The winter weather we have seen this past week across much of our country has been crippling in many ways. A State like Texas simply is not prepared to handle the extreme cold, snow, and ice, that have hit much of the population hard over the course of a few days. This will be the first real test of the new Administration and will also pave the way for a fresh round of discussions on the infrastructure that is so badly needed in many places.
All of this comes on the heels of the ongoing debate regarding the next round of needed stimulus. Janet Yellen, our highly respected new Treasury Secretary, once again reiterated the need to go “big” with these proposed spending bills. The logic here appears to be centered on the ability to borrow now, while rates are low. From an economic standpoint, I get it. But the spending and revenue gaps continue to widen and the long-term effects of this could be problematic. It is clear, those that are the hardest hit, need more near-term support. All of this seems contradictory to the 1st quarter GDP estimates that are showing strong manufacturing and real-estate segments. Even the retail sector has shown steady improvement from their low levels of last year. The unemployment levels in these sectors hardest hit by the pandemic should be the main priority of any future stimulus deals, and that seems to be where the current talks are stalling.
From a financial markets’ perspective, we remain mostly in a sideways pattern. I view this as a positive considering the events of the past week, including the log jam on the vaccine distribution. As we have discussed previously, it is believed that J&J will receive their emergency use approvals late next week. This should start to help alleviate some fears and allow for a wider distribution. The next hurdle will be to convince those still in doubt that it is in fact safe and needed to get us all back to a more normal place.
With the impeachment proceedings now in the past, perhaps the focus can now truly shift to moving forward. There is still a lot of “healing” that needs to take place in this country, but I believe we can now see a clearer path to the other side. While there will be challenges ahead, the prospects for a strong 2021, from an investment perspective, remain intact. As always, we are here for any questions or further guidance.
Have a safe, healthy, and enjoyable weekend ahead!