what was expected. More fiscal spending means more dollars flowing into the hands of those that need it the most right now. It is also believed that the coming stimulus will be much more targeted to the individuals and sectors of the economy hit the hardest (think service industries for example). The Federal Reserve has also reiterated this week that while inflation remains low, they would like to see it rise above 2% for an extended period of time before any moves higher in interest rates would be warranted. Maximum employment is another target in the recovery process. We remain far from those numbers at this point. The bottom line is that interest rates will remain low for the foreseeable future. In our opinion, tax hikes remain the biggest risk to the markets going forward, particularly on the corporate side (which would impact earnings) and on the capital gain front. Any large push on these agenda items could cause ripples across the board. While we don’t see this as a near-term threat, it is something we will have to watch and consider.

 

The recovery over the last 6+ months has been truly amazing. Yet, we really do have a long way to go when you consider the impact to our daily routines. Make no mistake, there is pent-up demand to travel, shop, eat-out, etc. As vaccines continue to roll-out and prove successful, spending in the “new economy” will prevail. The actions already taken by the past and soon-to-be administrations have set the table for continued growth in 2021. It is our belief that things will remain robust for at least the next 6-9 months. As your trusted advisors, we remain diligent in our investing process and will continue to make the adjustments needed to keep you on track.

 

My personal takeaways from 2020: Flexibility, Patience, Kindness, Exercise, and Wine (not necessarily in that order)!