Showing posts from January, 2021

What's going on with this market?

Profit taking and Game Stop. Transcript Hello. This is our weekly market alert for the week ended January 29, 2021. Wow. Month is over already. Yesterday, it was New Year’s Eve. It’s so fast. Time flies when you’re having fun, I guess. So, this week, I want to start off with saying that the selling that we’ve seen here in the last couple of days, last 3 days actually, we believe is essentially profit taking. We had a phenomenal run in the stock market since November, and so it’s not unreasonable to have some people say, you know what, with all this stuff going on and, you know, the new administration potentially raising taxes and who knows what, I’m a little nervous, maybe I’ll just take some profits off the table, and so we believe that this selling that we’ve seen here this week is that. It’s not the beginning of the next bear market. In fact, we think it’s the opposite. With stimulus and vaccines, that our economy is probably going to get back on its feet here over the next year or

Economic Reports: Week Ending Jan. 29, 2021

Market close 1/29/21 Markets remain choppy, with a decisive drop from record highs The stock markets retreated decisively from record highs this week, with the elevated frothiness in the markets appearing to fall victim to the vulnerabilities of a shock to the system, which came in the form of a cohort of retail investors taking aim at highly shorted stocks. The Schwab Center for Financial Research (SCFR) discusses the disruption in the article, What Investors Should Know About Recent "Flash Mob" trading . Meanwhile, the Federal Reserve reiterated its highly accommodative stance to combat the severely elevated unemployment levels as discussed by Schwab's Chief Investment Strategist Liz Ann Sonders in her latest article, Steady as We Go: Fed Keeps Rates Unchanged . Q4 earnings season reached a fever pitch and given that equities had been running hot coming into the season, the reaction on the Street was muted despite mostly stronger than expected results. Of the 184 S&

Cut These People Off

 You are a product of your environment. You are a product of who you hang out with. And how to deal with people you can't cut off.

Economic Reports: Week ending Jan. 22, 2021

Mortgage applications decline  The MBA Mortgage Application Index decreased by 1.9% last week, following the prior week's 16.7% jump. The pullback came as the Refinance Index fell 4.7% to more than offset a 2.7% gain for the Purchase Index. The average 30-year mortgage rate increased 4 basis points (bps) to 2.92%. Builder confidence off slightly  The NAHB/Wells Fargo Housing Market Index (HMI) slipped three points in January, down for the second straight month, to 83, below the consensus of 85. All three index components fell, led by reduced prospective buyer traffic. The report noted that the surge in lumber prices and the relentless increase in COVID cases weighed on builder confidence, amid ongoing concerns about the dearth of affordable lots and skilled labor, as well as increased regulatory uncertainty.  Even so, the HMI remains close to a record high level, indicating elevated builder confidence, which bodes well for the near-term outlook for housing starts.  More weakness in

What the Biden Administration may mean for your money

Taxes Biden has proposed sweeping changes to the tax code, including returning the top income tax rate to 39.6% from its current level of 37%. He has pledged to not raise taxes on anyone making less than $400,000. Yet, he wants to raise taxes on long-term capital gains from investments and qualified dividends. Taxpayers with income above $1 million would be subject to a capital gains tax rate of 39.6%, instead of the current 20%. Meanwhile, the corporate tax rate would jump to 28% from 21% and there would be a 15% minimum tax on book income for corporations that have profits of $100 million or higher. Bank of America Securities estimates that Biden's tax plan would reduce S&P 500 earnings by 7%, mostly because of the higher corporate taxes. In addition, the wealthy will face a higher estate tax bill. Currently, under the Tax Cuts and Jobs Act, individuals can gift or make a bequest of $11.7 million, or $23.4 million for a married couple, before facing the 40% estate or gift tax

NYT: Has the U.S. passed the peak of Covid cases?

 After months of soaring case numbers, the U.S. is beginning to show some signs that the latest surge is slowing. New cases have dropped significantly in the last week, falling to a seven-day average of about 194,000 on Wednesday from about 246,000 a week earlier — a roughly 20 percent dip. Across the country, 30 states are reporting sustained declines in cases, and no states with low case counts are reporting rises. It’s a striking difference from mid-December, when nearly every state was seeing record numbers of new infections. Even hospitalizations are starting to decline. While these indicators are positive, it’s still too early to know if the U.S. has definitively turned a corner, or if it’s simply plateauing before another spike. The biggest wild cards are the new, faster-spreading variants, which are finding footholds across the country, even as the vaccination campaign is moving more slowly than anticipated. According to the numbers reported below, the mortality rate is below 1

Economic Reports: Week ending Jan. 15, 2021

Note: If you subscribe to this blog, please check this story frequently for updates. The blog system will send an e-mail first time I publish, but I update when new economic reports are issued. Economics Recap (Details below) Better (or higher) than expected: JOLTS report for Nov: 6.527M vs. 6.450M est Import Prices for Dec: +0.9% vs. +0.7% est Export Prices for Dec: +1.1% vs. +0.6% est Industrial Production for Dec: +1.6% vs. +0.5% est Capacity Utilization for Dec: 74.5% vs. 73.6% est On Target: CPI for Dec: +0.4% vs. +0.4% est Core CPI for Dec: +0.1% vs. +0.1% est Business Inventories for Nov: +0.5% vs. +0.5% est Worse (or lower) than expected: NFIB Small Business Optimism Index for Dec: 95.9 vs. 100.2 est Treasury Budget for Dec: -$143.6B vs. -$143.5B est Initial (weekly) Jobless Claims: 965k vs. 789k est PPI for Dec: +0.3% vs. +0.4% est Core PPI for Dec: +0.1% vs. +0.2% est Retail Sales for Dec: -0.7% vs. -0.2% est University of Michigan Consumer Sentiment for Jan: 79.2 vs. 79.5 es

