Last year as the pandemic broke out in China, we looked to the east for signs of what life may be like dealing with lockdowns and a slow return from lockdowns.
For much of 2020, we were locked in our homes and have been waiting for life to return to normal. Thanks to government transfer payments, even those who lost their jobs saved money. According to the New York Times, in 2020, personal income increased by over $1 trillion and spending decreased by over $530 million. This means that American consumers are sitting on a $1.5 trillion war chest that is ready to be unleashed in the years ahead. If January retail sales are a hint of what's to come in 2021, retail spending will be powerful.
It was a year ago when COVID fears rocked the financial markets and pushed economies into lockdown. While all of us had hoped that it would end in short order, we still find ourselves socially distanced and are just passing the peak of the 2nd wave. The good news is that cases are falling quickly and vaccinations are on the rise. With the Great Re-Opening coming, we will be ready to emerge from our homes in a big way.
This is one of my favorite posts to write every year as we get to look back on Wall Street predictions and see how they panned out. We have done this in 2014, 2015, 2016, 2017, 2018, 2019, and 2020 so it is a tradition to see which strategists did well and which missed the mark.
Last year, the strategists predicted a slight up year market for 2020 with an average target of +1.6%, 3283, for the S&P 500. Of course, no one predicted a global pandemic, and I doubt they would have forecast this number if they knew what was ahead. Despite the lockdown induced recession, the epic stimulus from the Fed and policy makers helped drive stock market indices to all time highs and the S&P finished at 3756, up over 16%.
Last year's biggest bull was CSFB's Jonathan Golub at 3425 and that wasn't very close. Second place was a three way tie with a prediction of 3400. Now let's take a look at their thoughts on 2020...
On Tuesday, President elect Joe Biden announced that former Fed Chair Janet Yellen is his pick to be Treasury Secretary. Given her successful tenure as Fed Chair from 2014 to 2018, the pick looks like a winner from the start. Let's take a look at why she is a great choice in the current environment.
On November 9, 2020, Andy and Chris spoke on a zoom call with the friends of Tuckahoe Public Library to discuss "Financial Literacy: The Pandemic's Impact on the Economy and Financial Markets." In the talk, we cover a lot of ground including:
Earlier this week, we said that the market may be predicting another Trump upset, but another indicator is predicting our incumbent president's loss. The "Presidential Predictor," popularized by Sam Stovall, CFRA's chief investment strategist, tracks the S&P 500 performance from July 31 to October 31. Going back to 1944, it has found that a positive move over that period usually translates to an incumbent victory, while a negative move translates to a loss.
Most polls have Biden well ahead of President Trump and betting markets have Trump as an underdog with just a week to go before Election Day. However, we know that in 2016, Trump was in a similar position so it wouldn't be that shocking to see another upset win for Trump. The battleground states are very tight races so anything is possible. What is the stock market telling us about who will win the White House?
Last night on Capital One's 3Q earnings call, their founder and CEO Richard Fairbank made some interesting comments about what the credit card company is seeing in the COVID affected economy. Fairbank has over 30 years experience and has seen many economic downturns so his perspective is invaluable. He said, "This is the biggest disconnect that I certainly have experienced in my three decades of building Capital One between what we see in the economy itself and the actual performance of the consumer, especially from a credit point of view."
The Presidential election is just 26 days away and many investors are worried about the implications to their investments. While we know that polling isn't perfect, former VP Joe Biden is leading national polls and is well ahead of where Hillary Clinton was four years ago. A lot can happen in four weeks, but if Joe Biden wins the election, will his policies mean higher taxes and potential big losses to your investment portfolio?
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