Market Update – August 14, 2020 This Week in the Market

A fairly subdued market this week as investors are trying to comprehend all of the new data.  

Unemployment numbers for new claims continue to be shockingly high, although they are decreasing at a slow pace. 16 million people are holding their breath waiting for Congress to extend the federal unemployment payments as they haven’t received a check now since the end of July. Most pundits felt the market and economy would take a pretty big hit without these weekly checks for the unemployed, however the market has not responded that way.  Once again proving the connection between the stock market and reality has never seen this level of disconnect.  Further proving this point, the University of Michigan’s consumer sentiment Index showed that Americans are feeling uneasy, while the sentiment trader index showed that concerns about a stock market decline has decreased.

The average investor has a lot to digest with the upcoming election and fears of the direction of COVID-19. This is illustrated with the current stock trading volume averaging 25% of normal this week, showing that the average person is sitting on their hands waiting for some more information.

We are doing the same. History tells us that the market performance for August, September, and October will have a great deal to do with the election.  With an incredibly high accuracy rate, if the market is up for those three months, the incumbent will be reelected, if the market is negative there will be sweeping change.  However, we’ve never had a recession, a pandemic and a general election at the same time.

On a planning note please remember that if you took a required minimum distribution this year and you found yourself spending less money because of the current world situation, Congress has allowed you to give it back to your retirement account and then get a refund for the taxes paid for the calendar year 2020. The rollover must be done no later than 08/31/20, so if you’re interested in doing this please reach out to us immediately.  

As always, reach out to us if you have any questions or concerns.  We are always available via email, for a phone meeting, a Zoom video meetings and the occasional face-to-face meeting.  Once again this new normal is quite unique.

Have a great weekend and be safe!

Sincerely,
Ironwood Financial

Market Update – July 9, 2020 Today in the Market

Dear Clients and Friends,

On a bright note, new jobless claims came in better than expected, beating estimates by about 100,000 at around 1.3 million new claims.  This continues the trend downward, but it’s still a big number.  Even more positive, continued claims also fell, which shows that even with the roughly 1.5 million people filing new claims, more than that are returning to work, at least as of two weeks ago.

While this is good news, this spooked the market as we are expecting another stimulus package to come out in the coming weeks.  If the economic data were truly terrible, then we could expect a bigger package.  The better the economic picture, the more pushback there will be against further spending and stimulus plans.

I found this article to be interesting as it seems to show that the previous stimulus package is running out of steam, at least in terms of consumer spending.  The chart also breaks down the partial impact on spending by wealth.  The data in the coming weeks will be closely watched, and it may be that the better the data, the worse the market performs as it means less free money from the Government.

https://finance.yahoo.com/news/case-for-more-fiscal-stimulus-clearer-than-ever-morning-brief-100751703.html

As always, please contact us if you would like to discuss your specific situation.

 

Be Safe!

Sincerely,

Ironwood Financial