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Weekly Market Commentary, May 11, 2021

Blog
The Markets
 
Like a gender reveal gone wrong, last week’s employment report delivered an unexpected surprise.
 
Economists estimated 975,000 new jobs would be created in April. The United States Bureau of Labor Statistics (BLS) reported there were just 266,000. That’s a big miss.
 
Economists, analysts, and the media offered a wealth of theories to explain the shortfall. These included:
 
  •  Pandemic fear. A March U.S. Census survey found 4.2 million people aren’t working because they fear getting or spreading the coronavirus, reported Gwynn Guilford of The Wall Street Journal. That’s more than half of the 8.2 million non-farm jobs that need to be recovered to reach pre-pandemic employment levels.
 
  • Too-generous unemployment benefits. Another theory is federal unemployment benefits ($300 a week) have created a labor shortage. The theory is being tested. Last week, Montana announced it will no longer participate in federal unemployment programs. Instead, it will offer a $1,200 return-to-work bonus, reported Greg Iacurci of CNBC.
 
  •  Low pay. Some say Americans are less willing to work for low pay than they were before the pandemic. Christopher Rugaber of the AP interviewed a Texas staffing office manager who reported job seekers are turning down jobs that pay less than unemployment benefits.
 
A former retail worker told Heather Long of The Washington Post, “The problem is
we are not making enough money to make it worth it to go back to these jobs that are
difficult and dirty and usually thankless. You’re getting yelled at and disrespected all
day.”
 
  • Lack of childcare. Many women who want to work left jobs during the pandemic to care for children. The April employment report showed a slight decrease in the rate of unemployment for adult women; however, it resulted from women giving up on job searches rather than finding work. The Institute for Women’s Policy Research reported, “…more women continued to exit rather than enter the workforce: 165,000 fewer women had jobs or were actively looking for work in April than in March.”
 
  • Quirky data. Statistical distortions or seasonal factors could be responsible. “The more time the market has to digest [the] report, the more the report seems a bit of an anomaly relative to other data,” said a deputy chief investment officer cited by Mamta Badkar and Naomi Rovnick of Financial Times.
 
 
Other data include the ADP® National Employment Report™ which showed 742,000
new jobs in April. The report reflects real-time data on one-fifth of U.S. private
payroll employment.
 
  • Rethinking work. “There is also growing evidence – both anecdotal and in surveys – that a lot of people want to do something different with their lives than they did before the pandemic. The coronavirus outbreak has had a dramatic psychological effect on workers, and people are reassessing what they want to do and how they want to work, whether in an office, at home, or some hybrid combination,” reported The Washington Post.
 
U.S. financial markets shrugged off the news. The Standard & Poor’s 500 Index finished the week at a record high, and 10-year Treasury rates finished Friday where they started.
 
(The one-year numbers in the scorecard below remain noteworthy. They reflect the strong recovery of U.S. stocks from last year’s coronavirus downturn to the present day.) 
 
 Check out the big brain on Brett! There is a long-standing scientific theory about the size of a mammal’s body relative to its brain offers an indication of intelligence. The findings of a recent study seem to debunk that idea, reported Science Daily.
 
An international team of scientists investigated how the brain and body sizes of 1,400 living and extinct mammals evolved over time. They made several discoveries. One was significant changes in brain size happened after two cataclysmic events in Earth's history: a mass extinction and a climatic transition.
 
Not every mammal changed in the same ways. Elephants increased body and brain size. Dolphins and humans decreased body size and increased brain size. California sea lions increased body size without comparable increases in brain size. All have high intelligence.
 
“We've overturned a long-standing dogma that relative brain size can be equivocated with intelligence…Sometimes, relatively big brains can be the end result of a gradual decrease in body size to suit a new habitat or way of moving – in other words, nothing to do with intelligence at all. Using relative brain size as a proxy for cognitive capacity must be set against an animal's evolutionary history,” stated Kamran Safi, a research scientist at the Max Planck Institute of Animal Behavior and one of the study’s authors.
 
Of course, intelligence doesn’t always translate into wise behavior.
 
