Weekly Market Notes – June 7, 2021

For the Week of June 7, 2021

    The Markets

Stocks rose Friday. The Labor Department’s May jobs report showed unemployment fell to a pandemic-era low of 5.9 percent, and new job growth was stronger than April’s but short of expectations. The mixed news appeared to assure investors the Fed would retain its accommodating money policies. For the week, the Dow rose 0.69 percent to close at 34,756.39. The S&P gained 0.64 percent to finish at 4,229.89, and the NASDAQ climbed 0.49 percent to end at 13,814.49.

Returns Through 6/04/211 WeekYTD1 Year3 Year5 Year
Dow Jones Industrials (TR)0.6914.5534.9214.4517.00
NASDAQ Composite (TR)0.497.5144.7223.1824.08
S&P 500 (TR)0.6413.3538.0817.6517.28
Barclays US Agg Bond (TR)0.12-
MSCI EAFE (TR)0.7311.2232.518.189.95

Source: Morningstar.com. *Past performance is no guarantee of future results. Indexes are unmanaged and cannot be invested into directly. Three- and five-year returns are annualized. The Dow Jones Industrials, MSCI EAFE, Barclays US Agg Bond, NASDAQ and S&P, excluding “1 Week” returns, are based on total return, which is a reflection of return to an investor by reinvesting dividends after the deduction of withholding tax. (TR) indicates total return. MSCI EAFE returns stated in U.S. dollars.

Did You Need It? — 40.3 percent of college graduates aged 22 to 27 are working in jobs in which they are underemployed, i.e., they are working in a job that typically does not require a college degree. Historically, 33.5 percent of college grads are underemployed (source: Federal Reserve Bank of New York, BTN Research).

Will It Be Spent Eventually? — The personal savings rate in the U.S. in the first quarter 2021 was 21 percent. The personal savings rate in the U.S. in the first quarter 2001 was 5 percent. The personal savings rate is defined as savings (i.e., after-tax income less consumption spending) divided by after-tax income (source: Department of Commerce, BTN Research).

Not a Big Number? — At its peak, 3.7 million home mortgages (out of 52.4 million mortgages nationwide) had requested and received forbearance protection afforded through the CARES Act that was signed into law by President Donald Trump on March 27, 2020. As of March 2021, that total had fallen to 2.2 million home mortgages still in forbearance, or just 4.2 percent of all mortgages (source: Federal Reserve Bank of New York, BTN Research).

WEEKLY FOCUS – June Is Alzheimer’s & Brain Awareness Month

It’s difficult to find someone who has not been emotionally and/or financially impacted by Alzheimer’s. Alzheimer’s is one of our nation’s costliest diseases. According to the Alzheimer’s Association, total payments for all individuals with Alzheimer’s or other dementias are estimated to total $355 billion in 2021 (not including unpaid caregiving). Sadly, afflicted individuals without adequate long-term care insurance frequently lose most, if not all, of their financial assets.

But even dementias’ beginning stages and mild cognitive impairment experienced by healthy seniors can put personal wealth at risk. That’s why it’s important to begin having conversations about your aging family member’s finances well before you see signs of mental decline. Obviously, this has to be done with great sensitivity and respect. Make sure they know you don’t want to take control, but you would like to ensure they are protected and their wishes honored in the years to come.

During ongoing dialogs, try to learn what you’ll need to know if it becomes necessary to manage their finances: the names and contact information of their financial planner, accountant, and attorney; financial records and where they are kept; their monthly income and the sources; insurance policies; the location of financial accounts; regular bills and how they are paid; and log-in information for online accounts.

Suggest meeting jointly with their financial professional and/or other family members. Gain an understanding of their priorities and wishes. Ask which assets are most important to them, what causes they want to support, and whether their will is up to date.

Propose having legal documents created that will allow you or another family member to make decisions if your loved one becomes unable to. This can include: a health care power of attorney (POA) or a more limited living will, either a limited or durable power of attorney for finances, an authorization to disclose account information, and a form authorizing a financial institution to contact you if concerns arise about their ability to manage finances. Not having these documents when they’re needed can make helping your elderly relative considerably more difficult. For example, without a POA, you may need to go to court to attain guardianship of your family member to access accounts on their behalf.

