Cyberattacks are becoming more and more sophisticated and common. According to the 2019 Norton Cyber Security Insights Report, 152 million U.S. consumers were victims of cybercrime – more than half of the country’s adult online population – with losses totaling nearly $11.3 billion. Crews Bank & Trust is highlighting ways to help consumers protect themselves against online fraud.
As of January 2020, there were approximately 246.3 million mobile internet users in the United States, accounting for 87 percent of the population, according Statista, a provider of market and consumer data. Review 42 reports that the average user will tap, swipe, and click their phone 2,617 times a day and spend 171 minutes a day on a device.
According to a recent study by Javelin Strategy & Research, identity fraud reached $16.9 billion in 2019. As identity fraud continues to be a major threat, Crews Bank & Trust is offering tips to help consumers proactively protect their information from identity thieves.
The S&P 500 and Nasdaq index had wonderful performance during the third quarter, with returns of 8.5% and 11%, respectively. However, pre-election politics obstructing a new federal stimulus package and an escalation in COVID cases caused both indexes to decline in September. The political stalemate over aid to bailout states and cities is dampening confidence. A multi-trillion-dollar stimulus package will eventually be implemented that should focus support for small businesses and unemployed individuals. The interminable wait for a COVID vaccine is also weighing on the markets and suppressing economic activity. The year-end target for a vaccine is unlikely, although a “cocktail” of antibiotics and steroids has shown to help patients recover, so the management of the virus is becoming more tenable. With the health crisis reduced, we should expect a gradual return to a stable growth economy.
Despite the concerns about strained relations with China, increased COVID infections, social protests, weaker earnings, high U.S. unemployment and the November election, the S&P 500 Index is up 1% for the year while the Nasdaq Index is up 19.7%. The increasing spread of the virus is suppressing a healthy economic recovery as consumers and businesses remain conservative in their spending. U.S. leadership in Washington is debating another stimulus package.
I normally do not make a practice of working from home, but with safe distancing and travel limitations sparked by the pandemic, staying home was something many were following.After setting up my home office and starting some projects, I reached for my yellow highlighter, then laughed because I didn’t have one at home, then resorted to using Post-it Notes.I realized just how often I used my yellow highlighter at work and decided to pick one up the next time I went to the office. I find it handy to use a highlighter, which has become part of my work process. I’m sure many of you feel similarly.With that being said, I do want to issue a warning about highlighters, be they yellow, pink, or blue: Never use them on your original estate-planning documents. The same goes for using Post-it Notes or worse yet, crossing out text and handwriting changes in the margins. These attempts at changes could possibly create unforeseen issues.
The S&P 500 Index showed great resilience to the negative news flow and achieved the best quarterly performance since 1998. Despite media reports about the virus infection rate increases, potential new tariffs on European and Chinese goods, and early Presidential election polls, the market rebounded from the first quarter decline. The S&P 500 Index is still down by 4% year-to-date, but the Nasdaq is up 12.1%. This disparity is the real news for the markets as investors crowd into the digital age/new economy companies while remaining indifferent to the deep value and cyclically-oriented sectors. Apple, Amazon, Alphabet, Microsoft and Facebook were the dominant market leaders while Boeing, Caterpillar, General Electric and General Motors all declined. The information technology sector rose 31% in the first half of the year, basic materials declined 4%, industrials fell 10%, financials dropped 17%, and energy cratered 40%. Small cap and mid-cap indexes underperformed, with declines of 13% each, which indicates investors are wary of the heavy-weightings in deeply cyclical bank, retail and REIT stocks.
The arrival of hurricane season in the midst of the COVID-19 pandemic requires us all to be doubly vigilant. You’ll be hearing a lot about hurricane preparedness when it comes to protecting yourself and your loved ones in terms of shelter, safety and supplies. Researchers are predicting 19 named storms this year, and FEMA (Federal Emergency Management Agency) has posted some important operational guidelines on its website (fema.gov).
The S&P 500 Index has rebounded 35% from the low on March 23 and is now only down 6% year-to-date. The rally was slow and deliberate as the headlines shifted from a virus-induced economic lockdown to a gradual re-opening. The economic re-start will revitalize small and large business activity and inspire consumers to emerge from their shelter-in-place. The support of the Federal Government’s CARES Act and the Federal Reserve’s active management of the low interest rate and liquidity environment will dramatically help the recovery. Unless the virus infection curve rises again, the second quarter GDP will mark the trough of U.S. economic activity so future quarters should demonstrate accelerating economic growth. Optimism is supporting higher valuations with development news of many potential vaccines and the declining virus infection curve. The U.S. population is adapting to the new virus-preventative measures with new policies and procedures which will balance safety and growth for the future.
Several market technicians and strategists are warning that the leadership in this market has been mostly among the large cap technology companies. The five largest companies in S&P 500 Index (Microsoft, Apple Google, Amazon and Facebook) represent 21% of the weighting in the index. These strong growth companies continue to innovate and focus their digital strategies on cloud storage, social media, digital shopping, enhanced intelligence and virtual reality. The sector performance leadership has been remarkably narrow with information technology up 17%, healthcare up 10% and consumer discretionary up 8% while the remaining sectors are negative. The energy, financial and basic material sectors are down the most while the small cap index is down 16% and the mid-cap index is down 14% year-to-date. There should be a broadening market rally that will fuel these sectors to catch up over the summer months.
The international markets are also experiencing great volatility and some optimism recently. The European Union is trying to negotiate a stimulus package that relies on the more productive northern countries to provide debt relief and stimulus to the southern countries. The EU is expected to have 8-12% economic contraction this year and requires government intervention, but skeptical resistance by northern countries will prove hard to overcome. Russian GDP, with its heavy dependence on oil prices, is contracting dramatically which provides less social and political stability. China remains in political and economic disfavor after pandemic mismanagement and recent actions in Hong Kong. We should expect China’s government to be the political punching bag in the U.S. elections in November which will deter acceleration in trade. Due to these uncertainties we remain underweighted in all international markets.
Stay well!
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