Studies of behavioral finance have found the human brain is more interested in survival than saving. “It turns out that, when it comes to money matters, we are wired to do it all wrong. Our brains have evolved over thousands of years to focus on short-term survival in a dangerous world with limited resources. They were not designed for today’s optimal financial behaviors,” wrote financial psychologist Dr. Brad Klontz, a CNBC contributor.
 
No one knows how the COVID-19 pandemic will be remembered over time, but it appears to have influenced the way people think about money in some significant ways. An April 2021 Bank of America survey reported:
 
·        81 percent of participants saved money, that would normally be spent on entertainment, dining, and travel, and set it aside in emergency, savings, and other types of accounts.
·        46 percent used pandemic downtime to put their finances in order.
·        44 percent said their risk tolerance changed: 23 percent became more aggressive and 21 percent more cautious.
 
If the pandemic has changed your thinking, let’s review your financial plan and align it with your current circumstances and thinking.
 
Weekly Focus – Think About It
 
“It doesn't matter how beautiful your theory is, it doesn't matter how smart you are. If it doesn't agree with experiment, it's wrong.”
--Richard P. Feynman, Theoretical physicist
 
Best regards,
 
Lee Barczak
President
 
* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate. *Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features. * The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index. * The Standard & Poor's 500 (S&P 500) is an unmanaged index. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. * The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index. * The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market. * Gold represents the afternoon gold price as reported by the London Bullion Market Association. The gold price is set twice daily by the London Gold Fixing Company at 10:30 and 15:00 and is expressed in U.S. dollars per fine troy ounce. * The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998. * The DJ Equity All REIT Total Return Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones. * Yahoo! Finance is the source for any reference to the performance of an index between two specific periods. * Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. * Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful. * Past performance does not guarantee future results. Investing involves risk, including loss of principal. * You cannot invest directly in an index. * Consult your financial professional before making any investment decision.
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Weekly Market Commentary, April 9, 2021

Blog
The Markets
 
Zoom, zoom, zoom.
 
Big economies tend to recover from recessions about as quickly as semi-trucks accelerate from stop lights. In other words, recovery tends to be slow. That may not be the case this time.
 
“Everything in this economic cycle is happening at great speed. That is in part a reflection of the scale of economic stimulus, and not only from the [Federal Reserve]. One big fiscal package seems set to follow another. A $1.9trn package has barely passed and a $3trn infrastructure bill is mooted,” reported The Economist.
 
Economic recovery has helped push stock prices higher, and concerns about inflation have pushed bond yields higher. Here are a few highlights from the first quarter of 2021:
 
Vaccination nation
Vaccine debates pepper small talk. Social media posts feature tips about finding appointments, as well as inoculation selfies and photos of vaccine cards. So far, about 31 percent of Americans have received one dose of a vaccine and 18 percent are fully vaccinated, reported the Centers for Disease Control.
 
Confident consumers
Vaccine progress, in tandem with stimulus payments and easing business restrictions, helped lift consumer confidence. The Conference Board Consumer Confidence Index® rose from 88.9 in January to 90.4 in February. The March number exceeded even the most optimistic economic forecasts, reported Payne Lubbers of Bloomberg, rising to 109.7.
 
Jobs, jobs, jobs
In March, the employment report exceeded expectations, too. The U.S. Labor Department reported 916,000 new jobs were created. That was higher than the 675,000 jobs forecast by a Dow Jones survey of economists, reported Jeff Cox of CNBC. Leisure and hospitality sectors, which were hard hit by the pandemic, were job gain leaders in February and March.
 
An improving rate of job creation was welcome news. By government measures, the unemployment rate was about 6 percent. However, in early March, Treasury Secretary Janet Yellen told PBS News Hour, “We still have an unemployment rate that, if we really measure it properly, taking account of all the four million people who've dropped out of the labor force, it's really running at 10 percent.”
 
Bond yields rise
For more than a decade, professional money managers have been predicting the end of the 40-year bull market in bonds – and they have been wrong. Since 1981 when rates on 10-year Treasuries were almost 16 percent, Treasury rates have trended lower.
 
