Weekly Market Snapshot – May 3rd, 2021

Created by: Sam Tenney

GDP growth for first quarter 2021 has come in at 6.4% annualized growth, after a -3.5% decrease in 2020 GDP due to coronavirus. The Federal reserve has said it will continue its “ultra-easy” monetary policy however until employment aims have been met. Current GDPnow readings for second quarter are 13.5% annualized growth.¹
Personal Income from all sources is up over 20% year over year, for the highest single year growth ever recorded. Income from government stimulus checks and unemployment benefits in March has brought the total up from 19 billion in personal income in March 2020, to 24.2 billion recorded this month.²
During the Berkshire Hathaway shareholder meeting, Warren Buffet has said the company is seeing “substantial inflation” and that it “is almost a buying frenzy”. This is in contrast with the Federal Reserve statements that price increases are transitory and there will be no sustained inflation. ³

SOURCES

1. https://www.ft.com/content/3250f348-6a58-4a8f-ba79-5556ddfce127

2. https://www.bea.gov/news/2021/personal-income-and-outlays-march-2021

3. https://news.yahoo.com/warren-buffett-we-are-seeing-substantial-inflation-and-are-raising-prices-220539307.html

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Weekly Market Snapshot – April 12th, 2021

Created by: Sam Tenney

Many US corporations this week, including Coca-Cola, P&G, Kimberly-Clark, have outlined plans during their quarterly earnings meetings to raise their consumer product costs, as a result of pressures from rising commodity prices. ¹
India continues to face a staggering surge in Coronavirus cases, reaching 16.6 million confirmed cases as of this week and bringing the worldwide total cases to a new record high since the last peak in December. This raises concerns of possible lockdowns in India. ²
Eurozone inflation rose to a 1.3% annual average in March, while Japan rose to -0.2% annual inflation, the highest readings since the start of Covid for both countries. This highlights the continued economic rebound happening worldwide.³

SOURCES

1. https://www.ft.com/content/52dc058d-7a6d-4cd0-898e-84bd7f6806a7

2. https://www.aljazeera.com/features/2021/4/25/why-does-india-have-so-many-covid-cases

3. https://www.reuters.com/article/eurozone-economy-inflation-idUSL1N2LT0LN

Weekly Market Snapshot – April 12th, 2021

Created by: Sam Tenney

The U.S. recorded a strong March ISM manufacturing index of 64.7, far surpassing the consensus expectation of 61.5. This 37-year record high reflects robust manufacturing activity driven by strong growth in orders, production, and employment, along with increases in prices paid for inputs. The services index also had a strong March, coming in at 63.7, +8.4% up.¹
In a new study from Rice university, the expected job losses of tax hikes from the Biden administration proposed spending bill could reach upward of 1 million lost jobs within the next decade, with a long term 0.8% impact to the unemployment numbers.²
As of Saturday, April 10th, China has unveiled its two-tiered rollout of its “Digital Yuan” initiative, as reported by the wall street journal. China will be the first country to adopt a state sponsored digital currency.³

SOURCES

1. https://am.jpmorgan.com/us/en/asset-management/adv/insights/market-insights/market-updates/weekly-market-recap/

2. https://www.nam.org/wp-content/uploads/2021/04/NAM-Tax-Study-2021.pdf

3. https://www.wsj.com/articles/china-creates-its-own-digital-currency-a-first-for-major-economy-11617634118?mod=rsswn

Weekly Market Snapshot – April 5th, 2021

Created by: Sam Tenney

Total non-farm payroll rose by 916,000 jobs added in March, bringing the unemployment rate down to 6.0%. This is significant growth for a single month and suggests a continuing recovery¹
The S&P 500 hit record highs last week, breaking the 4,000 mark on Friday, April 2nd. The NASDAQ is still below its all time high of 14,000 however, signifying the recent months shifts from tech heavy sectors to industrial and value-oriented sectors.²
Last week, the Biden administration unveiled the details of its massive, 2-phase infrastructure package. The first phase will include $2.25 trillion in infrastructure spending, primarily focusing on traditional infrastructure, R&D, the electric grid, high-speed broadband and clean drinking water. The proposal also has an additional $400 billion in clean energy tax credits that are not included in the headline total.³

SOURCES

1. https://www.bls.gov/news.release/empsit.nr0.htm

2. https://www.ft.com/content/9d14780b-565a-4c2e-b0e4-75e2d094c4f8

3. https://www.usatoday.com/in-depth/news/politics/2021/04/01/2-trillion-infrastructure-bill-charts-detail-bidens-plan/4820227001/

WEEKLY MARKET SNAPSHOT – MARCH 1ST, 2021

Created by: Sam Tenney

The 1.9 trillion-dollar stimulus plan has been signed into law by the White House, as of Thursday, March 11th. The bill includes $1,400 in direct payments to US citizens, as well as a large amount of stimulus to help the national rollout of the Covid-19 vaccine. ¹
With next week being 1 year since the bottom of the Covid-19 bear market, JP Morgan analysts comment on future market expectations: “Historically, small caps tend to outperform large caps in the first year of a bull market, while trends during the second year have been more mixed in terms of large cap vs. small cap and growth vs. value. We continue to expect value to outperform growth this year as the earnings of financial, industrial and energy companies are much more levered to an economic restart.”²
For the first time since February 2020, Covid-19 is no longer the top worry of fund managers, having been replaced by “Inflation fears” and “Bond yields” for the top 2 worries, according to the Bank of America Fund manager survey for March 2021.³