Contact our office if you would like more information about protecting your loved one or help creating a plan to care for them.

The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Morgan Stanley Capital International Europe, Australia and Far East Index (MSCI EAFE Index) is a widely recognized benchmark of non-U.S. stock markets. It is an unmanaged index composed of a sample of companies representative of the market structure of 20 European and Pacific Basin countries and includes reinvestment of all dividends. Barclays Capital Aggregate Bond Index is an unmanaged index comprised of U.S. investment-grade, fixed-rate bond market securities, including government, government agency, corporate and mortgage-backed securities between one and 10 years. Written by Securities America, Copyright June 2021. All rights reserved. Securities offered through Securities America, Inc., broker-dealer and member of FINRA and SIPC. Investment advisory services offered through Securities America Advisors, Inc. and/or Arbor Point Advisors LLC, registered investment advisers. Securities America, Inc., Securities America Advisors, Inc., and Arbor Point Advisors LLC are separately owned and other entities and/or marketing names, products or services referenced here are independent. Securities America • 12325 Port Grace Blvd. • La Vista, NE 68128 • 800-747-6111 • securitiesamerica.com #3621494.1

June 2021 Monthly Outlook – Fully Invested Bear

Financial markets basically traded sideways during May, with stocks gaining 0.5% (S&P 500), while interest rates declined slightly dropping 0.05% (US 10yr Treasury).

We have a number of key economic reports and events in June that may dictate whether the market continues to trend sideways or makes a move either up or down.  On June 4th we get the May Jobs report, which will be an indication of how the job market is recovering with the economy opening up.  June 15-16 is the next Federal Reserve Board meeting, and I will be watching how they respond to the rising inflation we are seeing.  June 30th brings the start of 2nd quarter corporate earnings reports.

June is also a weak month for stocks, producing positive results only 40% of the time over the last 20 years with average returns for the month roughly negative 1%.

Two other factors I am watching closely: 

  1. The total market capitalization (stock price x # of shares) is now at an extreme level compared after a crisis, which then had a multi-month, double-digit pullback before resuming the rally                        
  2. The March 2020 rally to present is starting to resemble a pattern to the 1982 and 2009 recoveries to GDP.  This is one of Warren Buffet’s warning signs that stocks are expensive. 
Expectations (1)

Based on the above, I am operating as fully invested bear.  In the short to medium term, I am cautious about a potential correction.  Longer term, I believe the bull market and economic recovery from Covid-19 has further room to run.  As such, we have tightened up our risk levels but remain fully invested in broadly diversified portfolios and will adjust as conditions dictate.

P.S. Thank you for your referrals. They are making a big difference in my practice. Feel free to share my name with your friends on Facebook or LinkedIn.

I want to extend a special thanks to clients & colleagues who have recently referred us to family and friends:  Greg & Valerie W.

June Calendar of Events   (comments and additions for future months are always welcome)

  • June is LGBTQ Pride Month.  I’m an incredibly proud father of a daughter in an awesome same sex marriage.  So let’s all work towards acceptance and inclusion of people regardless of their sexual orientation.

June 14th        Flag Day                  

June 20th        Summer begins – it’s certainly going to be a different summer.  Enjoy it safely       

June 20th        Father’s Day  – wishing all father’s, grandfathers, and great grandfathers a wonderful day.

Sources:  Bloomberg, Ned Davis Research, Day Hagan Asset Management, CNBC

Although information herein has been obtained from sources deemed reliable, its accuracy and completeness are not asserted. All opinions and estimates included in this report constitute the judgment of the financial advisor as of the dates indicated and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security.

Investing involves risk and you may incur a profit or a loss. Diversification does not ensure a profit or ensure against a loss. There is no assurance that any investment strategy will be successful.  Past performance is no assurance of future results.

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Information provided should not be construed as legal or tax advice.  You should discuss any tax or legal matter with the appropriate professional.