That changed during the first quarter. Alexandra Scaggs of Barron’s reported:
 
“The Treasury market just posted its worst quarterly performance in more than 40 years, with investors betting on a strong U.S. economic recovery from COVID-19…In theory, the selloff in Treasuries should have left markets that trade at a yield premium to Treasuries, such as corporate debt, in a better position…Yet higher-rated and safer corporate bonds posted losses for the quarter as well, because of their high levels of duration or sensitivity to Treasury yields.”
 
Stock market boom
During the first quarter, sectors that were unloved in 2020 gained favor. In the Standard & Poor’s (S&P) 500 Index, Energy, Financials, and Industrials delivered double-digit gains, reported Carleton English of Barron’s. Major U.S. stock indices finished the quarter higher.
 
The stock boom also included tremendous enthusiasm for so-called meme stocks (inexpensive stocks with relatively weak fundamentals) which realized gains because of investors’ enthusiasm rather than intrinsic value, reported Bailey Lipschultz of Bloomberg.
 
The one-year numbers in the scorecard remain noteworthy. They reflect the strong recovery of US. stocks from last year’s coronavirus downturn to the present day. 
 
How many ways can you say money? Slang is used by groups of people to distinguish themselves from other groups. Sometimes, slang terms become so well known, they are adopted for general use. See what you know about money slang by taking this brief quiz.
 
1.   In Australia, the smallest coin in value and physical size is known as:
a.   Shrapnel
b.   Toonie
c.    Bob
d.   Dosh
 
2.   Which of the following foods is not a slang term for money?
a.   Cabbage
b.   Chips
c.    Cheddar
d.   Pickles
 
3.   In the 1800s, the name of an American political party included a slang term for money. What was it called?
a.   Spondilux Party
b.   Long Green Party
c.    Greenback Party
d.   Moolah Party
 
4.   If you wanted to say, “one dollar,” which term would you choose?
a.   Benjamin
b.   Simoleon
c.    Yard
d.   Sawbuck
 
Quiz Answers:
1.   A – Shrapnel
2.   D – Pickles
3.   C – Greenback Party
4.   B – Simoleon
 
Weekly Focus – Think About It
 
“Slang is a language that rolls up its sleeves, spits on its hands, and goes to work.”
--Carl Sandburg, American poet, journalist, and editor
 
Best regards,
 
Lee Barczak
President
 
* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate. *Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features. * The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index. * The Standard & Poor's 500 (S&P 500) is an unmanaged index. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. * The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index. * The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market. * Gold represents the afternoon gold price as reported by the London Bullion Market Association. The gold price is set twice daily by the London Gold Fixing Company at 10:30 and 15:00 and is expressed in U.S. dollars per fine troy ounce. * The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998. * The DJ Equity All REIT Total Return Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones. * Yahoo! Finance is the source for any reference to the performance of an index between two specific periods. * Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. * Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful. * Past performance does not guarantee future results. Investing involves risk, including loss of principal. * You cannot invest directly in an index. * Consult your financial professional before making any investment decision.
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Weekly Market Commentary, March 30, 2021

Blog

 

 The Markets
 
Last week, unemployment claims were looking good and consumers were feeling good.
 
The number of Americans applying for first-time unemployment benefits declined. Just 684,000 people filed claims during the week of March 20, down 97,000 from the week before, according to last week’s report from the Labor Department.
 
Granted, that’s a large number – higher than the highest number of first-time claims during the Great Recession – but it’s the smallest we’ve seen since the pandemic began, according to Christopher Rugaber of the AP. He wrote:
 
“Economists are growing more optimistic that the pace of layoffs, which has
been chronically high for a full year, is finally easing…Still, a total of 18.9
million people are continuing to collect jobless benefits…Roughly one-third
of those recipients are in extended federal aid programs, which means
they’ve been unemployed for at least six months.”
 
Consumer sentiment also improved, according to data released last week. The University of Michigan’s Index of Consumer Sentiment was up 10.5 percent month-to-month, although it remained down year-over-year. Perceptions of current economic conditions improved, too. Surveys of Consumers chief economist Richard Curtin reported:
 
“Consumer sentiment continued to rise in late March, reaching its highest
level in a year due to the third disbursement of relief checks and better
than anticipated vaccination progress…The majority of consumers
reported hearing of recent gains in the national economy, mainly net job
gains. The data clearly point toward robust increases in consumer
spending. The ultimate strength and duration of the spending surge will
depend on the rate of draw-downs in savings since consumers anticipate
a slower pace of income growth.”
 
