First Quarter 2021 Update
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First Quarter 2021 Update The first quarter of 2021 brought renewed optimism driven by supportive fiscal stimulus from policymakers and an improving public health situation via the widespread rollout of the COVID-19 vaccine. The United States has witnessed a strong recovery in the 12 months since the COVID-19 global health crisis roiled the economy. More Americans receive vaccines each day pushing the economy towards a broader reopening, which may unleash a surge of pent-up demand in the coming months. Moreover, the Biden administration unveiled a new infrastructure plan aimed at bolstering the economy in the long-term. The unemployment rate has dropped to 6% and consumer confidence hit a 1-year high as the economy looks to reopen. Despite these bright spots, the tragic COVID-19 pandemic is not behind us and we will continue to see some uncertainty with new strains emerging. Since the coronavirus began, there have been over 30.8 million cases and over 555,000 deaths in the United States. COVID-19 mortalities have reached a grim 2.86 million worldwide with 132 million cases reported. (Source: John Hopkins) The number of vaccinations administered is ahead of schedule with 19% of the U.S. population fully vaccinated and 32.6% receiving their first dose. There are currently 3 million doses given daily in the U.S. Globally, 16.2 million doses are administered each day with 689.6 million doses given. Showing progress, more Americans have received at least one dose than have tested positive for COVID-19 since the pandemic began. (Source: Bloomberg) Investment and Insurance products: NOT FDIC-Insured NO Bank Guarantee MAY Lose Value Wells Fargo Advisors is a trade name used by Wells Fargo Clearing Services, LLC, Member FINRA/SIPC. © 2021 Wells Fargo Advisors. All Rights reserved. CAR-0421-00965
Vaccine Providers The federal government directs vaccination distribution in the United States. Currently there are three main providers administering the vaccine. Moderna and Pfizer’s inoculations both require two doses taken 3-4 weeks apart. Johnson & Johnson’s vaccine requires just a single dose. The drug makers pledged to deliver vaccinations to 300 million in the U.S. by the end of May or enough to cover every adult. Clinical studies are in progress to vaccinate children. Investment and Insurance products: NOT FDIC-Insured NO Bank Guarantee MAY Lose Value Wells Fargo Advisors is a trade name used by Wells Fargo Clearing Services, LLC, Member FINRA/SIPC. © 2021 Wells Fargo Advisors. All Rights reserved. CAR-0421-00965
Pfizer initially reported 95% efficacy in preventing the disease after clinical trials. However, since a number of new variants have become more prevalent globally, the new overall efficacy rate is 91.3%. The vaccine is still 95.3% effective in preventing severe disease as defined by the U.S. Food and Drug Administration. (CNBC.com) Investment and Insurance products: NOT FDIC-Insured NO Bank Guarantee MAY Lose Value Wells Fargo Advisors is a trade name used by Wells Fargo Clearing Services, LLC, Member FINRA/SIPC. © 2021 Wells Fargo Advisors. All Rights reserved. CAR-0421-00965
President Biden Fiscal Proposals
President Joe Biden proposed an eight-year $2.25 trillion infrastructure and economic recovery
package as the administration shifts its focus to strengthening the post-pandemic economy. The plan
aims to revitalize U.S. transportation infrastructure going towards conventional projects like repairing
and rebuilding roads, highways and bridges. The measure also intends to modernize the electric grid
and fund clean-energy storage in an effort to tackle climate change. Other initiatives include
upgrading and building new schools, assisting with human services including elder and disability care,
providing workforce improvements, funding research and development and expanding high-speed
broadband. The plan will be funded by an increase in the corporate tax rate to 28% (halfway between
the current top corporate rate of 21% set by former President Donald Trump’s 2017 tax law and the
35% rate before it was enacted), combined with measures designed to stop offshoring profits. The
funds will be dispersed towards these programs over 8 years.
Speaking at a union hall in Pittsburgh, the president called the plan a vision to create "the strongest,
most resilient, innovative economy in the world" with millions of "good-paying jobs" along the way.
(CNBC.com) As the bill makes its way through Congress Janet Yellen showed support in remarks to
the Chicago Council on Global Affairs. Yellen stated, "Competitiveness is about more than how U.S.-
headquartered companies fare against other companies in global merger and acquisition bids." She
went on to say "It is about making sure that governments have stable tax systems that raise sufficient
revenue to invest in essential public goods and respond to crises, and that all citizens fairly share the
burden of financing government." President Biden's plan would generate about $2 trillion over 15
years to pay for the infrastructure spending he outlined.
