7-Chart Saturday (8/28/21)

By Charlie Bilello

28 Aug 2021

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7 charts from the past week that tell an interesting story in markets and investing…

1) More All-Time Highs Than Ever Before

The Nasdaq hit 15,000 this week for the first time, extending its gains on the year.

Not to be outdone, the S&P 500 crossed above 4,500, its 8th 100-point milestone of the year.

The S&P also hit an all-time high on Friday for the 52nd time in 2021 and is now on pace to surpass 1995’s record total. The 328 all-time highs from 2013-2021 are one more than the 327 recorded during the incredible run from 1989-2000.

2) New Home Prices Soar

New Home Prices in the US hit another all-time high in July, up a staggering 18% from a year ago.

3) Semiconductors Rule the World

The last 10 years belong to Semiconductors, who have outperformed all other S&P 500 industry groups with a 1,030% return.

Even the Nasdaq 100, which is on pace for its 13th consecutive positive year, doesn’t come close.

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4) Transitory Tales

The Fed’s preferred measure of inflation (core PCE) has moved up to 3.6%, its highest level since 1991. Rising inflation has been proving to be much less “transitory” than predicted by the Fed.

Still, at Jackson Hole this week Powell assured market participants that 0% interest rates are here to stay. However, he did indicate (as widely expected) that tapering of asset purchases could begin by year-end, but only if the labor market shows continued improvement.

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With rising inflation and GDP now well above pre-covid levels, emergency Fed policy is becoming increasingly at odds with reality. If 0% rates were necessary in March 2020 due to the crisis and collapse in markets, why would they still be necessary today? That’s a question that many are asking but the Fed continues to maintain its Pollyannaish view that there is absolutely no downside to keeping the foot on the accelerator.

5) Money, Money, Money, Money, Money

Speaking of acceleration, the US Money Supply has increased nearly 40% over the last 2 years, its highest 2-year increase ever.

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Here’s a look at how the Money Supply has grown over the years…

6) Billboard for Crypto

The actions of the Federal Reserve (Easy Money) and the Federal Government (Free Money) continue to be the best possible advertisement for Crypto, which has seen tremendous gains over the last year. After a steep correction which began in May, the last month has seen a ferocious snapback rally, with Cardano and Solana already back at new highs.

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Bitcoin is once again leading all major asset classes in 2021 with a return of over 67%.

7) Delta Still Rising But at Slower Rate

The highly contagious Delta strain continues to push covid-19 numbers higher, with new cases in the US rising to 155,000 (highest since January) and deaths moving back above 1,000 for the first time since March.

Overall hospitalizations have risen to levels we haven’t seen since January.

The current wave is still hitting the South harder than any other region. Here’s a look at the U.S. states with the highest hospitalization rates and their respective vaccination rates versus the U.S. average (52%).

The concern is that as the weather begins to cool in other regions (Northeast, Midwest), the Delta will spread more easily there as people spend more time indoors.

Let’s end with 2 positive signs…

First, the rate of case growth is slowing in the US, down to a 6% week-over-week increase. This is driven in large part by moderating numbers in the South, which are hopefully at/near a peak.

Second, the booster shots are coming, with possible approval as early as Labor Day and implementation starting a few weeks into September. They are now considering giving the booster shot 5 months after you were vaccinated, and current U.S. vaccine supply is so high that it should be available to everyone.

The data on boosters thus far is promising. Over 1.7 million Israelis have already received a third dose, with the latest study showing a significant reduction in severe illness (97% effective).

And that’s it for this week. Thanks for reading.

Have a great weekend everyone!


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