Home    News & Publications    1st Quarter 2021

1st Quarter 2021

April 12, 2021

Inside Financial Connections Newsletter


If you have been vaccinated, we suggest you scan your CDC card and upload it to your portal for easy access.


Please join us in congratulating Danielle. After only one year with Financial Connections, she passed her exam to become a Financial Paraplanner Qualified Professional (FPQP). She will be assisting us with financial plans.


We are a resilient nation. Our economy bounced back sooner than most developed countries from the impact of the Great Recession. It looks like we may be a leader bouncing back from the pandemic as well.

According to Oxford Economics, a combination of:

  • The rapid vaccine rollout
  • The $1.9 trillion spending package
  • The Federal Reserve’s easy money policy

puts the U.S. on a fast track to pre-pandemic economic activity. And, frosting on the cake, American households have $1.8 trillion of excess savings. Pent up spending will help the recovery as herd immunity gains traction and business starts re-opening.

Since 2008, China was the major global growth economy. Oxford Economics anticipates the U.S. will surpass China this year – a feat not accomplished since 2005.

According to Catherine Mann, global chief economist at Citibank, “The U.S. is going to play the role of the global locomotive again in 2021.”


 We know it seems that messenger RNA, a synthetic technology, appeared on the COVID-19 scene out of nowhere. Actually, it started almost 40 years ago. The basic principle of mRNA is very simple. Let’s use the most powerful drug factory known – our own body.

The goal is to instruct our cells to make proteins for some task – in this case, fight COVID-19. We’ve all seen the spike molecule that represents the virus. These vaccines instruct the cells to make a “spike protein.” Once available, if the virus enters our body, the mRNA recognizes it and triggers the immune system attack to block it before the virus can enter cells.

Why all of a sudden were the vaccines able to be used so quickly? There are many reasons but some of the primary ones are:

  • Speed with which China identified the genetic sequence
  • Sharing of information globally
  • Public and private funding to expedite the process
  • Purchase of the yet approved vaccine guaranteeing demand
  • Clinical trials usually done sequentially overlapped instead
  • Streamlined data collection

Where to now?

With the framework of mRNA technology, the following potential vaccines are being created.

  •  Malaria
  • HIV
  • Seasonal flu
  • Cancer treatments
  • Multiple Sclerosis
  • Growth of blood vessels related to heart disease
  • On-demand mRNA

It used to take an average of 10 years to develop a vaccine. COVID-19 was done in a year. Hopefully what we learned will help prevent, control, and cure other diseases.


There is a lot of media coverage about cryptocurrencies. Most inquiries we’ve received are about Bitcoin. Other popular ones are Dogecoin, Ethereum, XPR, Tether, and Litecoin.

According to Wikipedia.org, cryptocurrency is a type of currency which uses digital files as money. Cryptocurrencies use “decentralized control”, which means that they aren’t controlled by one person, company or government.

There are actually over 6,700 cryptocurrencies. They are unregulated. There is no  central authority. There are no banks. There is no Federal Reserve.

Your cryptocurrency is stored in what is called a “digital wallet” on your phone, computer or cloud. You can pay, if cryptocurrency is accepted, via electronic devices.

Cryptocurrency prices constantly change. They are very volatile. Your purchase of a unit at $1,000 could be worth $800 tomorrow or $1,200.

According to Roger Aliaga-Diaz, chief economist for the Americas and head of portfolio construction at Vanguard, cryptocurrency is speculation, not investment.

Without a central bank which preserves the value of the currency, the cryptocurrency price continues its volatility. You forego the consistency of a dollar being worth the same this year and future years.

Other potential concerns:

Liquidity – If you try to sell your digital currency, there needs to be a buyer.  However, there is no regulation requiring someone to buy.

Pricing – Again, no regulation and no way to have a unit equal a consistent price.

Regulatory – There may come a time when governments try to regulate digital currency. Regulation could adversely reflect cryptocurrency pricing though it might stabilize it.

Security risk – In 2019, 12 cryptocurrency exchanges were hacked. One individual said he lost $100,000 because of a SIM-swapping hack. His Coinbase account was wiped clean.

This may change in the future. Central Banks are beginning to study the potential of issuing government digital currency. JP Morgan is investigating issuing digital currency. China, as an experiment, handed out digital currency to the tune of 10 million yuan (approximately $1.5 million) to one of its provinces. It is an experiment to see how it works with over 3,000 merchants accepting digital payment.

Stay tuned. This is a rapidly evolving area.


There is consensus that the rescue plan is going to give a large boost to our economy this year; but forecasting beyond that will be difficult for some of the following reasons.

  • There has never been a pandemic in recent history that provides guidance on recovery.
  • There has never been a vaccination being administered so rapidly and globally.
  • There has never been a Rescue Plan aimed at lower wage earners.

Combine the lack of history for all these points and educated guesses might be moving into the speculative category.

At this time

We know that 62% of jobs have been recovered from pre-pandemic levels. This time next year, unemployment is expected to be at pre-pandemic levels (around 4% or lower).

Longer-term interest rates have risen even though the Fed says they aren’t planning to raise interest rates until 2023. The market doesn’t believe them. Hence the longer-term interest rates rising. Other reason – investors are assuming higher inflation.

The $1.9 Trillion Rescue package will turbocharge the economy short-term. Lower   income wage earners spend 99% of the income and more income will be distributed from the legislation.

Herd immunity could be reached by early summer and permit more businesses to re-open.

Expected Returns per JP Morgan

The Price/Earnings (P/E) is high (stock valuations). Interest rates are low. The earnings yield on a stock is defined as the inverse of the P/E ratio and is representative of future returns.

If you were to take the earnings yield on the S&P 500 forward earnings of 0.4 times and the yield from the Barclays Aggregate Bond Index, a portfolio of 60% U.S. Equities and 40% U.S. bonds would return 3.21% per year.

Financial Connections Portfolios

We diversify more than just large U.S. equities and bonds. Your portfolios may have small companies, international (developed and emerging markets), alternative strategies, and diversified bond funds.

With this newsletter and reports, we also include our annual ADV 2 and 3. Please let us know if you have any questions or would like to update your plans.



Financial Connections makes its staff available to journalists to share knowledge.



No Hidden Costs. No Referral Fees. No Commissions.

As a fiduciary, we put our clients' interests first. Our compensation comes exclusively from you. If we don't directly provide a particular service, we can serve as a resource for referrals to other professionals.

Download the fee schedule Download Disclosure Form ADV Parts 2 & 3