Highlights of the proposal include:
Spending Billions of dollars
Transportation and electric vehicle infrastructure $621
Housing, school, power and water upgrades $561
Manufacturing subsidies and research and development $480
Broadband and job training $200
Elder and disability care $400
Source: Financial Times, April 1, 2021
Coupled with President Biden’s recently enacted $1.9 trillion coronavirus relief package, the
infrastructure initiative would give the federal government a bigger role in the U.S. economy than it
has had in generations, accounting for 20% or more of annual output.
Investment and Insurance products:
NOT FDIC-Insured NO Bank Guarantee MAY Lose Value
Wells Fargo Advisors is a trade name used by Wells Fargo Clearing Services, LLC, Member FINRA/SIPC.
© 2021 Wells Fargo Advisors. All Rights reserved. CAR-0421-00965These topics as well as other economic and geopolitical concerns may continue to weigh on markets
and add to higher market volatility. Some of the items we are monitoring include:
U.S. consumer confidence in March sped to its highest level since the start of the COVID-19
pandemic, up 19.3 points to 109.7. This was the largest increase since April 2003. Confidence
remains below its pre-pandemic high of 132.6 in February, 2020. (Conference Board)
The unemployment rate declined to 6% in March, down from 6.2% in February. U.S. private
employers hired the most workers in six months in March. All industries added jobs and many
people rejoined the labor force. The broad-based increase was led by the leisure and
hospitality industry. (Reuters.com) The unemployment rate was as high as 14.7% in April,
2020.
The Federate Reserve does not expect to raise rates until unemployment reaches its pre-
pandemic level of 3.5%.
The ISM, a measure of U.S. manufacturing activity, climbed to its highest level in over 37
years, driven by growth in new orders. The reading rose to 64.7 in March, up from 60.8 in
February. The COVID-19 pandemic increased demand for goods. (Reuters.com)
U.S. home prices are rising at the fastest pace in 15 years as buyers compete for a limited
supply of homes across the country. In March 2021, the median home listing price reached an
all-time high of $370,000, up 15.6% compared to last year. The pandemic amplified demand
as buyers sought more space to work remotely or move farther from their offices. According
to the National Association of Realtors, there were 1.03 million homes for sale at the end of
February, the lowest inventory since 1982. (WSJ.com)
The S&P CoreLogic Case-Shiller 20-metro-area house price index jumped 11.1% in January
from a year ago, the fastest in 15 years, after increasing 10.2% in December. (Reuters.com)
Consumers worldwide spent $900 billion more with online retailers in 2020 compared with
the prior two-year trend. E-commerce made up about $1 out of every $5 spent on retail
globally (up from about $1 out of every $7 spent in 2019). (Mastercard Economics Institute).
Although many shoppers are returning to restaurants and stores, many may continue their
online habit developed during the pandemic.
Rising yields have helped lift the dollar to its highest level in nearly 17 months.
The yield on the benchmark 10-year U.S. Treasury rose by about 80 basis points - its third-
largest quarterly increase over the past decade.
The Federal Reserve raised its forecast for inflation by the end of this year from 1.8% to 2.4%
after years of chronically low price increases.
Investment and Insurance products:
NOT FDIC-Insured NO Bank Guarantee MAY Lose Value
Wells Fargo Advisors is a trade name used by Wells Fargo Clearing Services, LLC, Member FINRA/SIPC.
© 2021 Wells Fargo Advisors. All Rights reserved. CAR-0421-00965Should you be financially impacted as a result of COVID-19, please do not hesitate to reach out to
the Customer Service Disaster Line at 888-818-9147.
Tax Season and Retirement Plan Contributions
For those still working, we want to make sure you are maximizing deferrals into retirement plans and
taking advantage of other employer options to save like Stock Purchase Plans and deferred
compensation. Tax tables can be found on our website and please consult your tax preparer with
deduction questions.
Important Dates
Please note the contribution limits and plan funding deadlines below:
401k - For 2021, the maximum contribution under age 50 is $19,500. The catch up is $6,500 for over age
50.
Traditional and Roth IRA funding for 2020 and 2021 - The maximum allowable contribution for 2020 is
$6,000 with a $1,000 catch-up over age 50. We have until the tax filing deadline of, May 17, 2021
(extended from April 15, 2021) for 2020 contributions and April 15, 2022 for 2021 contributions.
SEP IRA - $57,000 contribution limit for 2020 – deadline to contribute is 5/17/21 (or tax filing date).
$58,000 limit for 2021 with 4/15/22 contribution deadline (or tax filing date).
Milestones
50: Catch-up contributions to IRAs and qualified retirement plans
59 ½: Can take distributions from qualified retirement plans and possibly in-service withdrawals to IRA
without penalty. Can also take distributions from IRAs without penalty
62-70: Can apply for Social Security benefits (we will help you estimate the best age to begin Social
Security to maximize lifetime benefit)- With good health, social security benefits increase greatly every
year you wait.
