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).
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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