Weekly Market Commentary February 17th, 2021
ROBARE & JONES ON THE MARKETS
Way back, when radio disk jockeys played 45-rpm vinyl singles, the A-side of a disk was the song the record company was promoting and the other side – the flip side – held a song that sometimes had an equal or greater impact. For instance, the flip side of Queen’s We Are the Champions was We Will Rock You.
When it comes to the economy and financial markets, flip sides can have significant impact, too. For example:
- Stock market performance. Last week, major stock indices in the United States – the Standard & Poor’s 500, the Dow Jones Industrial, and the Nasdaq Composite – finished at record highs. That was happy news for investors.
The flip side: Concern that share prices may not be sustainable. “The long, long bull market since 2009 has finally matured into a fully-fledged epic bubble.
- Vaccination acceleration. The pace of COVID-19 vaccinations has accelerated. Vaccinations are important to economic recovery because they are expected to restore confidence and increase economic activity, reported Janet Alvarez of CNBC.
The flip side: Vaccines may not be as effective as many anticipate for two reasons: 1) Some Americans are reluctant to be vaccinated, and 2) Vaccines may not be effective against all strains of the virus.
- Additional stimulus. A $1.9 trillion stimulus package is in the works, which could “…prevent unnecessary financial hardship and mitigate future economic risks,” according to Morning Consult economist John Leer.
The flip side: Too much stimulus could cause the economy to overheat, lead to inflation, and cause the Federal Reserve to raise rates. The bond market has already been pushing rates higher. Last week, the yield on 30-year U.S. Treasuries rose above 2 percent for the first time since February 2020.
- Infrastructure spending. Work has begun on a $2 trillion bipartisan infrastructure plan that is intended to create jobs and rebuild U.S. transportation networks, reported Ian Duncan of TheWashington Post.
The flip side: While many agree U.S. infrastructure needs repair, the cost may be paid through higher taxes. There is ongoing debate about whether tax increases impede or accelerate economic growth, according to Jim Tankersley of The New York Times. In addition, government spending of this type is another form of stimulus, which could heat up economic growth.
Let's take a look at the benchmarks from this past week!
I've Got Friends in Low Places
We've all heard the classic Garth Brooks tune 'Friends in Low Places', but this week has been comparable.
This week has been and will continue to be bizarre as Houston and the rest of Texas endures record low temperatures.
Last night was the lowest temperature recorded in Houston in over 116 years, and the "high" yesterday was the lowest, high temperature recorded in 111 years.
Texas, state-wide, experienced over 4 million of the 4.8 million power outages across the U.S. which was just a total of 1 million short of an all time record according to poweroutage.us
Today was a the first time all 254 counties in Texas are experiencing winter storm warnings in the same day.
As many are without power, water, gas, and other resources, we encourage everyone to check in on family, friends, and neighbors. God's favorite state, Texas, will get through this together, but in the mean time stay safe and stay warm!
Send us some pictures of your frozen adventures!
Sources:
https://en.wiktionary.org/wiki/catch_you_on_the_flip_side
https://www.radiox.co.uk/features/x-lists/b-sides-more-famous-than-a-sides/
https://www.barrons.com/articles/the-stock-market-keeps-rising-the-reasons-to-be-hopeful-are-also-the-reasons-to-worry-51613179045?refsec=the-trader (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2021/02-16-21_Barrons-The_Stock_Market_Keeps_Rising-The_Reasons_to_be_Hopeful_are_Also_the_Reasons_to_Worry-Footnote_3.pdf)
https://www.gmo.com/americas/research-library/waiting-for-the-last-dance/
https://www.cnbc.com/2021/01/10/why-the-covid-19-vaccine-will-be-good-for-financial-health.html
https://morningconsult.com/2021/02/12/analysis-1400-stimulus-coronavirus-relief-check-help/
https://www.barrons.com/articles/jobless-claims-continue-their-slow-climbdown-51613053832?mod=article_inline (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2021/02-16-21_Barrons-Jobless_Claims_Show_Uneven_Recovery-Footnote_7.pdf)
https://www.washingtonpost.com/transportation/2021/02/11/biden-senators-infrastructure/ (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2021/02-16-21_TheWashingtonPost-Biden_Meets_with_Key_Senators_to_Start_Bipartisan_Talks_on_Infrastructure_Spending-Footnote_10.pdf)
https://www.nytimes.com/2019/12/05/business/Elizabeth-Warren-tax-increases.html (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2021/02-16-21_TheNewYorkTimes-Could_Tax_Increases_Speed_Up_the_Economy-Democrats_Say_Yes-Footnote_11.pdf)
https://www.ft.com/content/a6d89494-9fac-49a8-8b0a-4f3f1870ace1 (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2021/02-16-21_FinancialTimes-Markets_Brimming_with_Investor_Optimism_on_US_Economy-Footnote_12.pdf)
https://www.history.com/news/11-innovations-that-changed-history
https://www.infoworld.com/article/3394399/machine-learning-algorithms-explained.html
https://news.mit.edu/2021/machine-learning-model-helps-determine-protein-structures-0204
https://www.brookings.edu/research/protecting-privacy-in-an-ai-driven-world/