SOURCES

1. https://www.ft.com/content/ecc0cc34-3ca7-40f7-9b02-3b4cfeaf7099

2. https://am.jpmorgan.com/content/dam/jpm-am-aem/global/en/insights/market-insights/weekly-market-recap-us.pdf

3. https://markets.businessinsider.com/news/stocks/inflation-fund-managers-main-fear-bond-tantrum-bofa-march-survey-2021-3-1030215512

Weekly Market Snapshot – MARCH 1st, 2021

Created by: Sam Tenney

As of Friday, February 26th, US lawmakers have taken a “safe harbor” provision out of the transatlantic trade talks bill. This provision would have allowed US based tech giants to voluntarily choose to “opt-in” to any tax deals made in the bill. This was likely removed to signal to European leadership that corporate needs will not surpass government cooperation with the US. ¹
Value stocks in the S&P 500 have outperformed growth stocks by almost 10% over the past 3 months as many investors position themselves to be long inflation. However, PIMCO bond fund manager Dan Ivascyn believes the markets might be getting ahead of themselves, citing record low money velocity and bad labor markets as reasons why bonds may be priced too low currently. ²
Regulations around Bank leverage ratios may pose another risk to long term treasury yields. Currently, federal laws prohibiting banks from being outside this leverage ratio are being exempted due to the coronavirus, but if the government fails to extend this exemption banks would be forced to sell long term treasury holdings for cash holdings. ³

SOURCES

1. https://www.ft.com/content/cab2caee-60c9-40cb-a115-099287ab8bf4

2. https://archive.vn/GkKBB

3. https://am.jpmorgan.com/us/en/asset-management/adv/insights/market-insig…

Weekly Market Snapshot – February 8th, 2021

Created by: Sam Tenney

The 10-year bond continues to rise fast hitting a 1.39% yield Monday, February 22, as fears of inflation continue to rise in the market. Bond futures continue to rise fast as well, with 10-year bond futures signaling a 100% certainty of rate hikes from the federal reserve in 2023. ¹
Junk bond yields, however, continue to lower their spread against government treasuries. They are currently sitting at the lowest spread on record of just 4% over government treasuries. Investor appetite for junk debt is so large right now that reverse inquiries at many businesses have surged, a process where money managers call up businesses and offer to write large amounts of debt for the company. ²
As the fourth quarter earnings season comes to an end, JP Morgan is projecting operating earnings per share (EPS) of $35.15, down 10.3% from a year ago. In all, 81% of companies have beaten earnings estimates, and 68% of companies have beaten revenue estimates.³

SOURCES

1. https://www.ft.com/content/cab2caee-60c9-40cb-a115-099287ab8bf4

2. https://archive.vn/GkKBB

3. https://am.jpmorgan.com/us/en/asset-management/adv/insights/market-insig…

Weekly Market Snapshot – February 8th, 2021

Created by: Sam Tenney

A recently released Democrat proposal to the new stimulus bill would raise child tax credits to $3,000 per child, a considerable increase to the previous amount. The stimulus bill is aiming for 1.9 trillion in additional stimulus. ¹
The current White House administration plans to stay tough on Chinese trade agreements, citing abuses of human rights and democracy as reasons to continue looking at further trade policy changes with the nation. ²
10 year and 30 year government bond yields continue to rise to nearly 1 year highs, with both reaching levels higher than March 2020. This is a good sign for equity markets, as bond holders continue to dump cash in favor of other assets. ³

SOURCES

1. https://www.nytimes.com/2021/02/07/us/politics/child-tax-credit-stimulus…

2. https://www.ft.com/content/c23a4e67-2052-4d2f-a844-e5c72a7de214

3. https://www.marketwatch.com/story/u-s-government-bond-yields-rise-to-nea…

Weekly Market Snapshot – February 1st, 2021

Created by: Sam Tenney

Economists expect the January jobs report to come in slightly positive at 55,000 jobs added. This a reversal from December, in which 150,000 jobs were lost. ¹
The precious metal Silver has hit a high today of $27 per ounce, a level not seen since 2011. All major Silver dealers were closed for purchase, due to demand skyrocketing over the weekend.²
The US Treasury borrowing estimates for quarterly spending were cut by nearly 80%, down to 250 billion from 1,000 billion. This is due to a large buildup of cash at the treasury reserve and lower spending than expected.³

SOURCES

1. https://www.ft.com/content/ccaf1fc3-1e28-423e-842c-c605042ed611

2. https://www.wsj.com/articles/reddit-users-fuel-rally-in-silver-11612182810

3. https://www.bloomberg.com/news/articles/2021-02-01/u-s-treasury-slashes-…

Weekly Market Snapshot – January 25th, 2021

Created by: Sam Tenney

Fourth quarter 2020 earnings are expected to be slightly down year over year, with the S&P projected at -4.8% down. The financial sector is expected to be the hardest hit, with a -28.9% year over year decrease in earnings estimates. ¹
Biden has unveiled plans to release another round of stimulus, estimating around 1.9 trillion dollars in the next stimulus package. The package is expected to include $1,400 stimulus checks for Americans, among other spending provisions. ²
China has overtaken the US as the largest destination for foreign investment in the world. Year over year inflows to Chinese markets have increased 4%, while inflows to the US markets have dropped -49%. ³