Performance of major U.S. stock indices was mixed last week. The Dow Jones Industrial Average and Standard & Poor’s 500 Index both finished higher for the week, while the Nasdaq Composite lost ground.
 
(The one-year numbers in the scorecard are noteworthy. They reflect the strong recovery of U.S. stocks from last year’s coronavirus downturn to the present day.) 
 
 
A fly…err, ship…in the ointment. Until last week, about 50 vessels, transporting approximately 10 percent of global trade, sailed through the Suez Canal every day, reported Scott Neuman and Jackie Northam of NPR.
 
The canal is a shortcut that makes it possible for ships to travel from Asia and the Middle East to Europe without sailing all the way around Africa’s Cape of Good Hope, a route that’s both less secure (pirates) and more expensive (time, insurance, and fuel), according to David Sheppard, Harry Dempsey, Leo Lewis, and Kana Inagaki of Financial Times.
 
That changed on Tuesday when one of the largest container ships in the world became wedged in the canal, blocking traffic in both directions, reported Sudarsan Raghavan and Antonia Noori Farzan of The Washington Post.
 
The effect on global trade, supply chains, and consumers has yet to be determined. “Like much else about the situation, it depends on how long it goes on. A weeklong delay for a few hundred ships at the Suez might have only a negligible impact for consumers, but a prolonged delay could increase the cost of shipping, complicate manufacturing, and ultimately drive up prices,” reported NPR.
 
Prior to the shutdown at the Suez Canal, container shipping costs were already rising. The increase was due, in part, to a shortage of shipping containers. In early February, The Economist reported, “Surging demand for goods and a shortage of empty containers at Asian ports have sent container-shipping costs rocketing…The Freightos Baltic Index, a measure of container-freight rates in 12 important maritime lanes, has increased from $2,200 to $4,000 per container…”
 
On Sunday, preparations were being made to unload some of the 18,000 containers the wedged ship carries to facilitate refloating, reported Yuliya Talmazan of NBC News.
 
Weekly Focus – Think About It
 
“Everything in a modern container port is enormous, overwhelming, crushing. Kendal, of course, but also the thundering trucks, the giant boxes in many colors, the massive gantry cranes that straddle the quay, reaching up ten stories and over to ships that stretch three football pitches in length. There are hardly any humans to be seen.”
--Rose George, British journalist and author
 
Best regards,
 
Lee Barczak
President
 
* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate. *Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features. * The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index. * The Standard & Poor's 500 (S&P 500) is an unmanaged index. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. * The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index. * The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market. * Gold represents the afternoon gold price as reported by the London Bullion Market Association. The gold price is set twice daily by the London Gold Fixing Company at 10:30 and 15:00 and is expressed in U.S. dollars per fine troy ounce. * The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998. * The DJ Equity All REIT Total Return Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones. * Yahoo! Finance is the source for any reference to the performance of an index between two specific periods. * Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. * Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful. * Past performance does not guarantee future results. Investing involves risk, including loss of principal. * You cannot invest directly in an index. * Consult your financial professional before making any investment decision.
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Weekly Market Commentary, March 17, 2021

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The Markets
 
 
Investors had a lot to be enthusiastic about last week.
 
Major stock indices in the United States soared, finishing the week higher and setting new records along the way, reported Al Root of Barron’s. There was plenty of good news to fuel investor optimism:
 
  • The $1.9 trillion American Rescue Plan was signed into law. The plan provides $1,400 payments to most Americans. It also delivers child-tax credits, health-insurance subsidies, and extends unemployment benefits into September, reported NPR. Funds also were made available for schools, states, and vaccination efforts, as well as tax relief for people receiving unemployment benefits.
 
  • The spread of the coronavirus appears to be slowing. The 7-day average number of cases in the United States dropped 11.2 percent week-to-week, reported the Centers for Disease Control (CDC). More than 20 percent of Americans have received a first dose of a COVID-19 vaccine and more than 10 percent have been fully vaccinated. As circumstances have improved, a number of states have begun easing lockdown restrictions.
 
