Latest / HPK Provident Advisors: The Weekly Bull / Santa Rally, Markets, And What’s Next

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Santa Rally, Markets, And What’s Next · HPK Provident Advisors: The Weekly Bull

• 0:07
  SPEAKER_00: Welcome to Friday Live.
• 0:09
  SPEAKER_00: Today is December 26, 2020.
• 0:13
  SPEAKER_00: And every Friday the partners of HBK Profit and Advisors get together and discuss what we're seeing going on in the markets, the economy, covering our blog posts for the week, which really tie around a lot of financial planning topics.
• 0:26
  SPEAKER_00: We do try to make them thematic.
• 0:28
  SPEAKER_00: So we have Market Monday, it where we have my uh look ahead post for the week, which just kind of like I said, discusses what we're looking at in the markets and the economy.
• 0:37
  SPEAKER_00: Tax Tuesday, Brian's been doing a campaign on that, putting out really good content, just some uh different tips you can do um to try to save you on taxes and and really maximize your your retirement um experience.
• 0:51
  SPEAKER_00: Wealth building Wednesday, think ahead Thursday, and then Friday Live, which you are viewing currently.
• 0:57
  SPEAKER_00: So I hope everyone had a wonderful Christmas.
• 1:01
  SPEAKER_00: Santa came to everyone's house, but will come to the stock market.
• 1:04
  SPEAKER_00: So, what is the Santa Claus rally?
• 1:07
  SPEAKER_00: Basically, what that is saying is the last five trading days of the year has averaged about a 1.3% return.
• 1:16
  SPEAKER_00: Now, if Santa shows up, meaning you reach that level or exceed it, it has implications for the following year.
• 1:24
  SPEAKER_00: Um, in terms of January, performance is positive a lot more than a normal month.
• 1:31
  SPEAKER_00: And if um Santa doesn't show, so if Santa does show, the average return is about 1.3%.
• 1:38
  SPEAKER_00: And then the implications for the full year, if he does show, is a return also a higher probability of being positive, but has averaged historically 10.7%.
• 1:49
  SPEAKER_00: Now, if Santa doesn't show, it doesn't mean the the market's gonna be down for the year.
• 1:55
  SPEAKER_00: It could.
• 1:56
  SPEAKER_00: Um, but the returns tend to be more muted.
• 1:59
  SPEAKER_00: I think it's closer to 6%.
• 2:01
  SPEAKER_00: So right now, um, we went into the last trading day of the week on a positive note.
• 2:07
  SPEAKER_00: We technically closed at an all-time high, so that's a good thing.
• 2:11
  SPEAKER_00: It's not a decisive breakout.
• 2:13
  SPEAKER_00: I think let me pull up the chart here.
• 2:14
  SPEAKER_00: If we do have a decisive breakout above these levels, as you can see, um, the projected technical price chart shows gets you to a short to intermediate term target of about 7,200, which is about 4%.
• 2:28
  SPEAKER_00: So a nice healthy um extra fuel to this bull market.
• 2:32
  SPEAKER_00: Now, I think we need to think about big picture going into the new year.
• 2:38
  SPEAKER_00: Um, we are estimated to have about 14.8% earnings growth on the SP 500 while trading at about 22 and a half times forward earnings.
• 2:49
  SPEAKER_00: So expectations are pretty high for earnings, and a lot of that seems to be baked in based on valuation.
• 2:56
  SPEAKER_00: So, not saying it's gonna be um an eminent decline, um, but we are very stretched above that 200 a week moving average.
• 3:04
  SPEAKER_00: Things tend to be mean reverting in the long run.
• 3:07
  SPEAKER_00: So it is just a possibility.
• 3:08
  SPEAKER_00: So make sure you're positioned for potential downside.
• 3:12
  SPEAKER_00: Um, no need to get alarmed and do a huge cash position, but just make sure you have an allocation that's that you're comfortable with, and we can certainly help you with that.
• 3:22
  SPEAKER_00: Um in terms of um the economic data, it was uh mixed again this week.
• 3:29
  SPEAKER_00: You know, GDP came in at 4.3%.
• 3:32
  SPEAKER_00: Uh, we saw a nice rise in consumer spending, government spending, exports.
• 3:37
  SPEAKER_00: Uh business investment was a little light and a drag on it, but that's been so strong lately with all the AI um investments.
• 3:45
  SPEAKER_00: Going into uh consumer confidence, a little weaker.
• 3:49
  SPEAKER_00: The present situation really deteriorated.
• 3:52
  SPEAKER_00: Um but and same thing with like last week, we had a lot of mixed data.
• 3:57
  SPEAKER_00: The employment situation um I took is a little weaker for November and October.
• 4:04
  SPEAKER_00: November came in higher than expectations on the headline number.
• 4:08
  SPEAKER_00: October is revised lowered a negative 100,000, I believe.
• 4:12
  SPEAKER_00: So, and a lot of that was due to the government um people accepting those resignation terms, those buyouts.
• 4:19
  SPEAKER_00: Uh, the unemployment rate ticked up to 4.6%.
• 4:22
  SPEAKER_00: So we've really seen a steady increase on that.
• 4:25
  SPEAKER_00: Um, nothing substantial, but it's just incremental each month.
• 4:28
  SPEAKER_00: I think the last four months have been adding uh to that number.
• 4:32
  SPEAKER_00: So something to keep an eye on.
