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Weekly Investment Perspective

Keep up-to-date with our Weekly Investment Perspective.

U.S. equity markets broadly moved sideways last week but closed out the month of April with the highest monthly gain since November amid a streak of strong earnings reports and continued signs of a robust U.S. economic recovery powered by stimulus and the vaccine rollout. The S&P 500 gained 5.3% for the month of April, bringing its year-to-date performance to 11.8%, while the Nasdaq Composite and Dow Jones advanced 5.4% and 2.8% for the month, respectively, with tech stocks retaking the lead on strong earnings results. So far in Q1, 68% of S&P 500 companies reporting earnings beat estimates by more than one standard deviation, much higher than the 46% historical average. The market continues to be more focused on future guidance as we move towards economic normalization.

The C.D.C. revised its social-distancing guidelines, allowing people who have received their shots to forgo masks outdoors except in crowded venues like stadiums. Of note is that Pfizer said the drug maker might roll out an oral treatment for Covid-19 by year end.  The seven-day average global new COVID case rate is running at  818k a day. Yesterday, 354k new cases were reported in India alone. The next worst countries are running just over one-tenth that rate. The US is still third, with 30,000 new cases reported yesterday, despite being one of the global leaders in vaccinations.

GDP rose 6.4% in the first quarter, a little less than the 6.7% consensus, but there was strength in the details. The rise was enough to lift real GDP 0.5% above its Q4-2019 cycle peak, meaning aggregate economic output has fully recovered from the pandemic and lockdowns.  There was also quite a bit of the (hopefully) transitory inflation Jay Powell warned about yesterday. With economic activity above pre-pandemic levels, the recession is mostly over. Still, there is significant damage evident in the weakness of service consumption and the need to draw down inventories in response to strong demand on one side and production and delivery bottlenecks on the other. The economy is roaring, and should continue to roar as services reopen this summer.

President Biden's "Build Back Better" agenda was on display Wednesday evening as he addressed the nation following his first 100 days in office. At the center of  the speech was the "American Families Plan," the second stage of a multi-trillion-dollar investment proposal. The first part, called the "American Jobs Plan," was released at the end of March and would be funded by a corporate tax hike. That bill is currently working its way through Congress.  Bloomberg News warns it might be hard to pass. Progressives in the House are already upset there is not more spending on healthcare. Some want the State and Local Tax (SALT) cap removed. In the Senate, where one lost vote would scuttle passage unless a Republican crosses the aisle, West Virginia Democrat Joe Manchin thinks we should fix tax enforcement first, so that people pay what they owe before raising taxes on those who do pay

JPMorgan Chase will open its U.S. offices to all employees next month. The bank told its American workers that they can return on May 17, subject to a 50 percent occupancy cap, with a formal return to the office for all in July. Separately, HSBC plans to cut its office space 20 percent this year as it adopts more flexible working arrangements.

This Friday, jobs data for April will be released by the US labor Department.  A strong rise in hiring is expected as the US economy continues to revive after the yearlong pandemic starts to subside.

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Previous Perspectives

Weekly Investment Perspective May 4, 2021

May 4, 2021
U.S. equity markets broadly moved sideways last week but closed out the month of April with the highest monthly gain since November amid a streak of strong earnings reports and continued signs of a robust U.S. economic recovery powered by stimulus and the vaccine rollout. The S&P 500 gained 5.3% for the month of April, bringing its year-to-date performance to 11.8%, while the Nasdaq Composite and Dow Jones advanced 5.4% and 2.8% for the month, respectively, with tech stocks retaking the lead on strong earnings results.

Weekly Investment Perspective April 27, 2021

April 27, 2021
Despite another strong week of corporate earnings announcements, U.S. equity markets took a pause from their year-to-date surge last week as market participants digested the announcement of President Biden’s proposal to increase the capital gains tax rate for high income households and monitored concerning global trends in Covid-19 cases. The major U.S. equity indices ended the week in the red but recouped most of their losses on Friday following robust economic data including indications of growing demand for the U.S. service sector and a 20% month-over-month increase in new home sales in March. The S&P 500 ended -0.1% lower for the week and the Dow Jones and Nasdaq Composite were down -0.4% and -0.3%, respectively.

Weekly Investment Perspective March 30, 2021

March 30, 2021
Despite an eventful week with a large segment of global trade stalled by a massive cargo ship stuck in the Suez Canal and the unwinding of an overleveraged hedge fund, equity markets broadly were undeterred with the S&P 500 and Dow Jones pushing to new all-time highs last week. Positive investor sentiment was aided by encouraging news on the vaccine rollout and the Federal Reserve’s decision to end restrictions on dividends and buybacks for U.S. banks.

Weekly Investment Perspective March 09, 2021

March 9, 2021
U.S. stock and bond markets had another bumpy ride last week as long-term interest rates continued to push higher on the back of robust vaccine and economic data and progress toward another round of stimulus, which was approved by the Senate over the weekend. For the week, the Dow and S&P 500 managed to post positive gains of 1.9% and 0.8%, respectively, as economically sensitive sectors like energy, industrials, and materials lifted the indices higher and offset weakness in information technology.

Weekly Investment Perspective February 23, 2021

February 23, 2021
U.S. equity markets slid lower last week amid a notable backup in long-term interest rates due to an improving economic outlook and growing expectation for more government debt issuance to fund stimulus and resulting upward pressure on inflation. Coronavirus cases, hospitalizations, and vaccine doses administered all continued to trend in an encouraging direction, which has bolstered growth expectations alongside last week’s very strong retail sales numbers.