Week in Review

Week-in-Review: Week ending in 05.28.21

The Bottom Line

● Stocks rallied during the week to close within 1% of their all‐time high. The S&P 500 gained +1%, but small cap Russell 2000 and tech‐heavy Nasdaq led with gains of
+ 2.4% and +2.1% respectively.
● On Friday, the U.S. Department of Commerce reported that the core personal consumption expenditures price index, the Fed’s favorite inflation measure, surged +3.1%year over year in April, its fastest rise since 1992.
● Despite the higher than expected rise in inflation, bond yields backed off from last week’s levels, with the yield on the U.S. 10‐year Treasury note falling ‐3 basis points to 1.59% after being as low as 1.55% on Monday.

Stocks nearly back to record highs

U.S. stocks rallied during the week as the S&P 500 gained+1.2% to closed just ‐0.7% from its May 7th all‐time high of 4,232. Growth stocks in the Communications Services and Information Technology sectors along with the cyclical sectors of Industrials and Materials led the way. The choppy trading that marked much of May subsided in the final week as the Cboe Volatility Index (VIX) fell to 16.7, down from 20.2 last Friday, and marking its lowest level since April 16. A key inflation indicator, the core personal consumption expenditures price index, rose +3.1% from April of 2020, faster than expectations of +2.9%, and the biggest increase since 1992. Despite the inflation surge, bonds still managed to stay positive for the week. After testing the bottom of its recent trading range at 1.55% on Monday, the yield on the 10‐year U.S. Treasury note ended the week at 1.59%, down 3 basis points from the prior Friday. So called “meme stocks” had a surprise revival during the week, fueled by traders in Reddit’s WallStreetBets forum, with names like AMC Entertainment more than doubling in price. Meanwhile in Washington, President Biden proposed the largest U.S. budget since World War II, with a $6 trillion price tag.

Digits & Did You Knows

HEY BIG SPENDER — 59% of US households made a “large purchase” during the first 4 months of 2021, i.e., January 2021 through and including April 2021, the highest percentage reported in 5 years. “Large purchases” include furniture, home repairs and automobiles (source: Federal Reserve Bank of New York, BTN Research).
ROADTRIP — U.S. drivers are projected to use 9.0 million barrels a day of gasoline during the summer of 2021, up from 7.8 million barrels a day of gasoline used during the 2020 “pandemic‐summer”, but still down from 2019’s 9.6 million barrels a day of gasoline consumed (source: Energy Information Administration, BTN Research).

Click here to see the full review.

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.

Advisory services offered through Prime Capital Investment Advisors, LLC. (“PCIA”), a
Registered Investment Adviser. PCIA doing business as Prime Capital Wealth Management
(“PCWM”) and Qualified Plan Advisors (“QPA”).
© 2021 Prime Capital Investment Advisors, 6201 College Blvd., 7th Floor, Overland Park, KS 66211.

Week in Review

Week-in-Review: Week ending in 05.21.21

The Bottom Line

● Another late week rally was not enough to undo an early week pullback in choppy trading that was reminiscent of last week. In the end the S&P 500 slipped ‐0.4% for its first back‐to‐back weekly decline since February.
● The U.S. 10‐year Treasury yield was flat at 1.62%, down just ‐0.01 percentage points (or 1 basis point) from last week. But the real yield, adjusted for inflation, rose 9 basispointsto ‐0.83% as inflation breakevens eased – the largest weekly rise since February.
● The employment picture improved yet again with weekly jobless claims falling to 444,000, a new pandemic low for the third week in a row and the fourth weekly decline.

Taper talk & crypto crash sink stocks

U.S. stocks finished mixed as fitful trading continued while the S&P 500 attempted to overcome early week losses, but still fell ‐0.4% to post its first back‐to‐back weekly declines since February. But in a counter trend move, the tech‐heavy Nasdaq Composite Index managed to snap a string of four‐straight weekly losses – highlighting the choppiness and cross‐currents that have defined markets the last few weeks. The minutes from the April Federal Open Market Committee meeting showed that some members of the Fed are ready to discuss tapering bond buying at future meetings, though they were clear to say the economy was still far short of its longer‐run goals. The Fed isn’t about to start raising interest rates, but the bond‐buying taper talk opens the door to tightening of monetary policy sooner rather than later. That, plus a wild ride for cryptocurrency investors (in which bitcoin plunged ‐30% at one point on Wednesday), left investors shaken until positive employment and business activity reports helped stabilize markets on Thursday and Friday. On Friday IHS Markit reported that the flash U.S. services and manufacturing Purchasing Managers Index (PMIs) jumped to record highs in May, beating economists’ expectations.