65: Can apply for Medicare
72: Must begin RMDs (Required Minimum Distributions) from Traditional IRA accounts (excluding Roth
IRAs)
Investment and Insurance products:
NOT FDIC-Insured NO Bank Guarantee MAY Lose Value
Wells Fargo Advisors is a trade name used by Wells Fargo Clearing Services, LLC, Member FINRA/SIPC.
© 2021 Wells Fargo Advisors. All Rights reserved. CAR-0421-00965Quarterly Team News Congratulations to the following team members on promotions and accolades: Howard Adler - promoted to Managing Director – Investment Officer Rosanna Tokar - promoted to Senior Registered Client Associate Eddie Zalayet – achieved Forbes Best-in-State Wealth Advisors 2021 recognition. The Forbes Best-in-State Wealth Advisors ranking algorithm is based on industry experience, interviews, compliance records, assets under management, revenue and other criteria by SHOOK Research, LLC, which does not receive compensation from the advisors or their firms in exchange for placement on a ranking. Investment performance is not a criterion. Eddie Zalayet, Howard Adler & Berit Suba – recognized as 2021 Wells Fargo Advisors’ Premier Advisors. The Premier Advisor distinction is held by a select group of Financial Advisors within Wells Fargo Advisors as measured by completion of educational components, business production based on either of the past two years, and professionalism. Additional criteria, including length of service, may also be used to determine recipients. ------------------------------------------------------------------------------------------------------------------------------------------ In addition to day-to-day portfolio reviews, research, investing and life planning, our team is active in Continuing Education via extra credentials, conferences and webinars. Below are recent examples. If any of the following topic areas are of interest to you, please let us know: Eddie, Berit and Stephanie – Attended Forbes Virtual Summit in March Berit and Stephanie – Attended Investment News Virtual Women Adviser’s Summit in March April is Financial Literacy Month Articles on Investing, Tax Planning, Retirement and Estates & Trusts can be found in the Resources tab of our team website: www.zasprivatewealthmanagement.com Please contact us with any questions. We are also happy to consult with your children and grandchildren as they embark on their careers and financial life planning journey. Investment and Insurance products: NOT FDIC-Insured NO Bank Guarantee MAY Lose Value Wells Fargo Advisors is a trade name used by Wells Fargo Clearing Services, LLC, Member FINRA/SIPC. © 2021 Wells Fargo Advisors. All Rights reserved. CAR-0421-00965
Conclusion
Although more work is needed to shore up weaknesses revealed by pandemic, we entered 2021 with
renewed hope via the COVID-19 vaccines. Domestic and global economies should move from a
recovery to an expansion phase once vaccines are widespread and the economy can reopen allowing
society to gradually normalize. While it will take time for many sectors to recuperate, we anticipate
continued elevated market volatility and potential downside risks. A rapid recovery in the United
States will help bolster global growth; however, a larger response is needed to ensure lasting future
progress. The Biden administrations multi-pronged approach will help start to address high-priority
future fiscal topics and reshape the U.S. economy for the long-term. The tragic COVID-19 pandemic
has changed the course of human history while also revealing key socio-economic issues and setting
the stage for future fiscal policy and reform priorities.
As always, we are available to discuss any questions you may have and review your goals, needs and
current plan. When reviewing your goals and needs, it is important to keep in mind that investments
in equities/stocks are intended for 3-5 years and beyond. We reevaluate plans when investor goals,
liquidity needs and time horizons, not financial markets change. Historically, long-term investors
have been rewarded for staying invested despite more volatile times and diversification and asset
allocation have historically helped to reduce long-term portfolio volatility.
Wells Fargo Advisors is not a tax or legal advisor.
Asset allocation and diversification do not ensure a profit or protect against a loss in a down market.
Wells Fargo Advisors did not assist in the preparation of this report, and its accuracy and completeness are not guaranteed. The
opinions expressed in this report are those of the author(s) and are not necessarily those of Wells Fargo Advisors or its affiliates.
The material has been prepared solely for information purposes and is not a solicitation or an offer to buy any security or instrument
or to participate in any trading strategy. Past performance is no guarantee of future results. Additional information is available
upon request.
Zalayet, Adler & Suba Private Wealth Management Group
of Wells Fargo Advisors
555 California St Ste 2300
San Francisco, CA 94104
(800) 634-4965
Investment and Insurance products:
NOT FDIC-Insured NO Bank Guarantee MAY Lose Value
Wells Fargo Advisors is a trade name used by Wells Fargo Clearing Services, LLC, Member FINRA/SIPC.
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