The Bottom Line

● Traders shook off omicron concerns and the hawkish Fed from last week and grinded out a new record for equities despite the shortened trading week.
● Yields climbed with equities for the week, the yield on the 2-year dropping slightly, up +5bps and the yield on the 10-year jumped +9bps.
● Economic data for the week illustrated that the economy is still rebounding, despite the myriad of constraints in supply-chains, labor markets, and runaway inflation, with GDP coming in above estimates and Personal Consumption showing consumers are returning to spending for the holiday season.

Santa Clause Rally: ✔ Year End Rally: ?

After last week’s abysmal sell-off in equity markets, investors shrugged off rising omicron cases and the hawkish tone of the Fed. The S&P 500 closed at a record high on Thursday, clinching a Santa Clause rally, markets were closed on Friday in observance of the Christmas holiday. The S&P 500 was up +2.28% for the week and a whopping +25.82% for the year. After bearing a large brunt of the selling pressure last week, the tech-heavy Nasdaq was able to post a strong week, up +3.19% for the week. Small Cap equities, as measured by the Russell 2000, were right behind the Nasdaq, up +3.11% for the week. International equities participated in the rally as well, albeit to a lesser extent, the STOXX Europe 600 was up +1.92% for the week and Japanese equities, as measured by the Nikkei-225, were up a modest +0.89%. Strong US GDP numbers, as well as strong Personal Consumption, helped buoy the rally for the week, showing that consumers are shaking off the continued concern of the spread of covid-19 variants. With a Santa Clause rally officially in the books for the year, the big question now is if it will continue into the final week of the year. Economic data releases for next week will be light due to the New Year’s holiday and another short trading week.

Digits & Did You Knows

IMPACTING MANY – 45% of American households surveyed in November of 2021 indicate that rising domestic inflation has caused “moderate” or “severe” hardship. (source: Gallup, BTN Research)
HOME LOANS – Government-backed mortgages, e.g., FHA or VA loans, make up 50% of all home mortgages. The maximum government-backed mortgage loan in 2022 in a majority of the US will be $647,200. In high-cost areas of the country, the maximum loan will be $970,800. (source: Federal Housing Finance Agency, BTN Research).
THEY’RE IN EVERYTHING – 75% of the semiconductor chips manufactured in the world today are made in Asia. Just 12% of all chips are made in the USA. (source: Semiconductor Industry Association, BTN Research.)

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Source: Bloomberg. Asset‐class performance is presented by using market returns from an exchange‐traded fund (ETF) proxy that best represents its respective broad asset class. Returns shown are net of fund fees for and do not necessarily represent performance of specific mutual funds and/or exchange‐traded funds recommended by the Prime Capital Investment Advisors. The performance of those funds may be substantially different than the performance of the broad asset classes and to proxy ETFs represented here. U.S. Bonds (iShares Core U.S. Aggregate Bond ETF); High‐YieldBond(iShares iBoxx $ High Yield Corporate Bond ETF); Intl Bonds (SPDR® Bloomberg Barclays International Corporate Bond ETF); Large Growth (iShares Russell 1000 Growth ETF); Large Value (iShares Russell 1000 ValueETF);MidGrowth(iSharesRussell Mid‐CapGrowthETF);MidValue (iSharesRussell Mid‐Cap Value ETF); Small Growth (iShares Russell 2000 Growth ETF); Small Value (iShares Russell 2000 Value ETF); Intl Equity (iShares MSCI EAFE ETF); Emg Markets (iShares MSCI Emerging Markets ETF); and Real Estate (iShares U.S. Real Estate ETF). The return displayed as “Allocation” is a weighted average of the ETF proxies shown as represented by: 30% U.S. Bonds, 5% International Bonds, 5% High Yield Bonds, 10% Large Growth, 10% Large Value, 4% Mid Growth, 4%Mid Value, 2% Small Growth, 2% Small Value, 18% International Stock, 7% Emerging Markets, 3% Real Estate.

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