The Bottom Line
● The S&P 500 Index was just 0.13% away from making its fourth consecutive weekly record high. Trading was choppy during the week despite strong economic data and stellar earning results with more S&P 500 companies beating EPS estimates than average, and beating those EPS estimates by a wider margin than average.
● After rising for essentially every week in February and March, the yield on the 10‐year U.S. Treasury bond has fallen for each of the three full weeks in April, going from a closing high of 1.722 on 4/2 to 1.558 on Friday 4/23. That has helped the Bloomberg Barclays US Aggregate Bond Index to gains in three of the last four weeks.
Missed it by that much…
U.S. stocks just missed making record highs for the fourth Friday in a row following a week of choppy trading. The S&P 500 rallied more than +1% on Friday after a sharp drop on Thursday on news that the Biden administration planned to nearly double capital gains taxes on high income earners. The rebound on Friday was buoyed by new highs in both the services and manufacturing Markit Purchasing Managers Indexes (PMIs) suggesting faster and broader growth in the second quarter than was already expected. The PMI data underscored strong economic activity data from the Chicago and Kansas City Fed regional economic surveys. New home sales were also very strong, as was the Conference Board’s Leading Economic Index (LEI). Meanwhile, it is shaping up to be a stellar earnings season, particularly for cyclical sectors like banks and retailers. According to The Earnings Scout the new blended first quarter earnings growth estimate for the S&P 500 is +24.2% from last year. At the beginning of the year, Wall Street was only expecting +12.2% growth for the first quarter. FactSet reports that 84% of S&P 500 companies have beaten estimates so far, which would tie the highest earnings beat rate since FactSet began the data in 2008.
Digits & Did You Knows
GROWING DEMAND, LAGGING SUPPLY —Inflation, as measured by the Consumer Price Index (CPI), was up +0.62%in March 2021, the highest monthly rate recorded in the United States since June 2009 (almost 12 years ago). There have been just 6 months in the last 30 years (360 months) when monthly U.S. inflation has been greater than +0.62%(source: Bureau of Labor Statistics, BTN Research).
DO YOU HAVE ANY PEANUTS? — 1.49 million travelers went through TSA screening at U.S. airports last Thursday 4/15/21, up from just 95,085 screened passengers on 4/15/20, but still down from 2.62 million passengers on 4/15/19 (source: Transportation Security Administration, BTN Research).
Source: Bloomberg. Asset‐class performance is presented by using market returns from an exchange‐traded fund (ETF) proxy that best represents its respective broad asset class. Returns shown are net of fund fees for and do not necessarily represent performance of specific mutual funds and/or exchange‐traded funds recommended by the Prime Capital Investment Advisors. The performance of those funds may be substantially different than the performance of the broad asset classes and to proxy ETFs represented here. U.S. Bonds (iShares Core U.S. Aggregate Bond ETF); High‐YieldBond(iShares iBoxx $ High Yield Corporate Bond ETF); Intl Bonds (SPDR® Bloomberg Barclays International Corporate Bond ETF); Large Growth (iShares Russell 1000 Growth ETF); Large Value (iShares Russell 1000 ValueETF);MidGrowth(iSharesRussell Mid‐CapGrowthETF);MidValue (iSharesRussell Mid‐Cap Value ETF); Small Growth (iShares Russell 2000 Growth ETF); Small Value (iShares Russell 2000 Value ETF); Intl Equity (iShares MSCI EAFE ETF); Emg Markets (iShares MSCI Emerging Markets ETF); and Real Estate (iShares U.S. Real Estate ETF). The return displayed as “Allocation” is a weighted average of the ETF proxies shown as represented by: 30% U.S. Bonds, 5% International Bonds, 5% High Yield Bonds, 10% Large Growth, 10% Large Value, 4% Mid Growth, 4%Mid Value, 2% Small Growth, 2% Small Value, 18% International Stock, 7% Emerging Markets, 3% Real Estate.
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