U.S. Equities Market Attributes April 2021

MARKET SNAPSHOT

The good times continued, and will until they don't. The new highs appeared faster than leaves falling in an early winter's frost, with profits blooming higher than dandelions after a spring rain. The gardening continued to be vigilantly overseen by the Fed & Treasury (the U.S. Federal Reserve, which still is not talking about talking about tapering, and the U.S. Treasury, which if you didn't like the last spending program, look at the two current proposals, or just wait a bit), as economic growth was measured against charts of actual stimulus checks and vaccine rates. Adding fertilizer to the garden were well-off consumers, who started what is expected to be a record-breaking spending spree, as they come out (safe or not) to resume their pre-pandemic lives. The impact of the wallet opening was seen in the first quarter earnings report, not by the 84% beat rate (249 of 297; 67% historically), but the size of the beat, as the first quarter was on track to set a new record (up 135% over the depressed Q1 2020 period) with the new high that wasn't expected until the second quarter. Those earnings records, with new ones expected for Q3 and Q4 2021 (Q2 is expected to be a tick down, and second only to Q1), fed the already optimistic market, as the S&P 500 set another 10 new closing highs for the month (of the 21 trading days; 25 new highs YTD). The bottom line was that the index returned 11.32% YTD (37.94% annualized), with some investors taking a little of f the top (and some reallocating to more liquid stocks), but few getting out of the market (less selling, and trading was down). With even more stimulus being discussed (via the American Infrastructure and Family Plans) and consumers charging on, upward pressure will likely continue. As for what could get in the way of the upward pressure, since even a pause in the Johnson & Johnson vaccine didn't impact the optimism, the current candidates are: COVID-21 (or the equivalent), a strong whiff of inflation (helped by overspending, cost push, and supply and labor shortages), higher debt cost (think national debt, not corporate), a resistance to higher price pass-throughs (lowering margins, which at 12.81% for Q1 could set an Operating record), a non-U.S. downturn (e.g., Europe and Asia, even as China is booming), the start of profit-taking with too many money managers jumping on the bandwagon to protect their gains, and a reliable old favorite— Washington.

The S&P 500 closed at 4,181.17, up 5.24% (5.34% with dividends) from March's 3,972.89 close. The Dow® broke through 34,000 for the first time, as it closed at 33,874.85, up 2.71% (2.78% with dividends).

The U.S. Senate Parliamentarian ruled that President Biden's USD 2.25 billion stimulus fiscal package is part of the of the previously passed budget resolution, which means a new budget does not need to be created, saving time and going directly to the reconciliation (political) process. In the background is an attempt by Democrats to change the filibuster rule, which would reduce the ability of Republicans to block legislation.