Hindsight isn’t always 20/20

Nicolet Wealth Management Market Update

Thank you for your continued confidence in Nicolet. As the COVID-19 pandemic continues to create uncertainty in our lives, we will work hard to provide you with timely insights on market and economic conditions.

The year 2020 is officially half over.  What we have all experienced over the last six months is likely far different than what we expected and planned for at the beginning of the year.  Regardless, the first half of 2020 was both a year to remember and a year that most would rather forget.

Although the 2020 Summer Olympics in Tokyo have been postponed until 2021, we have still witnessed a record breaking year.  The year started with the longest economic expansion in U.S. history, an incredible 128 months dating back to 2009, finally ending in February.  This was followed by the fastest bear market in history, as it took only 16 trading days for the S&P 500 Equity Index to fall 20% from the February 19th peak.  Ultimately, the market found a bottom on March 23rd after falling nearly 35%, as U.S. lawmakers announced the largest economic stimulus package in U.S. history called the CARES Act.  Next, we witnessed record breaking economic data, including the loss of 20.5 million jobs in April.  A staggering total considering it was 10 times the previous record set in 1945 which marked the end of World War II.  Finally, most recently, investors have witnessed the quickest start to a new bull market in history.

Given that the market has now risen over 35% off the lows set in March, and is only down 6% since the beginning of the year, a fresh review of potential risks may be beneficial.  One risk top of mind is around the reopening of the U.S. economy as several states have taken a pause.  Whether negatively affected states ultimately need to shut down again or not, we have already seen consumers and businesses in affected areas once again become more cautious.

Recurring COVID-19 outbreaks will continue to be a headwind to U.S. economic growth and keep unemployment levels elevated.  If economic activity only comes back gradually, companies might not need all employees to come back to work, as illustrated by continued jobless claims remaining at roughly 20 million for the last four weeks.  Additionally if employees are more efficient working from home and employers are increasingly encouraging employees to work from home, perhaps companies will need less employees going forward.

In addition to the COVID-19 outbreak, we expect as the year progresses that U.S. politics, the U.S. China trade war, and future U.S. tax rates will increasingly create even greater uncertainty in the markets.

However, positive market tailwinds do persist, such as, potentially more stimulus spending from the government, low interest rates, strong housing market, low inflation, and potential COVID-19 treatments and vaccines in the pipeline.

We continue to evaluate the capital markets for opportunities and risks.  We will continue to maintain our disciplined long-term approach, and are prepared for a range of potential outcomes.  If you would like to discuss your account in more detail, please contact us at your convenience.

Nicolet Wealth Management

Investment and insurance products:

Are Not FDIC Insured
May Lose Value
Are Not Bank Guaranteed
Are Not Deposits
Are Not Guaranteed by Any Federal Government Entity
Are Not a Condition to Any Banking 
Service or Activity

Nicolet Wealth Management is a brand name that refers to Nicolet National Bank and certain of its departments and affiliates that provide investment advisory, trust, retirement planning and insurance services.

Nicolet Advisory Services, LLC, is an investment adviser, registered with the U.S. Securities and Exchange Commission, and an affiliate of Nicolet National Bank.  Nicolet Advisory Services, LLC recommends the brokerage and custodial services of TD Ameritrade, Inc., member FINRA/SIPC.  TD Ameritrade is not affiliated in any way with Nicolet National Bank or its affiliated companies.

Trust services are offered through Nicolet National Bank, a national bank with trust powers.  Trust services utilizes SEI Private Trust Company (SPTC) as its custody provider.  SPTC is not affiliated in any way with Nicolet National Bank or its affiliated companies.