(New York)

The market has been doing very well since October 30th, up around 9%. Goldman thinks even bigger gains are coming for the S&P 500. The bank has been encouraged by investors’ response after the election and thinks that the vaccine is really in the driver’s seat. The bank’s research team has significantly upgraded their earnings forecasts for next year and 2022 based on the better-than-expected recovery. According to Barron’s, a few assumptions underpin Goldman’s outlook, “at least one vaccine becoming widely available in the U.S., less drastic changes in policy because Congress is most likely to be divided, and the continued V-shaped economic recovery”. Goldman’s official forecast for the S&P 500 at the end of 2022 is 4,300 and a 20% gain from now through the end of 2021.

FINSUM: The “continued v-shaped recovery” is the most volatile aspect of these assumptions, but they also discounted a potentially positive one—another stimulus package. The forecast seems reasonable.

(Washington)

The stock market is going to enter a new era as Joe Biden—in all likelihood—becomes president. As that happens, investors need to start thinking about how to align their portfolios. While all industries will likely be affected to some extent, there are a handful that might be impacted the most acutely, such as energy, autos, tech, manufacturing, agriculture, banking, pharma and healthcare. In autos, Biden’s push for more efficiency will likely benefit Tesla and GM, both of whom are looking to sell more electric vehicles. Tech looks like a real risk area as the chances for more data/anti-trust regulation look higher, though those could be somewhat mitigated by a red Senate. On the manufacturing front, Biden is expected to use government stimulus to boost domestic manufacturing, In banking, executives are bracing for more regulation, but changes are not expected at a fast pace, so nothing too shocking seems likely in the near-term. Pharma looks vulnerable as Biden is committed to bringing drug prices down; that said even Pharma companies don’t expect that Democratic policies will hurt their margins worse than Trump’s proposals. In insurance and healthcare, the picture is mixed. Insurers would almost certainly be challenged by increasing amounts of government coverage, but hospitals would likely benefit from providing care for millions of newly insured Americans.

FINSUM: Biden and the Democrats’ plans will reverberate through the market in the coming months, though not as much as they might if the Left grabs control of the Senate in January. Generally, we agree with that a divided government would be most beneficial to markets.

(New York)

The market has been extremely volatile this year and that has put many investors on edge, especially those nearing retirement who need to rely on their portfolios for regular income. Treasury yields have gotten so low that they are not a good source of yield. So where to turn? One option is fixed annuities, also called multi-year guaranteed annuities. In contrast to fixed-index annuities or equity-index annuities, the return on MYGAs is not tied to an index. Such MYGAs are currently offering spreads of as much as 300 bp over Treasuries, representing a strong opportunity for those who need guaranteed income.

FINSUM: Two things to bear in mind when considering these—they are generally quite illiquid as the money is “locked up”, and secondly, they do have default risk but often can have limited losses because of state guaranty associations.