• 4:35
  SPEAKER_00: Um wage growth really decelerated down to 3.5%, which brings us back down to kind of the pre-pandemic levels.
• 4:42
  SPEAKER_00: Inflation, we got a really good reading last report, but like I mentioned last week, there's a lot of skepticism around that number.
• 4:49
  SPEAKER_00: Um, we saw a big decline in uh owner's equivalent rent, which really hasn't been trending down that quickly.
• 4:58
  SPEAKER_00: So we and the government shutdown may have affected a lot of those numbers.
• 5:02
  SPEAKER_00: And in October, we just got the back half of the month, which reflects a lot more of those seasonal discounts.
• 5:06
  SPEAKER_00: So we really need to see more readings um to really determine where we're going from here.
• 5:12
  SPEAKER_00: Going to the blog post, um, let me go to a different.
• 5:17
  SPEAKER_00: So most of our all of our blog posts go out to the website.
• 5:22
  SPEAKER_00: However, um sometimes we do what's called a social post, which will go out to Facebook.
• 5:28
  SPEAKER_00: So if you want to see everything, go to our Facebook or LinkedIn page.
• 5:33
  SPEAKER_00: Um so on Monday, we have the week ahead post that I write, just talking about what's going on in the economy and the markets.
• 5:40
  SPEAKER_00: Um, this is the tax Tuesday post for the week.
• 5:43
  SPEAKER_00: Just little tips and tricks.
• 5:46
  SPEAKER_00: This one's revolving around, you know, make sure you keep your receipts for tax time, um, make a list of your deductions, make sure your dependents are actually qualified as dependents.
• 5:57
  SPEAKER_00: Um, consider pushing income to the next year.
• 6:02
  SPEAKER_00: Um, it's the tax version of re-gifting.
• 6:04
  SPEAKER_00: Energy tax credits, the only time the government pays you to make your house look brighter than Rudolph Snow's little Christmas pun there.
• 6:12
  SPEAKER_00: So you can go through that.
• 6:13
  SPEAKER_00: I'm not going to go through every detail.
• 6:15
  SPEAKER_00: Wednesday, it's just talking about the volatility in the stock market.
• 6:19
  SPEAKER_00: We get 3% dips um this year, seven times.
• 6:23
  SPEAKER_00: It's something that's just a part of investing.
• 6:26
  SPEAKER_00: Uh, pullbacks, which are characterized as 5% or under, tend to happen two to three times a year.
• 6:32
  SPEAKER_00: Uh corrections, meaning a pullback of 10% or greater, I think happen every on average 1.4 years.
• 6:40
  SPEAKER_00: So they're scary when they happen, as long as well as the 15% correction, which happens every two years on average.
• 6:48
  SPEAKER_00: And then the infamous bear market, meaning a drop greater than 20%, happens every, according to this, three and a half years.
• 6:57
  SPEAKER_00: Um, I've always read that it's it's typically in the three to five year range.
• 7:01
  SPEAKER_00: We've been seeing a lot more of them.
• 7:02
  SPEAKER_00: We almost had one this year, we got very close.
• 7:06
  SPEAKER_00: Uh 2022, we had one.
• 7:09
  SPEAKER_00: Uh 2018, we came very close.
• 7:12
  SPEAKER_00: So I guess technically, um, those aren't considered bear markets minus the 2022 one.
• 7:19
  SPEAKER_00: Obviously, 2020 was also another bear market.
• 7:23
  SPEAKER_00: Um, so next week we'll be uh putting out our normal blog posts.
• 7:28
  SPEAKER_00: Um, it's gonna be another shortened trading week with the the new year being on Thursday.
• 7:33
  SPEAKER_00: Um, but we'll have our look ahead market Monday post, Tax Tuesday, wealth building Wednesday, and then Thursday, I'm not sure if there's anything coming out.
• 7:44
  SPEAKER_00: And um we may or may not be on for Friday live next week, but keep an eye out.
• 7:50
  SPEAKER_00: We may be.
• 7:51
  SPEAKER_00: Um, I might end up recording it on like Wednesday, and I would probably push it out on Wednesday.
• 7:56
  SPEAKER_00: I like to get content out when it's live.
• 7:58
  SPEAKER_00: So before I go, I'm gonna flip on the disclosures, and I hope everyone has a wonderful long weekend if you have the day off, and a great new year next week.
• 8:09
  SPEAKER_01: So here's the disclosure offered through LPL Financial LLC, member FINRA and SIPC.org.
• 8:16
  SPEAKER_01: Advisory service is offered through LPL Financial LLC, a registered investment advisor.
• 8:21
  SPEAKER_01: Brian Peluso, Michael Kutch, and David Harper are registered representatives of the LPL Financial LLC.
• 8:28
  SPEAKER_01: Content discussed is for informational purposes only and not intended as an offer or solicitation to buy or sell any security or investment strategy.
• 8:36
  SPEAKER_01: Any opinions expressed are those of the authors and do not necessarily reflect the views of LPL Financial or its affiliates.
• 8:43
  SPEAKER_01: All investments involve risk, including the possible loss of principal.
• 8:47
  SPEAKER_01: This communication may include links or references to third party websites.
• 8:51
  SPEAKER_01: These links are provided as a convenience only.
• 8:53
  SPEAKER_01: LPL Financial and its representatives are not responsible for the accuracy or content of such sites.
• 8:59
  SPEAKER_01: Brian, Mike, and David and HBK Provident Advisors may only transact business in states where they are properly registered or exempt from registration.