The Bottom Line
● Equities began and ended the week with losses to mark their first weekly decline of the new year. Small companies, however, were able to advance and have now been positive in 10 of the last 11 weeks.
● The 10‐year Treasury yield rose as high as 1.18% early in the week but then backed off to finish at 1.08%. The 10‐year UST yield began the year at 0.91% and rose for each of the first five days before falling for 3 of the last four.
● President‐elect Joe Biden proposed a $1.9 trillion COVID package with $1,400 per‐person direct payments, a $400‐a‐week unemployment supplement through September, and hundreds of billions to state and local governments.
A down week bookended by losses
Stocks started and ended the week with losses on the way to their first down week in the last three. The S&P 500 fell ‐1.5%, its biggest weekly decline since sinking ‐5.6% in the final week of October. The Russell 2000 small cap index managed to buck the trend again, and advanced +1.5% for its 10th gain in the last 11 weeks. The CBOE Volatility Index (VIX) rose to 24.3 from 21.6 last week. The volatility helped bonds bounce back a bit as the yield on the U.S. 10‐year Treasury slipped 3 basis points to 1.08% after being as high as 1.18%early in the week. Federal Reserve Chair Jerome Powell also helped bonds on Thursday by pushing back on speculation that the Fed would taper its asset purchases any time soon. President‐elect Joe Biden proposed a larger‐than‐expected $1.9 trillion COVID recovery package. The plan includes $1,400 checks for individuals that fall under a certain income threshold, enhanced unemployment benefits through September and hundreds of billions of dollars in aid to state and local governments. Senate passage of the Biden plan is far from certain and most analysts expect the final package to be smaller in size than what the incoming administration has initially proposed.
Digits & Did You Knows
FIFTY‐FIFTY — The political split in the Senate today is technically not 50‐50, but rather is 50 Republicans, 48 Democrats and 2 Independents who caucus with the Democrats, effectively making it a 50‐50 split. The last time the Senate was split 50‐50 was in 2001, George W. Bush’s first year in office (source: Senate, BTN Research).
OLD AND THE YOUNG —81% of COVID‐19 deaths nationwide as of 12/30/20 were Americans at least age 65. Just 1% of COVID‐19 deaths nationwide as of 12/30/20 were Americans under the age of 35 (source: National Center for Health Statistics, BTN Research)
Source: Bloomberg. Asset‐class performance is presented by using market returns from an exchange‐traded fund (ETF) proxy that best represents its respective broad asset class. Returns shown are net of fund fees for and do not necessarily represent performance of specific mutual funds and/or exchange‐traded funds recommended by the Prime Capital Investment Advisors. The performance of those funds may be substantially different than the performance of the broad asset classes and to proxy ETFs represented here. U.S. Bonds (iShares Core U.S. Aggregate Bond ETF); High‐YieldBond(iShares iBoxx $ High Yield Corporate Bond ETF); Intl Bonds (SPDR® Bloomberg Barclays International Corporate Bond ETF); Large Growth (iShares Russell 1000 Growth ETF); Large Value (iShares Russell 1000 ValueETF);MidGrowth(iSharesRussell Mid‐CapGrowthETF);MidValue (iSharesRussell Mid‐Cap Value ETF); Small Growth (iShares Russell 2000 Growth ETF); Small Value (iShares Russell 2000 Value ETF); Intl Equity (iShares MSCI EAFE ETF); Emg Markets (iShares MSCI Emerging Markets ETF); and Real Estate (iShares U.S. Real Estate ETF). The return displayed as “Allocation” is a weighted average of the ETF proxies shown as represented by: 30% U.S. Bonds, 5% International Bonds, 5% High Yield Bonds, 10% Large Growth, 10% Large Value, 4% Mid Growth, 4%Mid Value, 2% Small Growth, 2% Small Value, 18% International Stock, 7% Emerging Markets, 3% Real Estate.
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