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7 charts from the past week that tell an interesting story in markets and investing…
1) The Stimulus Effect
US personal incomes were 29% higher in March 2021 than a year ago, the highest rate of increase ever recorded.
2) The V in Earnings and the Economy
With incomes surging, consumers are spending more, and corporate earnings remain on pace to hit new highs in Q1.
As for the economy, it moved back in positive territory with a 0.4% year-over-year increase in Real GDP.
A continued rebound is expected in Q2 with a new high in real GDP. This is a much faster rebound than the 2008 recession which did not see a new high in real GDP until the 2nd quarter of 2011.
3) The Big 4 Beat Goes On
The 4 largest US companies (Apple, Microsoft, Amazon, and Google) all reported blowout earnings this week and their combined market cap of $7.5 trillion hit another new high.
The top growth names continue to post huge increases in revenues…
4) Housing Boom 2.0
The strong housing numbers continue to pour in, with the Case-Shiller national index showing a 12% increase over the last year, the highest growth rate since 2006.
Fueled by low supply and sky-high demand, most major metropolitan areas have seen a significant increase in prices over the last year.
5) Higher Inflation, Money Still Easy
Inflation expectations in the US continue to rise, with 10-year breakevens hitting their highest levels since 2013.
At this week’s FOMC meeting, we heard more of the same from the Fed. They remain committed to easy money policies (0% rates and $120/month of bond buying), calling the recent rise in inflation readings “transitory.”
6) 4 Months in the Books
With a third of the year in the books, a look at asset class returns shows leadership in Crypto, Commodities and REITs. The laggards? Bonds and Gold as real interest rates have trending higher.
In a sharp reversal, the 3 worst performing sectors in 2020 are the 3 best thus far in 2021: Energy (+32%), Financials (+24%) and Real Estate (+18%).
7) The Road to Herd Immunity
Judging by that reversal, the market is betting on a continued reopening of the economy with the US soon reaching herd immunity to covid-19.
On that front, continued progress has been made, with 44% of the US now vaccinated with at least 1 dose.
After a small move higher in April, new covid-19 cases are moving down again, now at their lowest levels since last October. In the coming weeks we should see these numbers continue to decline.
And that’s it for this week. Thanks for reading.
Have a great Sunday and week ahead!
-Charlie
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