  • Inflation remained low in February. For the 12 months through February 2021, the Consumer Price Index rose 1.7 percent, reported the Bureau of Labor Statistics last week. That’s well below the Federal Reserve’s usual target of 2 percent. However, food and energy prices increased significantly more than the index average.
 
Despite last week’s positive news, Ben Levisohn of Barron’s cautioned:
 
“The combination of trillions of dollars of fiscal stimulus, ultralow interest rates, and a newfound sense of liberation means the U.S. economy in coming months will be unlike any the country has experienced in decades. Growth will be faster. Inflation will run hotter. The job market could bounce back more speedily than even the Fed expects. This environment won’t be easy for investors to navigate…For those who can pivot as the market shifts, however, multiple opportunities await.”
 
There is another concern, as well. COVID-19 continues to mutate, and it remains to be seen whether vaccines will prove effective against new strains.
 
The one-year numbers in the performance table below are noteworthy and reflect the strong recovery of U.S. stocks from last year’s coronavirus downturn to the present day.
 
 
 
Big plans for the moon. The Outer Space Treaty of 1967 set forth principles making space – including the moon and celestial bodies – the province of all mankind. It confirmed the exploration and use of outer space should benefit all people. Here are a few of the plans various nations have for the moon:
 
  • International Lunar Research Station. Last week, China and Russia signed a memorandum of understanding. The nations plan to build a base on the moon. “…the base will be self-sufficient enough to work without constant resupply from Earth. It will exist either on the lunar surface, in orbit, or both. And it will be a launching point for basic science, exploration, and "utilization" of the moon's resources, as well as a proof-of-concept for the technologies required to sustain human life so far from Earth,” reported LiveScience.
 
  • Lunar fish farming. The European Space Agency has plans for a Moon Village where settlers may be able to “boldly farm fish where no one has farmed fish before,” reported Hakai Magazine. Researchers at the French Research Institute for Exploitation of the Sea have found that European sea bass and meagre (stone bass) are strong candidates because their eggs can withstand the brutal shaking that accompanies the launch of space vehicles.
 
  • Solar-powered Lunar Ark. The movie Titan A.E. may have inspired researchers at the University of Arizona. They’ve proposed building a modern-day ark to hold “cryogenically frozen reproductive cells from 6.7 million species on our planet.” Popular Mechanics asked, “…what's the next best use for a nearby celestial body with a stable environment that only takes about four days to reach on a supply mission? Turn it into a storage locker of sorts for the most precious data on Earth: our own reproductive cells.”
 
The moon isn’t the only part of space nations on Earth plan to explore more fully. The United Arab Emirates put a scientific satellite into orbit around Mars in February, according to The Washington Post. The new space race is here.
 
Weekly Focus – Think About It
 
“I would like to die on Mars. Just not on impact.”
--Elon Musk, Entrepreneur and businessman
 
 
 
 
Best regards,
 
Lee Barczak
President
 
* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate. *Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features. * The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index. * The Standard & Poor's 500 (S&P 500) is an unmanaged index. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. * The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index. * The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market. * Gold represents the afternoon gold price as reported by the London Bullion Market Association. The gold price is set twice daily by the London Gold Fixing Company at 10:30 and 15:00 and is expressed in U.S. dollars per fine troy ounce. * The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998. * The DJ Equity All REIT Total Return Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones. * Yahoo! Finance is the source for any reference to the performance of an index between two specific periods. * Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. * Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful. * Past performance does not guarantee future results. Investing involves risk, including loss of principal. * You cannot invest directly in an index. * Consult your financial professional before making any investment decision.
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Weekly Market Commentary, February 24, 2021

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The Markets
 
It’s a contrarian’s dream come true.
 
Contrarian investors like to buck the trend. They buy when other investors are selling and sell when others are buying.
 
Last week, Bank of America (BofA) delivered a contrarian’s dream. BofA’s monthly survey of 225 global asset managers, who are responsible for $645 billion in assets under management, showed the managers were almost fully invested, according to CNBC.
 
The survey showed asset managers’, “…cash levels at the lowest since March 2013, global equity allocations at a 10-year high, and a record number of respondents reporting taking a ‘higher than normal’ level of risk,” reported Randall Forsyth of Barron’s.
 
