​Happy Memorial Day!  The major U.S. stock indexes posted modest gains in a quiet week of trading, with the S&P 500 and the Dow both rising around 1% and the NASDAQ adding more than 2%. The results left the S&P 500 and the Dow within less than a percentage point of record highs set three weeks earlier. For the second week in a row, growth stocks chipped away at the year-to-date dominance of value-oriented stocks, as a U.S. large-cap growth index outperformed its value counterpart by a wide margin. That weekly trend helped lift the growth- and tech-oriented NASDAQ, which outperformed the S&P 500 and the Dow. May was the sixth positive month out of the past seven for the S&P 500, which rose nearly 1%. The Dow added about 2% while the NASDAQ lagged, falling more than 1% and snapping a six-month string of gains.  In honor of the holiday, I have broken down this week's news using quotes from General George S. Patton Jr. 

​Oil has bounced tremendously. It was just April of last year when oil prices sank to their lowest level in history, dropping into negative pricing as oil supplies overwhelmed the globe’s storage capacity. Oil hit $0.01 a barrel before falling to as low as negative $40 and eventually settling at negative $37.63, the lowest level recorded since the New York Mercantile Exchange began trading oil futures in 1983.  It has been a meteoric rebound for oil prices. This week, U.S. crude oil prices climbed another 4%  to nearly $67 per barrel, the highest level since October 2018. Strong U.S. demand heading into the summer bolstered prices ahead of a key meeting of leaders from top oil-producing countries.

President Joe Biden released his fiscal year 2022 budget request to Congress on Friday, the first formal budget of his presidency. The proposed budget which requests $6 trillion in spending is focused on helping reach some of the administration’s lofty goals and will likely have to overcome the tug of stiff opposition from Congress.  The budget requests an increase of 41% for the Department of Education over last year, plus 23% more for the Department of Health and Human Services, and 22% more for the Environmental Protection Agency.

General Patton, who was never a fan of politicians, would likely not approve of the proposed decrease in funding for the Department of Homeland Security and light increase for the Department of Defense (just 2%). As with most presidential budgets, and swivel chair created proposals, the budget relies on optimistic (perhaps unrealistic) projections of unemployment rates and GDP growth.   Just like when planning for retirement when budgeting if you use overly optimistic assumptions, you run a higher risk of running short.  The economy needs to hit these growth projections to cover their spending plans.   The proposal does include an increase in the corporate tax rate from 21% to 28%, as well as increased IRS enforcement and higher taxes on the wealthiest taxpayers but that alone will not cover all the spending. 

Thank you to all who have served.  Enjoy your holiday.  I will close in the words of General Patton as to me they strike the essence of what we celebrate this weekend. "It is foolish and wrong to mourn the men who died. Rather we should thank God that such men lived."

I am here to help at any time. If you would like to schedule a phone/web conference appointment, I have included a link to my calendar below and you can self schedule. 

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Hope all is well. The major stock indexes were mixed, with little overall change. Declines on the first three trading days of the week were largely offset by a rally on Thursday, leaving both the S&P 500 and the Dow around 1.5% below their record highs set two weeks earlier. For the first time in six weeks, the NASDAQ outperformed the S&P 500, and the U.S. large-cap growth stocks edged a large-cap value.  Since this week’s news highlights two of the questions I get most frequently, I will take an opportunity to address both questions.

With markets near an all-time high should I go to the sidelines?

The recent run in the stock market has stock valuations stretched. A pull back is likely but will probably be too short lived to try and time it by moving in and out.   It is best to stay invested at this point unless you’re planning to spend the money you have invested in the stock market in the short term (within the next year).  Long term, stock valuations are sustainable.  The average of price to earnings (P/E) ratio for the S&P 500 is 22.  Still below what would be considered an extreme bubble.  Looking back at bull markets since 1929, P/E ratios traditionally rise in the first year of a bull market, as optimism rises, then the ratio declines as earnings rebound. With expectations for earnings growth of roughly 30% in 2021, earnings (the E portion of P/E) appears to be in good shape.  That means P/E ratios could drop to more normal levels while still supporting stock-market gains. The combination of valuations and earnings growth will produce positive but more moderate gains for stocks. Over the past 40 years, periods of accelerating earnings have often seen outperformance from value stocks, as they are more closely linked to economic momentum. That has been the case this year however I don’t expect that to continue because I believe the pandemic has changed the way we do business and I expect growth stocks to benefit just as much if not more from the economic momentum. That started to happen this week as technology stocks that had recently been lagging were among the latest week’s top performers.

Is now the time to sell my home?

Home sales are slowing down. Home prices have skyrocketed over the last year amid a significant jump in demand. Lower inventories (supply) and rising building-material costs have also added to price gains. On Friday we learned U.S. sales of existing homes fell 2.7% in April compared with the previous month, making it the third straight monthly decline but still up significantly year over year.  Spring is a time of year when sales typically pick up so the decline has some concerned that they may have missed their opportunity to sell.

The last time home prices were on this type of year over year trajectory, a housing bubble became the catalyst for a financial crisis. We're not traveling the same path now.  The pace slowing does not mean the boom is over. While the current pace of appreciation is likely not sustainable the demand for housing is. Home prices have skyrocketed over the last year because of a significant jump in demand. Lower inventories (supply) and rising building-material costs have also added to price gains. New and existing home sales are at their highest levels in more than a decade, reflecting the surge in demand. Falling unemployment, virtual work trends, and still-low mortgage rates should all support an enduring positive outlook for the housing market for the next several years. Of note, the average size of a new single-family home has also begun to rise for the first time in many years, likely reflecting the shift in home preferences sparked during the pandemic. Increased home buying activity, improving job growth, and an estimated $1.5 trillion in household savings should help keep the home prices from dropping. 