Digits & Did You Knows

PENT‐UP DEMAND — U.S. consumers purchased $234.4 billion of foreign imports in March 2021, the largest monthly total recorded in U.S. history. The low point for the purchase of foreign imports during the pandemic was $166.5 billion in May 2020 (source: BTN Research).
GIVE ME A HUG — As of Friday 5/14/21, 119 million Americans are fully vaccinated, or 36% of our 332 million population (source: CDC, BTN Research).
ROAD TRIP — The average price of a gallon of gasoline reached $3.04 on Friday 5/14/21, up 79 cents a gallon YTD. The last time gasoline closed a calendar year above $3 a gallon was 2013 (source: AAA, BTN Research).

Click here to see the full review.

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.

Advisory services offered through Prime Capital Investment Advisors, LLC. (“PCIA”), a
Registered Investment Adviser. PCIA doing business as Prime Capital Wealth Management
(“PCWM”) and Qualified Plan Advisors (“QPA”).
© 2021 Prime Capital Investment Advisors, 6201 College Blvd., 7th Floor, Overland Park, KS 66211.

Week in Review

Week-in-Review: Week ending in 05.14.21

The Bottom Line

● A big stock rally on Friday couldn’t reverse the losses incurred Monday through Wednesday. The Cboe VIX Volatility Index surged past 28 on Wednesday before falling back under 19 on Friday as the market rebounded.
● Both consumer and producer inflation accelerated much faster than expected and sent stock prices lower and bond yields higher. The S&P 500 fell ‐1.4% and the Nasdaq fell ‐2.4%, while the yield on the benchmark U.S. 10‐year Treasury note rose +0.05% to 1.63%.
● The employment picture continues to improve as weekly jobless claims fell to 473,000, a new pandemic low, and monthly job openings soared to a record 8.123 million.

Inflation fears sparks equity selloff

Global equities were down for the week after inflation accelerated much faster than expected, sparking a broad market selloff that set the S&P 500 back ‐1.4% for the week. For the technology sector, the largest sector in the S&P 500, the downturn was particularly pronounced, as it fell ‐2.2%. The tech‐heavy Nasdaq was down ‐2.1%, its fourth straight weekly decline. The inflation scare came with the April Consumer Price Index (CPI) accelerating at its fastest pace in since 2008, up +4.2% from last year, and the Producer Price Index (PPI) rising +6.2% for the last 12 months, which was the largest increase since the data began in 2010. On Wednesday the S&P 500 and the Nasdaq were down ‐4%and ‐5%, respectively, for the week but a big Friday rally helped limit the week’s damage. The Cboe VIX Volatility Index spiked as high as 28.4 before falling back to 18.8 by the week’s close. The balance of the week’s economic data came in below expectations reversing a weeks‐long trend that saw largely better than expected results. Besides the higher than expected inflation results, retail sales stalled unexpectedly and consumer sentiment was softer than forecasted. On the plus side jobless claims fell more than expected.

Digits & Did You Knows

BE CONTRARIAN — The last 7 times that the S&P 500 index had a negative total return over a trailing 12‐month period, it rebounded each time with a positive total return of at least+15% over the next 12 months. The 1‐year average total return of all 7 comebacks is +27.6%. The last example was when the S&P 500 fell ‐7.0% (total return) for the 12 months ending 3/31/20 but bounced back with a +56.4% total return for the 12 months ending 3/31/21 (source: BTN Research).
NEW HOMES — 103,700 new single‐family homes began construction in the United States in March 2021, the highest monthly total reported nationwide since June 2007 (source: Census Bureau, BTN Research).

Click here to see the full review.

