Year-end Update on the Virus, the Economy and the Markets - November 23, 2020
Several months have passed since my last communication to you. During the initial days and weeks of the pandemic as we were overwhelmed with the fallout from COVID-19, I felt it was necessary to let you know as much information as possible. My desire was to lower the level of anxiety that you felt with regards to your investments and the markets. There was a tremendous amount of uncertainty with all aspects of our lives and I wanted you to be able to put the financial world in perspective. As so much has happened in the roughly nine months that we have been affected by the virus, I think now is a good time to assess where we are heading into 2021. Let us revert to the format that we used previously and start with the virus.
COVID-19
The virus is roaring back as we are in the middle of being swamped by the “second wave”; there are 361 new cases in NH as of Sunday, November 15th, while nationally we had over 133,000 reported new infections on November 16th. There have been almost 250,000 people in the United States that have died with COVID-19 since the beginning while in New Hampshire we will cross the 500-person plateau soon. These grim stats are offset by some very exciting news that as of this morning (November 16th) there are 2 separate vaccines that are on track to be approved within the next month or two. Both vaccines have shown to be over 90% effective. Our level of testing continues to increase, and you likely know someone who contracted the virus or most certainly know someone who knows someone that tested positive. For now, NH is in good shape and can handle the case load from a severe illness standpoint as our statewide hospitalizations are currently only 69.
The Economy
For all of us there is a constant struggle between doing what is necessary to “defeat” the virus with our social distancing, mask wearing, sanitizing, and limiting our gatherings and conversely trying to return to normal life. For all of you with kids in school there is no “normal” anymore. Words like remote learning, hybrid model, color codes and pods are part of a brand-new language to identify where your child is supposed to be on any given day. Many businesses have reopened with a much different look and feel with plexiglass around registers and “Stand Here” stickers on floors. The big chain stores do much more business online or with curbside pickup while more local companies battle to be safe but profitable. When looking at key measures of the economy, we are not completely back to pre-pandemic levels but by most measures we are continuing to improve. Unemployment hit a high of nearly 15% and is now back under 7%. We just hit our highest ever recorded increase to GDP (Gross Domestic Product) at +33.1% for the 3rd quarter, however that followed the worst quarter in recorded history at -31.7%. More governors are restricting or locking down our economy to try to slow the spread of the virus and they are challenged with not killing the economy while trying to eliminate COVID-19.
The Markets
We are hitting all time highs with the S&P 500, the Dow Jones Industrial Average and the NASDAQ. While writing to you earlier in the year we recommended that if you were a “long term investor” you should hold the course with your investment portfolio and it appears that most of you were rewarded for that. The markets will continue to be volatile as we finish up the election and get clarity on what our government will look like. The markets pushing to new record highs right after the election shows that investors are pleased with the apparent results of a Biden win and divided congress (we will know the Senate for sure after the January 5th Georgia Senate runoff elections). The markets are reacting as expected after the Government passed a $2.3 Trillion CARES relief package in late March and The Federal Reserve provide over $3 Trillion of liquidity to sure up our debt/bond markets.
2021
I think 2021 is shaping up to be a very good year. We should make significant progress in battling the virus with the new vaccines and improved treatment protocols. Every day more people are getting their jobs back or securing new work. There are some sectors of the economy that should come back, like hospitality, entertainment, and travel. I think by the fall of 2021 we will be living our lives much closer to the fall of 2019 than we are living now.
As always, feel free to contact our office to discuss your personal situation. Have a safe holiday season and remember that every day we are one day closer to the end of this!
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