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Fourth Quarter 2020 Executive Summary

Quarterly Executive Summary

"It is during our darkest moments that we must focus to see the light." -- Aristotle

Following a year marred by a deadly pandemic, brutal recession, and historic bear market (officially the shortest on record), we exit Q4 with the world turning the corner.  We have a way to go and global suffering persists, but we are finally able to see the light at the end of the tunnel.  We have solid reason to believe that we are approaching the end of the crisis and the beginning of a sustained recovery.  Optimism for the new year is high – and for good reason.  

In December, the FDA authorized emergency use of both Pfizer and Moderna’s COVID-19 vaccines, initiating the broadest vaccine campaign in history -- the beginning of the end of this humanitarian disaster.  The U.S. is struggling with a post-holiday resurgence in new cases, but we are confident that the vaccine will soon be available to all.   “100% of Americans that want the vaccine will have had the vaccine by June”, according to Paul Ostrowski, an official working with Operation Warp Speed.   

The U.S. stock market reached record highs in Q4, with the Dow, Nasdaq and S&P all experiencing double-digit increases.  (Back in March, would you have believed we would reach all-time highs nine months later?)   We expect the economic rebound and the bull market to continue through 2021 – with some hiccups likely along the way.  

With $900 billion pouring into the economy by way of the most recent U.S. government pandemic-relief package (and likely more on the way), the highest personal savings rate in four decades (a silver lining to service industry restrictions) and mass vaccinations underway, the U.S. is positioned for dramatic growth once the virus is contained.  Battered by pandemic-related restrictions, industries such as travel, leisure and entertainment should bounce back relatively quickly once we resume normal activity.  

We don’t envision smooth sailing, but we do anticipate a brighter 2021.  Expected tax hikes under the new administration are likely to be outweighed by boosts from stimulus and infrastructure spending.  National divisiveness continues (and in the short run the market lost ground when rioters stormed the Capitol), but the market seems to be looking past this and focusing on moving forward with the new administration.  At some point the U.S. will need to deal with its ever-increasing budget deficit (which soared to a record $3.1 trillion, following massive spending aimed at containing economic damage from the pandemic), but the legacy impacts won’t come to a head in the near term.  For now, fueled by a combination of growth and fiscal and monetary policy, we expect the economic rebound to continue through the coming year.  

We wish you well in these trying times, and as always, we are here for you.  Please contact us anytime you have questions or concerns … or even just to touch base.   Your peace of mind is paramount.  

Recent Economic Data: 

Gross Domestic Product (GDP).  The GDPNow model’s latest estimate (January 4, 2021) for real GDP growth (seasonally adjusted annual rate) in Q4 2020 is 8.6%. Following Q2’s decrease in real GDP of 31.4%, real GDP increased at an annual rate of 33.4% in Q3 2020, reflective of continued efforts to reopen businesses and resume activity.  

Unemployment.   In December, the unemployment rate was at 6.7%, down from 7.9% in September and significantly lower than April’s pandemic-related high. Prior to the pandemic the unemployment rate was at a 50-year low of 3.5% … about 50% less than the current rate. 

Consumer Confidence.  The Conference Board Consumer Confidence Index (an indication of consumer attitudes and buying intentions) dropped to 88.6 in December (1985=100), a four-month low and well below February’s pre-pandemic level (132.6), as the U.S. struggled with a resurgence in new coronavirus cases and renewed business restrictions as well as the delay in Congress’ approval of another stimulus package.  

Consumer Price Index (CPI).  The CPI for All Urban Consumers (a measure of inflation which shows “cost of living” fluctuations) increased 0.2% in November on a seasonally adjusted basis.  Over the last 12 months, the index increased 1.2% before seasonal adjustments.  

Earnings.   For Q4 2020 the estimated earnings decline for the S&P 500 is -9.7%, an upward revision from September.  On September 30, the estimated earnings decline for Q4 was -12.8%.

Housing.  Fueled by strong demand, limited supply and low interest rates, U.S. home prices rose at the fastest pace in more than six years.  Home prices were up 7.9% in October compared with twelve months ago.  After five consecutive months of gains, sales of existing homes, which represent the bulk of U.S. homes sales, turned lower in November, falling 2.5% on a month-to-month basis; however, sales are 25.8% higher year-over-year.  


December 31, 2020

Q4 Return







S&P 500



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The views expressed represent the opinion of Asset Management Financial Solutions, Inc. (“AMFS”) and are subject to change and are not intended as a forecast or guarantee of future results. This material is for informational purposes only. It does not constitute investment advice and is not intended as an endorsement of any specific investment. Statements of future expectations, estimates, projections, and other forward-looking statements are based on available information and AMFS’s view as of the time of these statements.  Accordingly, such statements are inherently speculative as they are based on assumptions that may involve known and unknown risks and uncertainties.