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.

Advisory services offered through Prime Capital Investment Advisors, LLC. (“PCIA”), a
Registered Investment Adviser. PCIA doing business as Prime Capital Wealth Management
(“PCWM”) and Qualified Plan Advisors (“QPA”).
© 2021 Prime Capital Investment Advisors, 6201 College Blvd., 7th Floor, Overland Park, KS 66211.

Week in Review

Week-in-Review: Week ending in 05.07.21

The Bottom Line

● Friday night heights returned as the S&P 500 and Dow closed the week at all‐time highs. The Cboe Volatility Index (VIX) fell from 18.6 last week to end Friday at 16.7.
● The yield on the benchmark U.S. 10‐year Treasury note sank ‐0.05% to 1.58% after a surprisingly big downside miss in jobs created from the April Employment report.
● The headline April jobs number was surprisingly short of the one million new jobs expected with just 266,000 jobs added by U.S. employers during the month. A shortage of workers may be a primary culprit in the jobs shortfall. Average weekly hours worked seems to support that as it matched the highest level since data began in 2006.

TGIF… stocks return to all‐time highs

For the first three weeks that ended in April, the S&P 500 set new all‐time highs. But the end‐of‐the‐week magic ended after that. Last Thursday, 4/29, marked another all‐time high but then stocks slipped back last Friday and haven’t been able to reclaim the record level. But the Friday magic returned on May 7th as the S&P 500 and Dow Jones Industrials jumped back to record levels to end the week. Interestingly it was “bad news is good news” that seemed to have fueled stocks on Friday after the Labor Department released a disappointing April employment report (see the details on the following page). Investors seem to be interpreting the weak data will mean that easy money and accommodative monetary policies will last longer now. Others dismissed the report as an outlier and continued to focus on virtually all other economic data that has been exceptionally strong and better than expected. The weak jobs report sent bond yields lower, with the yield on the 10‐year U.S. falling to 1.58% from 1.63% last Friday. The Cboe Volatility Index (VIX) also tumbled from 18.6 a week ago to 16.7 at the close of this week. The U.S. dollar was decisively lower, and has now given back all of the first quarter’s rally.

Digits & Did You Knows

STICKER SHOCK — Soaring lumber prices add $35,872 to the price of an average new single‐family home. Lumber prices seem to set records daily, now up +67% this year and +340%from last year (source: NAHB, Random Lengths, CNBC).
NEED A SCORECARD — The Biden White House announced its 3rd stimulus proposal since taking office on 1/20/21. The “American Families Plan” is a $1.8 trillion proposal (released on 4/28/21). Previously, the “American Rescue Plan Act,” aka HR #1319, scored at $1.9 trillion and signed into law on 3/11/21 and the “American Jobs Plan,” the $2.3 trillion infrastructure proposal released on 3/31/21, was introduced by the administration (source: White House, BTN Research).

Click here to see the full review.

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.

Advisory services offered through Prime Capital Investment Advisors, LLC. (“PCIA”), a
Registered Investment Adviser. PCIA doing business as Prime Capital Wealth Management
(“PCWM”) and Qualified Plan Advisors (“QPA”).
© 2021 Prime Capital Investment Advisors, 6201 College Blvd., 7th Floor, Overland Park, KS 66211.

Week in Review

Week-in-Review: Week ending in 04.30.21

The Bottom Line

● Global equities were little changed for the week with the S&P 500 essentially flat while the Nasdaq, Russell 2000, and international stocks were slightly negative.
● The yield on the benchmark U.S. 10‐year Treasury note climbed +0.07% to 1.63% as commodity prices continued to rally and inflation expectations continued to rise.
● Transportation stocks are at all‐time highs after 13 straight weeks of gains, their longest winning streak in 122 years. Railroads, airlines and trucking companies make the Dow Jones Transportation Average, which is up + 23% this year as investors reward companies that will benefit from the U.S. returning to normalization.

Americans get back out and about.

