Will Normal Become the New Thrilling?

As we approach the end of 2020, we can, with a slight sigh of relief, put the tumultuous year behind us and dare to look ahead.  The holiday season and the prospect of a new year tend to bring a renewed sense of energy and hope.  And I think we can all use a healthy dose of that these days! 

One of the TV news channel pundits I happened to see remarked that a return to normal may become exciting again.  How far we have come!  While uncertainty still very much exists in our world today, perhaps this time of year is an opportunity for a reset and a look forward to what could be in 2021.

With the exhausting election season largely (finally?) behind us, Washington DC will likely look a little different, but the focus, in the near term, will remain the same - controlling the spread of the COVID 19, providing economic relief to individuals and businesses and developing ways to get the American economy back on track.

Markets exhibited greater volatility at the end of October leading up the election but have since shifted momentum greatly.  Maybe that is the market’s way of expressing its love of predictability over uncertainty!  History shows us that markets not only prefer predictability, but they also appreciate a divided government.  While Americans have political nuances to debate, markets can agree that gridlock is a good thing.

Furthermore, when stocks jumped on the news of the effectiveness of Pfizer’s vaccine, one could sense the markets were ready to leave 2020’s malaise behind and begin focusing on a future where the U.S. economy is back on more solid ground.  

It may seem like ancient history now but back in February 2020 the economic forecast suggested the U.S. would enter a recession sometime in 2021.  The pandemic accelerated the arrival and exacerbated the depth of that recession.  Recessions, however, do not last forever.  With some continued effort to keep taxes low, interest rates favorable and Americans employed, we can reasonably expect the U.S. economy to respond favorably, enter a new phase of growth and, dare we say it, get back to normal.  Thrilling indeed!

We are already seeing much of that play out.  The Federal Reserve is using its tools to keep interest rates down and the money supply flowing.  Historically low mortgage rates have helped fuel a mini-boom in housing purchases and refinances.  Global supply chains have adjusted to the strains imposed by COVID-19 and inventories are ready for the holiday shopping season.  We cannot say with certainty when the economic woes will end but we can take comfort in knowing our economic system is healthy enough to push forward.

At Unified Trust, our investment team continues to monitor the recessionary conditions.  As of this writing, we do not anticipate making substantial changes in our investment approach and believe our portfolios are well positioned to start the new year off strong.  Rest assured, with masks on and appropriate distance maintained, we are here for you and ready for whatever new thrills lie ahead.
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