The Week Ahead
Your Weekly News and Updates
January 4th, 2021
Happy New Year! Best wishes for peace and health in the New Year. I am also wishing for “Fun in ’21!”
I wanted to forward along Goldman Sachs’ recently released Market and Economic Perspectives (attached to this email). The piece covers an array of topics including Macroeconomics, Politics, and Capital Markets. Please see below several of the key themes we identified with the corresponding slide and our thoughts. As a reminder from our last correspondence, we are seeking to benefit from the “recovery trade ” in our portfolios, and are tilting more towards equities, with a lean towards International, Emerging Markets, and US Small & Mid Cap (while still holding on to technology).
Key Themes from Goldman Sachs
1. Capital Market Forecasts (Slide 5): This slide covers Goldman’s forecasts on various asset classes for the next 3, 6 and 12 months. Goldman is expecting a strong year for global equities as low rates, stimulus and the distribution of a COVID-19 vaccine provide an ideal environment for equities (Goldman S&P 500 12 month target: $4,300 (~18% upside to current price)). As mentioned above, we share this view and have tilted client portfolios towards equities. Additionally, Goldman is bearish on the US Dollar and bullish on Gold, sharing views with several other notable Investment Managers such as Van Eck. We share these views as well (another reason we favor emerging markets and international as they tend to outperform when the dollar weakens).
2. Global Growth (Slide 7): This slide shows GDP forecasts for 2020 and 2021 from Goldman and the consensus view. Both are expecting a strong GDP recovery in 2021 in the US and globally, with Goldman a bit more optimistic than the consensus. 2021 US GDP Forecasts • Goldman Sachs: 5.0% | Consensus: 3.8% • Global – Goldman Sachs: 6.1% | Consensus: 5.2% A strong economic recovery will likely benefit cyclical companies, many of which are still “unloved” by investors. Along with our general tilt towards equities, we have reintroduced these “unloved” asset classes, which include Value and US Small & Mid cap.
3. International Equities (Slide 18): This is an excellent slide showing the domicile of the 50 top-performing companies within the MSCI All Country World Index (ACWI). As shown, for 9 out of the past 10 years, the US has accounted for about one third (or less) of the top-performing companies in the Index (12 out of 50 so far in 2020), which seems hard to believe given the success of US stocks over that time period. This slide bolsters our belief in global investing, but we will note the importance of having a manager who can identify the right opportunities, ie, active management.
4. Credit (Slide 21): This slide covers current Bond Spreads and Default Rates in the US and Europe. Goldman is leaning away from “core” and instead favoring Credit in 2021 due to the accommodating monetary policy already put in place by the Federal Government, along with the Federal Reserve making clear their intention to intervene when needed. Although we have tilted towards equities heading into 2021 within our models, we have not abandoned fixed income entirely in our more conservative portfolios. Given the current interest rate environment, we are focusing our fixed-income allocations to Multisector solutions that will invest in spread products and other non-traditional fixed income to provide upside.
As always, feel free to contact us if you would like to have a further conversation on these topics or your portfolio in general. Have a great week!
CURRENT STATE OF THE MARKET
Weekly Market Commentary 1.4.2021: S&P 500 Finishes the Year at a Record High, Unemployment Numbers Decrease Slowly
Published by The Carson Group, LLC
The S&P 500 wrapped up a surprising year with another strong week. The index of large-cap stocks, including dividends, climbed 1.5% and finished 18.4% higher for the year. Figure 1 shows the performance of the S&P 500, ex-dividends, in 2020 and just how far stocks have roared back from their lows. Global stocks powered 1.4% higher last week to finish the year up 16.3%. The Bloomberg BarCap US Aggregate Bond Index gained 0.2% and finished up 7.5% for the year….Read More
MARKET OUTLOOK 2021
Your Market Outlook for 2021LPL Research Provided by Taylor Financial Group, LLC
More than most years, it’s hard to look ahead to the next year, to 2021, without looking back at 2020. A global pandemic, a massive economic collapse, a bear market, a surprisingly sharp reversal, a hotly contested election where passions ran high, the impact of lockdowns—it was an unusual year of extraordinary challenges…Read More
UPCOMING WEBINARS
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The Year in Review and a Look Ahead: Six Planning Ideas for 2021 and Beyond
Client Only Webinar: Thursday, January 7th at 4:15 pm EST
Prospect Webinar: Thursday, January 14th at 4:15 pm EST
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Here’s what you’ll learn:
1. Potential economic policy and tax changes under the Biden administration and how they may impact your future planning
2. Planning strategies to utilize in 2021 to help lower your tax bill
4. Investments to Consider for 2021
5. Ways to improve your Wealth in 2021 and Beyond
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STIMULUS CHECK UPDATE
When Will Your Second Stimulus Check Arrive? It May Already Be On Its Way
Kiplinger Article Provided by Taylor Financial Group, LLC
If you don’t receive a direct deposit by early January, watch your mail for either a paper check or a debit card. The IRS will start mailing paper checks on Wednesday, December 30. To speed up delivery, a limited number of people will receive their second stimulus payment by debit card. But the form of payment for your second stimulus check may be different from your first payment. Some people who received a paper check last time might receive a debit card this time, and some people who received a debit card last time could receive a paper check…Read More
Is Your Stimulus Check Taxable?
Kiplinger Article Provided by Taylor Financial Group, LLC
I’ve heard the question many times: Will I have to pay tax on my stimulus check? The tax code says you have to pay taxes on “all income from whatever source derived,” unless it’s specifically exempted or excluded. That’s a pretty broad definition that seemingly would include money from the government. And, strictly speaking, there’s no specific exemption or exclusion for stimulus check money. So, stimulus checks are taxable – right?.. Read More
COVID-19 HEALTH AND WELLNESS
What You Can Do Post-Vaccine, and When
The New York Times Article Provided by Taylor Financial Group, LLC
Scientists cite several reasons for staying masked and cautious as you start your post-vaccine life. Vaccines don’t offer perfect protection; we don’t yet know whether vaccinated people can spread the virus, and coronavirus is likely to continue its rapid spread until a large majority of the population is vaccinated or has survived a natural infection..Read More
LAST WEEK WITH THE TFG TEAM…
Last week, we celebrated Operations Associate, Rob Papa’s 2nd work anniversary. Thank you for all your hard work over the past two years!
“Don’t make resolutions without an action plan.
The secret to success is right in your hands.
-J. Allen Shaw