Covid relief and shot records

Biden proposes Covid relief, plus a lot more President-elect Joe Biden began laying out his economic agenda last night, saying he would ask Congress for $1.9T in immediate relief to fight the coronavirus pandemic. The plan includes $1,400-per-person direct payments to most households, a $400-a-week unemployment insurance supplement through September, as well as funds for Covid testing, vaccine distribution and state and local governments. The proposal is the first phase of a two-part strategy, with a broader program to be unveiled in subsequent weeks focused on infrastructure and climate change. Not only is further fiscal aid on the table, but Fed Chair Jerome Powell doubled down on the monetary side as weekly jobless benefit claims rose to their highest level since last August. "Now is not the time to be talking about exit" from easy money policies, he said in a webcast with Princeton University, pledging to give plenty of notice before scaling back the central bank's bo

Where did Americans move in 2020?

States compete with each other in a variety of ways, including in attracting (and retaining) residents. Sustained periods of inbound migration lead to (and reflect) greater economic output and growth. On the other hand, prolonged periods of net outbound migration can strain state coffers, contributing to revenue declines as economic activity and tax revenue follow individuals out of state. The 2020 National Movers Study, while showing only a subset of all moves, still provides a targeted look at the types of interstate migration patterns we can expect to see in government-issued data once it becomes available.

Corporate America pulls political funding

Following in the footsteps of Marriott (NASDAQ: MAR ), JPMorgan Chase (NYSE: JPM ) and Citigroup (NYSE: C ), a growing number of big businesses have decided to suspend or review their campaign donations in the wake of last week's riot at the U.S. Capitol. The storming led to five deaths, including one police officer, prompting many C-suite executives to take action. There is widespread anger in the business community at what they see as a challenge against any disruption in the "peaceful transition of power," or the democratic stability on which business depends. Pausing all political spending: American Airlines (NASDAQ: AAL ), Archer Daniels Midland (NYSE: ADM ), BlackRock (NYSE: BLK ), Boston Scientific (NYSE: BSX ), BP (NYSE: BP ), Charles Schwab (NYSE: SCHW ), ConocoPhillips (NYSE: COP ), Facebook (NASDAQ: FB ), Google ( GOOG , GOOGL ), Kroger (NYSE: KR ), Marathon Oil (NYSE: MRO ), Microsoft (NASDAQ: MSFT ), Union Pacific (NYSE: UNP ), U.S. Bancorp (NYSE: USB ) and U

How many stimulus checks ended up in the stock market?

(From Seeking Alpha) Direct payments have provided a financial lifeline to millions of Americans, but for others, they represent an opportunity to boost their savings. That is thanks to the $2.3T CARES Act and the latest $908B stimulus bill, which provided $1200 and $600 to all Americans making under $75,000 - regardless of their employment and financial situation. In fact, securities trading was among the most common uses - across nearly every income bracket - for the government stimulus checks issued in May, according to software and data aggregation company Envestnet Yodlee. For many consumers, trading was the second or third most common use for the funds, behind only increasing savings and cash withdrawals. In fact, Americans that earned between $35,000 and $75,000 annually traded stocks about 90% more than the week prior to receiving their stimulus check. Quote: "Where are the Robinhoodies going to invest their newfound wealth?" asked Mark Tepper, president and CEO of St

CNBC: Where the jobs are

The U.S. economy ended seven months of job gains and posted its first net payrolls loss since April last month as restaurants laid off droves of workers with the arrival of the winter months. The Labor Department reported Friday that total nonfarm payroll employment fell by 140,000 in December as fears over a Covid-19 resurgence sparked a backslide in travel and hospitality job numbers. The unemployment rate held at 6.7%. The decline in total payroll employment was worse than the net loss of 50,000 that economists had forecast. CNBC studied the net changes by industry for December jobs based on data contained in the employment report. The broad leisure and hospitality sector saw outsized job losses thanks almost entirely to a torrent of layoffs at bars and restaurants as winter weather begins across much of the U.S.

Economic Reports: Week Ending Jan. 8, 2021

The markets appear to be pleased with the clarity on the political front as the outcome of the runoff elections in Georgia gave the Democrats a slim majority in Congress, which could prove pivotal in future legislation, notably implications for tax policy, regulation, further fiscal relief, and infrastructure spending. However, this week's violence at the U.S. Capitol remains a sore spot. December manufacturing activity revised higher The final December Markit U.S. Manufacturing PMI Index was unexpectedly revised higher to 57.1 from the preliminary level of 56.5, above the Bloomberg forecast of a slight downward adjustment to 56.3 and November's 56.7 level. A reading above 50 denotes expansion and this was the highest level since September 2014 amid further substantial increases in output and new orders. However, Markit noted that supply chain disruptions were the most severe on record and the industry saw the sharpest rise in cost burdens since April 2018. The release is indep

After Georgia, what's next? Higher corporate taxes?

Now that it looks like the Senate will be 50-50, with Kamala Harris as the tie-breaker, what now? It seems that Biden will get his wish for more taxes...maybe. We'll see. Markets today didn't freak out. Dow up, NASDAQ down, so maybe money is moving from high-tech to blue chip. Too early to tell, in my estimation. Though energy was also up today. Here's a good article on corporate taxes by an economist.

What's in the second round of Covid-19 relief?

The new covid-19 relief package contains approximately $900 billion of programs for individuals and businesses. It includes renewal of many programs created in the CARES Act, including the Paycheck Protection Program, the Employee Retention Tax Credit, direct payments to individuals, unemployment insurance expansion, and more. Read the full story  here .