A recovery is underway as evidenced by the jobs data released for March (more details below). The employment levels have a long way to go but there is now evidence that companies are re-hiring as states loosen restrictions and vaccinations become widespread. These are all good signs that the economy will rebound strongly in the coming months.
The price action for the S&P was tumultuous in Q1 as interest rates spiked higher which paused the advance. Prices worked around the 3850 level about a dozen times over the last three months as the S&P consolidated. The bottom on 3/25 was a re-test that brought in buyers and provided a set-up to make new all-time highs. The jobs data pushed stocks higher on Friday as futures were open for trading in an abbreviated session before the holiday. This sets up a good open for after the Easter holiday as we are making new all-time highs which is always bullish.
Chart of the Week!
President Biden announced an 8-year $2T infrastructure spending plan this week. The details of the plan will be open for debate as the bill proposes tax increases on corporations while they lick their wounds from the pandemic. So, this may be a bill that needs a bi-partisan blessing as constituents from both sides will likely have objections.
Weekly Notables:
- Total nonfarm payroll employment rose by 916,000 in March, and the unemployment rate edged down to 6.0%, the U.S. Bureau of Labor Statistics reported today. Also, the February report was revised from +379K to +468K, making the two-month total over one million. These improvements in the labor market reflect gains in leisure and hospitality, public and private education, and construction. (BLS)
- New jobless claims in the U.S. came in at 719,000 last week, according to the Labor Department.
- Factories around the world are struggling to keep up with soaring demand as the global economic recovery accelerates. In the U.S., factory production and product sales soared in March, according to the Institute for Supply Management (ISM). The March ISM reading rose to 64.7 from 60.8 – above the estimate of 61.5 and the highest since 1983. The expansion was broad based, with demand rising from every major industry. (WSJ)
- In the eurozone, factory activity grew at the fastest pace in twenty years, according to forecasting firm IHS Markit. China also had trouble keeping up with the rise in demand as supply-chain disruptions impeded the flow of goods.
- OPEC and an alliance of other top oil producers agreed to boost their collective production by more than two million barrels a day over coming months, betting on resurgent demand as the pandemic recedes.
- Home loans are on the rise but they are going almost exclusively to borrowers with pristine credit histories and sizable down payments. A segment of borrowers who would have qualified for a home loan early last year are now out of luck, deemed too much of a credit risk.
- Auto makers are seeing a rise in U.S. vehicle sales. The Q1 numbers are better than last year as Americans want to get out of the house and spend some of their savings. This may be an early sign of the migration from the cities to the suburbs as more may continue to work from home.
- Sunday is the Christian celebration of Easter. Americans will spend an estimated $21.6 billion this year according to the National Retail Federation. However, the chart below shows more people have in-person plans like visiting family, easter hunts or going to church. (NRF)
Happy Easter and thank you for being a subscriber!
Regards,
President – Kisco Capital