Vaccine Hopes Prop Up Prices July 20, 2020 Weekly Update Print Please note: This update was prepared on Friday, July 17, 2020, before the market’s close. A vaccine for COVID-19 is already working its magic on one coronavirus victim: Wall Street. Despite worrisome signs that the nascent economic recovery in the U.S. may be backsliding and news that COVID-19 cases are rising in the South and Southwest, the broad stockA financial instrument giving the holder a proportion of the ownership and earnings of a company. market has again moved into positive territory for the year on hopes that a vaccine may be available before the end of 2020. Through Thursday, the S&P 500 has returned 0.6% for the year while the narrower Dow Jones Industrial Average of 30 stocksA financial instrument giving the holder a proportion of the ownership and earnings of a company. is still in the negative column. The MSCI EAFE index, a measure of developed international stock markets, has lost 7.7%. As of Thursday, the Bloomberg Barclays U.S. Aggregate BondA financial instrument representing an IOU from the borrower to the lender. Bond issuers promise to pay bond holders a given amount of interest for a pre-determined amount of time until the loan is repaid in full (otherwise known as the maturity date). Bonds can have a fixed or floating interest rate. Fixed-rate bonds pay out a pre-determined amount of interest each year, while floating-rate bonds can pay higher or lower interest each year depending on prevailing market interest rates. index’s yieldYield is a measure of the income on an investment in relation to the price. There are several ways to measure yield. The current yield of a security is the income over the past year (either dividends or coupon payments) divided by the current price. was where it stood last week, at 1.17%, down from 2.31% at year-end. On a total return basis, the U.S. bondA financial instrument representing an IOU from the borrower to the lender. Bond issuers promise to pay bond holders a given amount of interest for a pre-determined amount of time until the loan is repaid in full (otherwise known as the maturity date). Bonds can have a fixed or floating interest rate. Fixed-rate bonds pay out a pre-determined amount of interest each year, while floating-rate bonds can pay higher or lower interest each year depending on prevailing market interest rates. market has gained 7.0% for the year. Coronavirus, Not Economics, Driving Sentiment Reports that biotech company Moderna is ramping up trials on a COVID-19 vaccine and a hopeful note from Dr. Anthony Fauci, the government’s leading infectious disease expert, that a vaccine might be available before year-end helped propel stocks higher this week, continuing the trend of optimistic medical news driving stock prices. Economic data was more mixed. The good news is that confidence is increasing among small business owners, overall economic activity has picked up and there’s even been a slight uptick in inflation. However, much of the recently released data reflects conditions from a few weeks ago, when many states were actively reopening, which spurred a big jump in consumer spending. A record number of new COVID-19 cases in the South and Southwest have since compelled many states to pare back their attempts at a return to normal. More “high-frequency” data, which looks at close-to-real-time activity, shows that consumers have pulled back on dining out and air travel. The jump over the three-day Independence Day weekend may have been anomalous. For us, this suggests the market’s recent confidence may be built on shaky ground. Hopeful outcomes rest upon the quicksand of the medical data. It remains too early to do more than hazard a guess as to how the upcoming flu season, when the medical establishment will be fighting two viruses at the same time, will impact trader sentiment (not to mention day-to-day life). So far though, optimism prevails. We’ll take gains when and where we find them, but we haven’t forgotten that high returns driven by hopeful headlines can quickly come crashing down to Earth. We believe our tactical strategies’ ability to react defensively to changing trends is a strength during such times of uncertainty. Our ‘Take Your Pick’ Economy While medical news appears to be driving stocks, the “take your pick” economic news continues to confound investors. For example, the Federal Reserve Bank of Atlanta’s “Nowcast” forecasting tool indicates the economy may have contracted at a 35% annual rate in the second quarter. Note: Chart shows changes in Atlanta Fed’s “Nowcast” forecast for annualized second-quarter GDP growth from 4/30/20 through 7/17/20. Source: Federal Reserve Bank of Atlanta. Is that good? No, it’s horrible. But it’s better than the 54% contraction the tool, developed by some of the nation’s top economic analysts, was predicting in early June. Manufacturing and industrial production have rebounded 11% and 7%, respectively, off of their April bottoms. But both measures are still more than 11% below where they were at the beginning of the year—which wasn’t exactly a high point either. Plus, the jobs numbers aren’t really maintaining the rapid rebound we saw initially. Some 1.3 million workers were laid off just last week. While that might be an improvement over prior reports, it’s still not good. At the beginning of the year, the number was around 223,000 a week. So, take your pick. The numbers are a little better, but they are hardly rosy. Podcast: What Freelancers Need to Know Some call it a side hustle. Others call it consulting. Whatever label you put on it, more than a third of American workers now have a freelance gig—including many former retirees. In this episode of The Adviser You Can Talk To Podcast, two of our financial planners, Andrew Busa and JonPaul McBride, cover some important need-to-knows for anyone considering taking on freelance work, including: Using freelance income to supercharge retirement savings Tax withholdings and expenses Emergency funds Insurance needs At any stage of your career, having freelance income can be a useful boost to your finances—but only if you’re prepared for the risksThe probability that an investment will decline in value in the short term, along with the magnitude of that decline. Stocks are often considered riskier than bonds because they have a higher probability of losing money, and they tend to lose more than bonds when they do decline. and