Global equities were little change for the week, with the S&P 500 essentially flat at +0.02%, while the Nasdaq Composite and Russell 2000 small cap index fell less than half a percent. Although technology has been the driving force for markets since the pandemic recovery began more than a year ago, it has been old fashioned railroads, airlines, and trucking companies that are enjoying strength lately. The Dow Jones Transportation Average gained +1.4% last week, marking its 13th consecutive weekly advance, which is the index’s longest streak since it rose for 15 straight weeks in January 1899. The Transportation index is up +23% this year, to all‐time highs, and well ahead of the +10‐15% gains other U.S. indices are up. The Transportation’s strength underscores investors’ high expectations for a rebounding economy that will benefit companies carrying goods and raw materials as Americans get back out and spend again. And spend they did. The U.S. reported a +6.4% first quarter GDP growth fueled by a surge in personal consumption, to a +10.7%annual rate, the second best rate of spending since the 1960s. Corporate earning have maintained their impressive growth, now running at +45.7% with about 60% reported.

Digits & Did You Knows

RENT IS DUE —The median asking monthly rent rose to$1,463 in March across the country’s 50 largest markets, according to a report from Realtor.com. That’s a +1.1%increase on an annual basis and the first month where the pace of rent growth increased since last summer, the report showed. The Covid‐19 vaccine rollout and rising employment are prompting more people to move back into cities and look for apartments to rent (source: Realtor.com, WSJ).
STICKER SHOCK — The median sales price of existing homes sold in the U.S. was $329,100 in March 2021, an all‐time high both on a nominal basis and on an inflation‐adjusted basis (source: National Association of Realtors, BTN Research).

Click here to see the full review.

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.

Advisory services offered through Prime Capital Investment Advisors, LLC. (“PCIA”), a
Registered Investment Adviser. PCIA doing business as Prime Capital Wealth Management
(“PCWM”) and Qualified Plan Advisors (“QPA”).
© 2021 Prime Capital Investment Advisors, 6201 College Blvd., 7th Floor, Overland Park, KS 66211.

Week in Review

Week-in-Review: Week ending in 04.23.21

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).

Click here to see the full review.

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.

Advisory services offered through Prime Capital Investment Advisors, LLC. (“PCIA”), a
Registered Investment Adviser. PCIA doing business as Prime Capital Wealth Management
(“PCWM”) and Qualified Plan Advisors (“QPA”).
© 2021 Prime Capital Investment Advisors, 6201 College Blvd., 7th Floor, Overland Park, KS 66211.

 

 

Week in Review

Week-in-Review: Week ending in 04.16.21

The Bottom Line

● For the third week and a row the S&P 500 and Dow Jones Industrial Average both closed at new record highs. Earnings and economic data continues to come in stronger‐than‐expected.
● After being relatively flat for the last two weeks, the yield on the 10‐year U.S. Treasury bond fell 8 basis points, its largest weekly decline since June 2020, partly due to renewed buying from overseas, particularly Asia.
● After subpar economic activity in February, which was negatively impacted by severe winter weather, the U.S. economy has clearly shifted into high gear in March and April. Retail sales, manufacturing, and housing all jumped.

Better than expected… all around

First quarter earnings season kicked of this week and so far companies are reporting numbers way above what Wall Street expected. With 9% of the S&P 500 reporting earnings so far, according to FactSet about 81% of companies have beaten estimates – and with an earnings growth rate of 30.2% so far. Its still very early, but if that holds up, it would mark the best earnings season since Q3‐2010. It was a busy week for economic reports and they too were much stronger than expected. Retail sales boomed in March, new jobless claims plunged, and April Empire State and Philly Fed manufacturing surged. Heck, even state revenues fared better than expected in a pair of studies, one by The Pew Charitable Trusts’ state fiscal health initiative and one by the Federal Reserve Board of St. Louis. It’s no wonder that the S&P 500 is at a record high and up +11.4% YTD through Friday 4/16/21. The index has set 23 record closing highs this year and is up for four straight weeks now. The Dow Jones Industrial Average also set a record high on Friday after crossing 34,000 for the first time on Thursday. After pausing the past two weeks the yield on the 10‐year U.S. Treasury fell 8 basis points, its largest weekly decline since last June.