Asset managers’ optimism reflects central banks’ monetary policies, governments’ fiscal stimulus programs, and positive signs of economic recovery.
 
  •  Central bank actions are supporting low interest rates. Low interest rates encourage economic growth by making money inexpensive for companies and individuals to borrow. In the United States, the real (adjusted for inflation) 10-year Treasury yield finished last week at -0.80 percent, according to the U.S. Treasury.
 
  • Government stimulus is flooding world markets with cash. “Although percentage cash levels held by investment managers are falling, they are not falling fast enough to keep up the rapid expansion of money still flooding the system…U.S. household savings at the end of 2020 were still almost $1 trillion above pre-COVID levels…,” reported Mike Dolan of Reuters.
 
  • Economic recovery is gaining steam. While the virus continues to be a risk, last week much of the economic data in the United States was positive, with retail sales exceeding expectations and manufacturing holding steady, reported Nicholas Jasinski of Barron’s. Economic growth is forecast to be about 6 percent in 2021, reported Reuters.
 
Last week, yields on 10-year Treasuries moved higher and the Dow Jones Industrial Average advanced. The Standard & Poor’s 500 Index and Nasdaq Composite both finished the week lower.
 
 
It’s black history month. Throughout the month of February, people in the United States celebrate the achievements of Black Americans. President Gerald Ford started the tradition in 1976 to “…seize the opportunity to honor the too-often neglected accomplishments of Black Americans in every area of endeavor throughout our history.” Test your knowledge by taking this brief quiz.
 
1.   In 1972, the first Black woman elected to Congress launched a campaign for the Democratic Presidential nomination with the slogan: Unbought and Unbossed. She once said, “If they don’t give you a seat at the table, bring a folding chair.” What was her name?
a.   Yvonne Brathwaite Burke
b.   Shirley Chisholm
c.    Barbara Jordan
d.   Gwen Moore
 
2.   Eugene Bullard was the first African American pilot to serve in the Armed Forces. He worked as an air gunner for the French Army and served in two American wars. Which wars did he serve in?
a.   World War I and World War II
b.   World War II and Korean War
c.    Korean War and Vietnam War
d.   Vietnam War and Grenada
 
3.   One Black American author, who has won the National Book Award, the Carnegie Medal for Excellence in Fiction, the MacArthur Genius Grant, and many other awards, described the work this way, “When you write, it's like braiding your hair. Taking a handful of coarse unruly strands and attempting to bring them unity.” What is the author’s name?
a.   Candace Carty-Williams
b.   Marlon James
c.    Edwidge Danticat
d.   Ta-Nehisi Coates
 
4.   Alabamian Percy Julian didn’t attend high school, but he earned a PhD from DePauw University. Julian graduated Phi Beta Kappa at the top of his class. Historically, he is regarded as one the most influential leaders in his field. What was his field of study?
a.   Law
b.   Medicine
c.    Chemistry
d.   History
 
Quiz Answers:
1.   B – Shirley Chisholm.
2.   A – World War I and World War II.
3.   C – Edwidge Danticat.
4.   C – Chemistry.
 
Weekly Focus – Think About It
 
“No person is your friend who demands your silence, or denies your right to grow.”
--Alice Walker, American novelist and poet
 
 
 
Best regards,
 
Lee Barczak
President
 
* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate. *Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features. * The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index. * The Standard & Poor's 500 (S&P 500) is an unmanaged index. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. * The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index. * The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market. * Gold represents the afternoon gold price as reported by the London Bullion Market Association. The gold price is set twice daily by the London Gold Fixing Company at 10:30 and 15:00 and is expressed in U.S. dollars per fine troy ounce. * The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998. * The DJ Equity All REIT Total Return Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones. * Yahoo! Finance is the source for any reference to the performance of an index between two specific periods. * Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. * Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful. * Past performance does not guarantee future results. Investing involves risk, including loss of principal. * You cannot invest directly in an index. * Consult your financial professional before making any investment decision.
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Contact Details

Morgan Kenwood Advisors, LLC
5130 West Loomis Road
Greendale, WI 53129-1424
Phone: (414) 423-4020
Fax: (414) 423-4023
Email: This email address is being protected from spambots. You need JavaScript enabled to view it.