rewards of this kind of work. Click here to listen now! ***** Financial Planning Focus: Financial Planning in Your 60s—5 Things to Do Before You Retire According to a recent survey, 64% of Americans are not prepared for retirement. We don’t want you to be part of that statistic. Retirement is a major life milestone, and it requires not only financial readiness but emotional preparedness, as well. Complete the five steps below to retire with confidence: Plan for Your Free Time. Many people look forward to having more free time in retirement. Far fewer have a plan for exactly what they’ll do with it. The average retiree watches around 40 hours of television per week—we think ensuring an enjoyable retirement requires a bit more than adding a Disney+ subscription to go along with Netflix. Whether you’re interested in continuing to use your professional expertise as a consultant or devoting more time and money to causes you care about, don’t let this aspect of life become an afterthought. Understand Your Social Security Benefits. Social Security is the number-one topic pre-retirees have questions about. Your first step to getting answers is creating an account at www.ssa.gov to get an estimate of what your Social Security benefits will look like. When you choose to begin taking Social Security will impact your income throughout your retirement—claiming it early could cost you thousands; delay a little longer than the standard retirement age and you can reap substantial benefits. For married couples, especially, it can be worthwhile to talk to your adviser about how to strategically maximize your Social Security payments. Create a Health Care Strategy. Enrolling in Medicare when you reach age 65 is crucial, but there’s more to health insurance in retirement than that. If you plan on retiring before 65, how will you bridge the gap between employer coverage and Medicare? Will Medicare be sufficient for your needs, or will you need supplemental insurance for items it doesn’t cover? There are many options, but a financial planner or insurance expert can help you navigate the complexity. Top Off Your Emergency Fund. It’s always a wise move to hold three to six months’ worth of expenses in a cash account to meet unexpected needs that pop up, but it’s especially important as you prepare to retire. Yes, you will have your asset base to draw on to meet those expenses. But ideally, you’ll want to keep that money invested, since it may have to last 25 or 30 years once you’ve retired. Revisit Your Financial Plan. A well-built financial plan can provide a roadmap to retirement, but it’s important to course-correct as the day draws near. As you decide where and when to retire, you should review your spending needs, estimate your taxes (especially if moving to a new state or selling your home) and consolidate accounts to get the clearest possible picture of your retirement income. It’s also a good idea to review your investment portfolio and make sure it’s allocated to defend your assets as you transition into retirement. Taking the time to go over your plan will let you make any necessary adjustments so that you can retire with peace of mind about your finances. We believe a comprehensive financial plan is the most powerful tool you have at your disposal in preparing for what comes next—we advise anyone lacking one to speak to a trusted financial planner and get started sooner than later. ***** Adviser Investments’ Market Takeaways This week in our Today’s Market Takeaways video series, EquityThe amount of money that would be returned to shareholders if a company’s assets were sold off and all its debt repaid. Research Analyst Kate Austin shares her outlook for the upcoming earnings season and Vice President Steve Johnson discusses how to prevent your emotions from driving your investing. Looking Ahead Next week’s slate includes several important reports, including the Chicago Fed’s National Activity Index, new and existing home sales, and manufacturing and service sector purchasing managers’ indexes. As always, please visit www.adviserinvestments.com for our timely and ongoing investment commentary. In the meantime, all of us at Adviser Investments wish you a safe, sound and prosperous investment future. About Adviser Investments Adviser Investments is a full-service wealth management firm, offering investment management, financial and tax planning, managed individual bond portfolios, and 401(k) advisory services. We’ve been helping individuals, trusts, institutions and foundations since 1994, and have more than 3,500 clients across the country and over $7 billion in assets under management. Our portfolios encompass actively managed funds, ETFsA type of security which allows investors to indirectly invest in an underlying basket of financial instruments (these may include stocks, bonds, commodities or other types of instruments). Shares in an ETF are publicly traded on an exchange, and the price of an ETF’s shares will fluctuate throughout the trading day (traditional mutual funds trade only once a day). For example, one popular ETF tracks the companies in the S&P 500, so buying a share of the ETF gets an investor exposure to all 500 companies in the index., socially responsible investments and tactical asset allocation strategies, and we’re experts on Fidelity and Vanguard mutual funds. We take pride in being The Adviser You Can Talk To. Our minimum account size is $350,000. To see a full list of our awards and recognitions, click here, and for more information, please visit www.adviserinvestments.com or call 800-492-6868. Please note: This update was prepared on Friday, July 17, 2020, before the market’s close. This material is distributed for informational purposes only. The investment ideas and opinions contained herein should not be viewed as recommendations or personal investment advice or considered an offer to buy or sell specific securities. Data and statistics contained in this report are obtained from what we believe to be reliable sources; however, their accuracy, completeness or reliability cannot be guaranteed. Our statements and opinions are subject to change without notice and should be considered only as part of a diversified portfolio. You may request a free copy of the firm’s Form ADV Part 2, which describes, among other items, risk factors, strategies, affiliations, services offered and fees charged. 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