Ann Sterling:
It is now time for 4 Your Money, and we are joined by David Nelson, CEO of NelsonCorp Wealth Management. We welcome you back every single time, David. Glad to have you.
David Nelson:
Thank you. I appreciate it very much.
Ann Sterling:
We continue to talk about this. We talked about it a lot, about the economic impact of COVID-19, a pandemic. While we certainly aren’t back to normal, we are seeing some good news, a pickup in activity. How do you gauge where things stand right now?
David Nelson:
So, it’s key to look at data that really matters. So what we try to do is, to look ahead versus looking in the rearview mirror. So much data these days is looking in the rearview mirror. So what we’re looking at is that we’re not back to cycle highs, which I think most people are probably well aware of, but things clearly are getting better.
David Nelson:
So again, when we look at unemployment, retail sales, housing, it’s starting to improve, but again, we’re not back to where we want to be, we’re not at all time highs yet. But what we did is, we brought along a really nice chart. And this chart that I brought along is put out by Citigroup. And Citigroup puts out this chart and it’s looking at the surprise, what they call the surprise index. And the surprise index, in simple terminology, is looking at what people are anticipating and then looking at what actually is taking place.
David Nelson:
And what you see on the far right hand side, i- on the right hand side what we’re seeing is all time highs. So things plummeted badly, people thought the world’s coming to an end. It didn’t quite come to an end and now what we’re seeing is that many of the reports that are coming out are better than expected. So the surprise index, which again, is a very reliable tool, as far as looking forward, is actually giving us some pretty good information.
Ann Sterling:
That’s an amazing graphic to show right there. Not only just a roller coaster ride, but we’re just going up, up, up. Encouraging news. However, we continue to see the headlines, we continue to read the headlines suggesting that not everything is great. You have shared with us in previous segments that the economic and financial recovery is going to be uneven. It could take some time. What information can help provide a more nuanced view, if you will?
David Nelson:
Correct. So probably the area that, again, would apply to most individuals out there is what they look around as far as commercial real estate. And commercial real estate, unlike the Citigroup index that we just looked at is pretty broad in age, but it has some holes. And one of the holes we look at is commercial real estate. And when we look at commercial real estate, again, that’s chart two is going to give people a nice visuals as far as on this. We’re looking at here from an architectural standpoint, actually what’s taken place as far as billings, which is the top clip in blue, and then the bottom, which is inquiries, and both of which fall off the planet here, as far as recently, but they both have rallied back some.
David Nelson:
Now the top one, I think, is the most crucial, because that isn’t just inquiries. That’s people writing checks, and the writing checks is improving some, again, not as much as we’d like to see, but it has come around some. These drops and the rise that we saw earlier, it’s even greater than what we saw in ’07, ’08, ’09 in the great recession. So these are really important numbers that people need to pay attention to.
Ann Sterling:
So David, how should viewers be thinking about their investments now, and as we continue to march towards the future as things evolve?
David Nelson:
Yeah so, don’t think we’re out of the woods totally yet. People need to understand what they own. We talk about, and I know it’s boring, but you need to understand what you own. Once they understand what they own, now we can make decisions. So I think the markets have come a long way, clearly from the bottom, but again, it’s not over. Now the instincts are for most people, is to go after the hardest hit industries, such as the airlines and hospitality and retail, and say, “Maybe I can get a quick kill here as far as to make a lot of money in short period of time.” We would caution people otherwise. We would say focus on, again, the big tech companies are probably going to be some clear winners. There’s opportunity out there as far as still in that space that people should be looking.
Ann Sterling:
All right. Great information. David, thank you for joining us. And if you missed-
David Nelson:
Thank you.
Ann Sterling:
Good to see you. And if you missed any of this discussion, we will make it available for you right there on ourquadcities.com.