Gill Capital Partners Holiday Update
First and foremost, all of us at Gill Capital Partners would like to say Happy Holidays and Merry Christmas to our friends, clients and partners. 2020 has truly been a year like no other. Many of us are looking forward to 2021 with a sense of optimism as vaccines are being distributed worldwide. While we know it will take some time, the vaccine offers hope that we can see the light at the end of the tunnel, and with it, an eventual return to some semblance of normalcy. The light at the end of the tunnel is not simply a cliché this week, as sky watchers are in for an end-of-year treat. What has been knows as the “Christmas Star” will be easily visible over the next two weeks as Jupiter and Saturn come together. They will appear as one bright star, with the closest alignment occurring on Monday December 21st, the winter solstice. The last occurrence of this once in a lifetime astronomical event was nearly 400 years ago in 1623 and was not observable due to its close proximity to the sun. The last time it was observable was nearly 800 years ago in 1226. Some scholars and theologians believe it was this same astronomical event that that became known as the Star of Bethlehem or the Christmas Star. What else should we expect in 2020, right?
While the year may be winding down, there is no shortage of headlines and market-moving events, from the vaccine rollout to a second round of stimulus.
Vaccine Update – The market has been moving higher over the past couple weeks on the back of emergency use approvals for both Pfizer’s, and more recently, Moderna’s COVID-19 vaccines. The first round of vaccinations began last week, and the market has taken on a new, more optimistic tone that this could mean a return to normal in 2021.
Our view – This is truly a great scientific feat, and we are hopeful that the vaccine will deliver safe, effective results, but we are also cognizant that this will take some time. With two doses required roughly three weeks apart, and approximately two weeks after the second dose before full effectiveness, this is going to be a slow process, and likely to take us well into 2021 to reach large swaths of the population. While a return to normal is largely priced into markets, it could be a bumpy road back, and many industries are going to continue to struggle until such time. So, while we are optimistic about the vaccine outcome, we are cautious with respect to the market’s view and expectation of the pace and timing to get to the end.
Stimulus Update – Leaders in the House and Senate reached an agreement late Sunday evening on second pandemic relief bill, which has been long in the making. Below is a summary of $900 billion bill that includes enhanced unemployment benefits and direct cash payments.
What’s In – While the bill has not yet been passed into law, below is a high-level overview of what it is said to include. These are the major items, and there are many other smaller programs as well:
Stimulus Checks – The package includes direct stimulus checks of $600 per person, including children (that means a family of four would receive $2,400). This is half the amount provided in the first stimulus package. As with the first round of stimulus, payments will only be sent to people below a certain income level, and the size of the payment will decrease for people who earned more than $75,000 in 2019 and disappear altogether for those who earned more than $99,000.
Jobless Benefits – Congress will extend the $300 weekly federal enhancement benefits for 11 weeks from the end of December through mid-March. The amount is half of the earlier federal boost, which ran out at the end of July. The bill also expands jobless benefits to “gig workers,” freelancers, independent contractors, and the self-employed, providing an extra 13 weeks of payments to those who have exhausted their regular state benefits. Both programs would close to new applicants in mid-March
Business Benefits – The bill includes language to re-open the Paycheck Protection Program (PPP) for the hardest hit businesses, and expands the program to allow nonprofit organizations, news outlets, and churches and faith-based organizations to apply. The bill also provides clarity that businesses that took PPP loans will be allowed to deduct the costs covered by those loans on their federal tax returns. The bill also provides targeted relief packages for certain industries such as movie theaters, airlines and cultural institutions, and includes a tax break for corporate meal expenses.
Rental Assistance – The bill extends the eviction protection that was set to expire at the end of the year until January 31st and provides $25 billion in rental assistance for individuals who lost their source of income during the pandemic.
Vaccine Distribution – The bill provides $20 billion for the purchase of vaccines, stating they “will make the vaccine available at no charge for anyone who needs it.” Further funding for vaccine distribution and testing is also included in the bill
What’s Out – Some of the key sticking points that are not included in this bill include:
Aid to state and local governments – The bill lacks new money for state and local governments. Mayors have been pushing for help as budget shortfalls become a reality. This issue had been one of the major sticking points. Democrats have been pushing for additional assistance for state and local governments, but Republicans have resisted allocating additional aid beyond what was provided in the first stimulus package, saying that they do not want to bail out states that have mismanaged their finances.
Liability Protections – One of the most contentious issues in the negotiations revolved around whether companies can be sued by workers over coronavirus outbreaks in the workplace. Democrats wanted protection for workers, while Republicans warned against a slate of potential lawsuits.
Our view – While not perfect, this bill does provide some relief to those who need it most. While many of the details still need clarification, lack of any agreement would have proved disastrous for many individuals and small businesses. Both sides gave ground to arrive at what looks like a compromise. This second, and likely final, round of stimulus will hopefully provide a bridge for those most impacted by the effects of the coronavirus to get to the post-vaccine world some time later in 2021. While it isn’t perfect, it is something.
Gill Capital Partners Annual Toy Drive Update
Thank you to those who donated toys through the Denver Santa Claus Shop this year! We are pleased to report that, with your help, Gill Capital Partners donated more than $2,300 in toys to children in need! That’s over 40 arts & crafts kits, 26 baby block sets, 30 toy fire trucks, dump trucks and tractors, and 30 Vtech activity toys, among others. Thank you for your help in supporting our community!
As always, please let us know if you have any question or concerns, or if we can provide assistance with any other financial planning matters including education, taxes, insurance or estate needs.