Digits & Did You Knows

APRIL 14th IN HISTORY —On April 14th in 1865 President Lincoln was assassinated. In 1912 the Titanic hit an iceberg and sank. In 2021, cryptocurrency exchange Coinbase Global made its stock market debut, exceeding a market cap of$100 billion before falling back to a first‐day closing valuation of $86 billion (source: Crossing Wall Street, CNBC).
CLOSE THE DOOR? — 32% of Americans believe that foreign imports shipped into the U.S. represent a “threat” to the U.S. economy. The Port of Los Angeles and the Port of Long Beach, just 3 miles apart on the West Coast, are the 2 busiest American ports by total container trade (source: Gallup’s 2021 World Affairs survey, iContainers.com, BTN Research).

Click here to see the full review.

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.

Advisory services offered through Prime Capital Investment Advisors, LLC. (“PCIA”), a
Registered Investment Adviser. PCIA doing business as Prime Capital Wealth Management
(“PCWM”) and Qualified Plan Advisors (“QPA”).
© 2021 Prime Capital Investment Advisors, 6201 College Blvd., 7th Floor, Overland Park, KS 66211.

 

 

Week in Review

Is Your Current Budget Working For You?

With the tax filing deadline around the corner, many individuals might be wondering what they are going to spend their refund on. A more important question might be, “How much can I save?” With the COVID-19 pandemic continuing on, many companies have had to lay off or furlough employees with countless more experiencing reduced hours. While it might seem like a good time to splurge, we learned in 2020 that you can never be too prepared for the future.

As you’re preparing for your potential refund or if you’ve already received it, here are a few items you should also be evaluating:

  • Nonessential recurring expenses: Write a list of all nonessentials and decide which ones are important enough for you to keep and which items you can cancel. You can also see if you can pay off the ones that you want to keep. If you want to keep that gym membership see if you can pay for the entire year and potentially get a better deal!
  • Credit card balances: Look at what credit cards have the lowest balances and see if there is an opportunity to get some paid off with your refund.
  • Student loan payments: Do you have lingering student loans? Take a look at what you owe and plan to use your refund to make a dent in your debt.
  • Restrict online shopping: Unsubscribe from all retail emails, don’t save your card information online, and delete shopping apps off your phone to make it harder for yourself to shop online.
  • Prep for grocery shopping: Before you go shopping or place your delivery order, set aside a little time to create a grocery list. Not only will it help you stay on track to purchase only what you need, but it’ll also stop you from eating out as much.

The most important step is to have a plan. As soon as you know if you will be getting a refund, you should decide what to do with it. Setting time aside to prepare and plan will ultimately pay off in the long run. For help with determining how much you need to set aside in savings and how to build up that account, reach out to our advisors at https://pciawealth.com/contact-us/.

*Prime Capital Investment Advisors, LLC (“PCIA”) and its associates do not render any legal, tax or accounting advice nor prepare any legal documents.
Week in Review

March Madness Lessons for Risk, Ratings, and SPACS

March Madness is here, and it’s one of my favorite times of the year. Although my team, the University of Arizona Wildcats, will be missing the tournament because of a self-imposed postseason ban, I’ll still be spending my free time in the next few weeks, glued to the games.

March is the time of year when almost everyone becomes a basketball fan — cheering on teams, participating in office bracket challenges, and feverishly following basketball underdog stories. So, the ‘madness’ also makes for a great opportunity to help explain some investing do’s and don’ts.

Opening Tip: Emotions Won’t Help You Win

I’ve written about the parallels between March Madness and investing before, but given how volatile the financial markets have been this past year, there’s more to expand upon. Emotional investing – based on fear, greed or some other reason – can cost an investor dearly. Starting in March 2020 when there was a huge sell-off in the market and volatility was at all-time highs, there were a lot of knee-jerk reactions and emotional investing. But emotional investing only negatively impacts a long-term investing strategy. People who stayed the course with their long-term strategy were rewarded with gains this past year.

When strategizing for your team or portfolio, picking blue blood teams to win your bracket or blue-chip stocks for your portfolio, are typically safe bets. But as we all know from this pandemic-stricken year, who and what truly defines safe is not guaranteed, and sometimes changing strategy is necessary.