During the housing bubble of 2008, there was too much supply compared with demand, and lending conditions were reckless. Currently, lending standards are much more prudent, and, most importantly, demand is outstripping supply, which should prevent an outcome like last time.  Supply will eventually catch up. The spike in lumber prices appears to have abated and construction is getting back to pre-pandemic pace this will increase inventory.   So in answer to the question it is a seller’s market but I don’t think you need to rush to sell because I think demand will continue to keep home prices growing albeit at a slower rate.

I am here to help at any time. If you would like to schedule a phone/web conference appointment, I have included a link to my calendar below and you can self schedule.

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Hope all is well. The s&P 500 and the Dow both fell more than 1%. The NASDAQ dropped more than 2% and lagged the S&P 500 for the fifth week in a row. While the week's overall declines weren't huge, the market's path was choppy. Big declines on the first three days of the week that sent the NASDAQ down a total of 5.2% before rebounding with positive results on Thursday and Friday. I have broken down this week's news using a couple of my favorite commercials from the 80s.

This week began with a large section of the country asking Where's the Gas?  The Colonial pipeline has returned its entire system to normal operations and is back delivering millions of gallons of fuel per hour after a ransomware attack forced the company to shut its network 8 days earlier. The company said Saturday that its pipeline is now servicing all markets. However, there are still widespread fuel shortages in many of the markets serviced by the pipeline. In Washington D.C.  gas stations are without fuel. In North Carolina 63% of stations are short, in Georgia and South Carolina more than 40%, and in Virginia 38%.  The pipeline disruption led to the pull back the markets experienced at the beginning of the week.

​The post pandemic economy would have brought sanity to  Crazy Eddie whose commercials in the 80's screamed that their low prices were INSANE.   Prices are going up everywhere. Inflation surged by the most in any 12-month period since 2008. The Consumer Price Index (the most common gauge of inflation) jumped 4.2% for the 12-month period that ended in April.  The jump in inflation caused the early week sell off to intensify on Wednesday.  

I am here to help at any time. If you would like to schedule a phone/web conference appointment, I have included a link to my calendar below and you can self schedule.

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Hope all is well.  Happy Mother’s Day!  It was an uneven week for the major U.S. stock indexes, as the Dow climbed nearly 3%, the S&P 500 added more than 1%, and the NASDAQ fell more than 1%, with most of its weekly decline coming on Tuesday. The Dow and the S&P 500 both set records, eclipsing highs set less than a month earlier.  In honor of  Mother’s Day I have broken down this week’s news using some motherly wisdom. 

​A job.  We experienced a setback in the labor market.  Friday’s jobs report fell far short of expectations as the recent rollback of pandemic-related restrictions failed to provide much lift to the labor market. The economy generated 266,000 new jobs in April, far below economists’ expectations for a gain of nearly 1 million. The unemployment rate actually rose from 6.0% to 6.1%.

​Corporate earnings growth continues to break records. S&P 500 companies are now expected to report a cumulative 49% increase over last year’s first-quarter results. That’s up significantly from the roughly 25% gain that analysts had forecast at the start of earnings season.

Manufacturing continued to be too sick to participate in the economic recovery. The Institute for Supply Management’s (ISM) index of manufacturing activity came in at 60.7 in April—down from 64.7 in March and below expectations for a 65.0 reading. A separate reading on the services sector also fell below expectations. 

I am here to help at any time. If you would like to schedule a phone/web conference appointment, I have included a link to my calendar below and you can self schedule.

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​Hope all is well. For the second week in a row, the major U.S. stock indexes were little changed overall, as the Dow and NASDAQ were slightly negative and the S&P 500 posted a tiny gain. The lack of sustained movement follows a four-week string of gains that lifted indexes to record highs in mid-April.  April was the fifth positive month out of the past six for the S&P 500, which rose more than 5%. The NASDAQ also added about 5% while the Dow rose nearly 3%. All 11 S&P 500 sectors posted positive results in April.  I have broken down this week's news using quotes from one of the best television characters of all time, Norm from Cheers.

The Federal Reserve remains as consistent as Norm's order, showing no signs of straying from its accommodative monetary policies in the short term. Fed Chair Jerome Powell attributed a recent rise in inflation to factors that he views as temporary―a statement that eased concerns about a possible Fed policy shift to fight inflation. ​

President Biden made his joint address to Congress and tried to be honest. He spent equal time  making promises and discussing how the rich will pay for them.  President Biden pushed for funding to expand broadband, update infrastructure for drinking water and modernize the energy grid as part of a plan he described as the “blue-collar blueprint to build America.”  His blueprint comes with a price, 6 trillion dollars (if you count the 2 trillion dollar Covid bill passed earlier this year).  He plans to pay for this spending by taxing corporations and individuals making over $400,000.   He also intends to tax capital gains above a certain level on death, currently inheritors pay no capital gains on appreciated property when the owner passes.

I am here to help at any time. If you would like to schedule a phone/web conference appointment, I have included a link to my calendar below and you can self schedule.

https://booknow.appointment-plus.com/b8hh5y90/