Insights

WuRevue Week Ending 4/2/2021

 

Top News:

03/29: A pall was cast over the market’s open, after reports of sizable margin calls totaling $30B and their unknown rippling effects surfaced.  Concerns over backsliding infection data in the US have prompted calls for a pause in reopening, even as the government races to widen vaccine eligibility.  The chief US trade negotiator suggested tariffs against Chinese goods won’t be lifted in the near future. 

 

03/30: Recovery optimism was reflected in one measure of consumer confidence, which surged to the highest level in a year.  Reflationary bets in stocks were kept in check, however, as the yield on 10-year Treasurys edged higher to 1.73%. US home prices registered an annual increase of 11.2% in January, notching an eighth consecutive month of gains.

 

03/31: Amid last-minute quarter-end portfolio rebalancing, investors were eagerly awaiting details of Biden’s infrastructure plan, expected after the market’s close.  Record low inventory and higher mortgage rates all conspired to cool two housing indicators (here, here).

 

03/25: Both the S&P 500 and Dow Jones Industrials saw milestones, following Biden’s unveiling of his expansive $2T infrastructure upgrade proposal.  US manufacturing retained its upward trajectory in March as a key index hit a 38-year high, pointing to gathering momentum in the U.S. economy.  However, the patchiness of recovery was evident in the latest weekly jobless claims report, which saw an unexpected increase.  Meanwhile, OPEC and its allies have agreed to boost oil production gradually over the next three months in a bet on recovery in demand.

 

03/26: While US and European stock exchanges were closed in observance of Good Friday, bond traders pushed the US benchmark yield above 1.7% again, after the government reported a net gain of 916K jobs and a slight dip in the unemployment rate to 6% in March.

 

 

Heard on the Street:

“Increasingly euphoric sentiment is a key reason for our neutral outlook as the cyclical rebound, vaccine, stimulus, etc. is largely priced into the market… Valuations today are signaling anemic long-term returns and rising rates are also a headwind for both income investors, who have piled into equities amid low rates, and corporate margins.”

— Savita Subramanian, head of equity research at Bank of America, as quoted by MarketWatch on 4/01/2021

 

 

Longer Game:

Why should Americans care about the escalating competition between the US and China? One key answer: the threat to the greenback’s preeminence as a global currency, which has served as the bedrock in sustaining decades-long trade deficits and budget shortfalls. One observer bugled a warning on a scenario whereby such dominance might be shared.

 

As the development of AI received a leapfrogging boost in 2012’s ImageNet competition, researchers, practitioners and governments alike are grappling with the challenge of regulating an emerging field without stymying progress.

 

 

For Your Consideration :

Almost two weeks after extending the federal income tax filing deadline to May 17^th, the IRS harmonized the deadline for 2020 contributions to IRAs and health savings accounts to the same date.  A person under age 50 can contribute $6,000 to an IRA, while those older can contribute up to $7,000.