Pivot

Duke and Kentucky, two of the most well-known blue blood basketball teams, did not make the tournament this year. And another well-known blue blood, UNC, is seeded lower than we’re used to seeing. In the markets, the big tech names like Apple, Amazon, Google and Microsoft, may not be where you want to allocate all your money right now either. We’re seeing a rotation out of technology, and this year may be the year you need to find other investments to help carry your portfolio, like high quality companies found in more cyclical sectors like financials, industrials, materials, and even energy. Just like you’ll have to find other teams to carry your bracket, such as more blue-collar teams like the Gonzaga Bulldogs, Villanova Wildcats, or even the Baylor Bears. While many topics from my previous March Madness blog still hold true, some things have changed, like a rotation out of tech, fallen angels and Special Purpose Acquisition Companies (SPAC). So, here’s how this year’s hot investing topics correlate to the madness of the single-elimination college basketball tournament.

Boom or Bust

In the past ten years, bracket participants are getting bolder. Every year more and more people are picking 16 seeds to upset 1 seeds in their brackets, which has only happened once in the history of the tournament. So picking 16 seeds to upset 1 seeds can very easily bust your bracket, just like buying a bankrupt and/or junk rated stock can very easily bust your investment portfolio. We saw this pandemonium play out recently with retail trading activity surrounding Hertz last year, and the ‘Reddit Revolution’ and frenzy around stocks like GameStop and AMC; some made a lot of money, others lost a lot. Building an investment philosophy around buying bankrupt stocks is not a sound principle, just like picking 16 seeds to upset one seeds to build your tournament bracket.

Instead of hoping for the slam dunk, picking the 12 and 11 seed upsets in your bracket is more calculated and similar to investing in a company that may not be profitable quite yet, but perhaps will be in the future. An example of calculated risks would be tactically overweighting asset classes in your portfolio relative to their long-term targets, to capitalize on the current and future expected market environment, such as overweighting small cap stocks, overweighting international equities (primarily emerging market equities). Historically, during the early phases of recovery, expansion, and reflationary periods, certain areas and asset classes tend to perform better as they capitalize on improving global growth and expansion. Because these asset classes typically carry higher levels of volatility or risk, making minor tactical changes to your long-term targets could be seen as calculated, despite exposing more of your portfolio to riskier asset classes over the short term. Other examples of calculated risks in the investment world might include renewable energy and Electric Vehicle (EV) companies. Just because they aren’t profitable right now, doesn’t mean they aren’t a good long-term investment. You have to be willing to accept the short-term volatility, as there are themes taking shape right now that will play out longer-term. The key, just like picking the right 12 and 11 seed upsets, is to spend time getting to know those companies and how they may benefit from trends just now starting to form.

SPAC Attack and Fallen Angels

Everyone loves a Cinderella team during the tournament because they have a great story that gets a lot of media attention and support from the masses. Special Purpose Acquisition Companies (SPACs) are an investment hot topic in financial media these days. With more than $80 billion being invested in U.S. SPACs in 2020, investors like Shaquille O’Neal, Steph Curry, Serena Williams and a number of others are buying in. But there’s still caution to be had because SPACs don’t have the same regulatory process as other companies going public through IPOs. With the level of risks accompanying SPACS, you don’t want to put all your money in one basket. If you’re going to invest in them, proceed with caution and look to make SPACs a very small portion of your portfolio, just like you would make a potential Cinderella team, a small portion of your bracket.

Building a team or portfolio strictly based upon rankings, has the potential for diminishing your long-term success, as we’ve witnessed this past year with bonds. If you build out your bracket just by looking at the NET and KenPom rankings of teams, your long-term success is going to be diminished. The same goes for picking bonds for your portfolio. The market witnessed a lot of ‘investment grade’ BBB-rated bonds downgraded to junk bond status as their credit ratings took a hit during the heart of the pandemic shutdown, making them ‘fallen angels’. Focusing solely a bond’s rating could lead you to adding bonds of companies on the brink of credit downgrades, which could cause you to experience large losses on what are perceived safer investments – ‘investment grade’ bonds. Conversely, fallen angels present attractive buying opportunities for high yield, or junk bond, managers; allowing them to add higher quality junk bonds to their portfolios, often at a discount. Given the amount of credit downgrades we witnessed in 2020, it’s no wonder about 50% of the junk bond market is now rated BB.

