Seasons Greetings, Friends,
"It's the Most Wonderful Time of the Year" according to the old yuletide tune sung by crooner Andy Williams. As a new year approaches, many of us will reflect on the year that has passed and look forward to a better new year. We look forward to spending quality time with family and friends as we prepare to go out of town or have visitors in for the holidays.
In our Thanksgiving note to clients, we expressed our sincere gratitude to our clients and the professions that make our lives free, healthy, and prosperous. One group we failed to specifically thank were our education professional friends. They deserve all our recognition and acknowledgment for a job well done in the face of challenging environments in the classrooms, cafeterias, and school buses. You have earned the coming time off and rest over the holidays. Thank you for all you do.
For sure, it is a busy time. Holiday shopping, parties, tree-trimming and year-end cheer may already be on the calendar. We truly hope you are enjoying the season and not allowing stresses to interfere with your jolliness.
Following nice gains in October, November gave up some of the gains and the markets found themselves under a little Omicron/inflation/headline pressure.
The news (and trading machines) caused markets to be whipsawed when the realization emerged of another variation of COVID-19. Black Friday turned into a spanking for the major market averages as the announcement came out about a new variant of the COVID-19 virus was found in South Africa. The supposition was that, although it was identified, it likely had already started to “migrate” to other parts of the world.
A few days later, Fed Chairman Jerome Powell further riled the traders with news that the Federal Reserve, in response to higher inflation, would certainly continue easing the bond repurchases (taper) and would be looking at interest rates more closely. The expected market reaction of “sell on the news” occurred with the potential of a tightening might pull the punch bowl of cheaper money and liquidity away. No one likes a diet during the holidays.
It is interesting that the continent of Africa has received little in the way of vaccination assistance – in fact it is estimated that only 23% of the population has received an initial inoculation. Also, initial indications are that this new variant has less potential for severe complications – especially among the fully vaccinated. Let’s certainly hope that that is indeed the case.
Not to sound too dismissive, but like the great philosopher Yogi Berra, this all sounds like “Déjà vu all over again”. And like times before, the markets have a knee-jerk reaction and then ameliorate with the realization that our healthcare protocols have been tested and work.
And, while the Fed may be removing the “transitory” label to their inflation appraisal, we doubt very seriously that it will get out of control once supply chains reopen and consumers fully return to normalcy (which they will some day). By all accounts, stronger earnings are still being realized by the vast majority of companies in the S&P 500.
Bottomline: spend time preparing for a great Holiday Season and let’s not let the noise interfere with your merriment.
Again, hopefully your Holiday Season with be joyous. Best wish for good health and happiness always. Let’s make the new year the best and most prosperous as possible.
As always, thank you for the trust and confidence you place in us. It is something we never take for granted and sincerely appreciate. Please do not hesitate to reach out whenever you have questions, concerns or whenever we may be of service to you.
Joe Downs, CFP® & John Cunningham, CFP®