Ratings can often be misleading and adding, or even excluding, securities solely based on their ratings could lead to portfolio losses or missed opportunities. The same way picking your bracket based solely on the lowest rankings (NET or KenPom – lower is associated with being better) or seeding could leave your bracket susceptible to the ‘fallen angels’ of the tournament, those that were ranked highly, only to be upset in the first round, or even the round of 32. Conversely, identifying the pre-tournament ‘fallen angels’, or those that may have suffered a couple of losses leading up to the tournament, causing in their rankings to fall, could prove to be high-quality tournament teams that could result in some upset victories. In investing and basketball, it’s best to look beyond just ratings and rankings and think about the sum of all of the parts. Balance is key.

Throughout the tournament’s history, there has only been one Final Four where all top four seeds made it to the final, so why construct your bracket just with top seeds? A better predictor is the sum of your teams’ rankings. Typically, the sum of the Final Four teams tends to be between 8-11, so you’ll need some lower seeded teams for your bracket’s Final Four. Put this into the context of the bonds in your portfolio. If you’re aiming for an A average, you’ll want a mix of AAA and AA bonds (which can be viewed as the one and two seeds), BBB bonds (like a 4 or 5 seed), and some junk bonds (the 7 seeds or lower). By sprinkling in some bonds that have lower ratings, you give yourself the opportunity for higher yield while also maintaining some safety. Again, the key is balance.

It’s important to remember that investing should be done for the long-term. And while it’s fun to compare investing to basketball, March Madness only lasts a few weeks. You want your money to last for decades. Making smart, prudent choices for a long-term investing strategy is always the best bet. Remember, that if you’re going to include risk, you need to make sure it’s calculated and that the juice is worth the squeeze. Consider working with a trusted advisor who can help you take the emotion out of investing. Here are some tips for picking the right advisor for you.

Disclosures: The preceding commentaries are (1) the opinions of Chris Osmond and not necessarily the opinions of PCIA, (2) are for informational purposes only, and (3) should not be construed or acted upon as individualized investment advice. Investing involves risk. Depending on the types of investments, there may be varying degrees of risk. Investors should be prepared to bear loss, including total loss of principal. Past performance is no guarantee of future results. Advisory services offered through Prime Capital Investment Advisors, LLC (“PCIA”), a federally registered investment adviser. PCIA: 6201 College Blvd., 7th Floor, Overland Park, KS 66211. PCIA doing business as Prime Capital Wealth Management (“PCWM”) and Qualified Plan Advisors (“QPA”)

Week in Review

Should You Consult a Financial Advisor Before Buying a Home?


March is the peak season for house listings, which means that you, as a buyer, might be thinking about what your next step is for your living situation. This big decision could likely impact your life for years to come. It may warrant the question, “Should I consult a financial advisor before buying a home?”

Though you may have already gotten advice from your real estate agent and mortgage broker, they’re not prioritizing your complete financial situation. A financial advisor will take a comprehensive look at your entire situation before giving you advice.

  • A good advisor will help you build a strong financial plan to manage your current debt, giving you tips on how to budget and pay off loans, prior to looking at real estate.
  • A good advisor will help you start the conversation by asking you important questions before you buy a home such as:
    -What are your long and short-term goals? Knowing this will help you know how the home fits in.
    -Will you be able to make a decent down payment? (10 to 20% down) Your down payment will impact your budget and more than likely your savings.
    -What is your contingency plan if your job or family situation changes soon after buying a home?
  • After you’ve bought a home and have lived there a couple months, you’ll get a better sense of your actual budget, which may include items you forgot to factor in. Your financial advisor will be there to help you readjust your budget for unaccounted costs, while also monitoring the rest of your financial goals.

Our team at PCIA provide a wide range of products and services to meet the expanding needs of each individual client. Our financial experts are passionate about applying their knowledge and expertise to help you reach for your financial goals. To get started, you can contact us at https://pciawealth.com/contact-us/.

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