Portfolio Advisory Council, LLC presents:
March 15, 2021
THE WEEKLY ECONOMIC
UPDATE
QUOTE OF THE WEEK

"Get your facts first, then you can distort them as you please."

-MARK TWAIN

"The two enemies of the people are criminals and governments."

-THOMAS JEFFERSON

THE WEEK ON WALL STREET

Stocks touched new record highs last week as bond yields steadied, a fiscal relief bill was signed into law, and confidence in a strong economic recovery grew.

The Dow Jones Industrial Average gained 4.07%, while the Standard & Poor’s 500 tacked on 2.64%. The Nasdaq Composite index rose 3.09% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, gained 3.01%.1,2,3

DOW 32,000

Stocks marched higher as bond yields leveled off and the $1.9 trillion stimulus bill moved through the legislative process. A muted inflation number and a better-than-expected jobless claims report evidenced an improving economy absent an attendant rise in inflation.4

The technology sector was particularly volatile, with the NASDAQ Composite falling into correction territory to start the week as investors rotated into cyclical opportunities.

Technology rebounded strongly as bond yields stabilized and bargain hunters purchased tech names at reduced prices. The bounceback propelled the S&P 500 to a record high, while the reopening trade drove the Dow Industrials above 32,000 for the first time.5,6

The week ended on a mixed note, with the Dow and S&P 500 adding to their record closes and the NASDAQ Composite trimming its weekly gain. 

TREASURY AUCTIONS

Treasury auctions to finance federal spending are usually staid affairs, but investor trepidation was high ahead of last week’s auctions of 10-year and 30-year Treasuries. Investors were concerned that lukewarm demand amid a huge supply had the potential to drive yields higher and take the pressure on stock prices lower.

As it turned out, Wednesday’s auction of 10-year Notes was received with adequate demand, helped by a tame February inflation number and strong overseas interest. The following day’s 30-year auction also went relatively smoothly, though the auction yield was 36.2 basis points higher than last month’s auction. Despite $120 billion of federal debt issuance last week, yields steadied, easing investors’ interest rate concerns for the moment.7
 
BY THE NUMBER$
YEAR-OVER-YEAR IMPROVEMENT - The aggregate earnings per share of the companies in the S&P 500 in the 1st quarter 2021 are forecasted to be +21.5% greater than the actual aggregate earnings per share of the S&P 500 companies from the 1st quarter 2020 (source: FactSet). 
 
NEW BUSINESSES - The 4 top months for “business applications” in US history have occurred since July 2020, i.e., during the pandemic. The all-time monthly record (582,334 applications) was set in July 2020, followed by January 2021 (497,539), September 2020 (463,175) and August 2020 (430,489) (source: Census Bureau). 8  
 
 
THE WEEK AHEAD: KEY ECONOMIC DATA

Tuesday: Retail Sales. Industrial Production.

Wednesday: Housing Starts. Federal Open Market Committee (FOMC) Meeting Announcement.

Thursday: Jobless Claims. Index of Leading Economic Indicators.

Source: Econoday, March 12, 2021

The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.
 
THE WEEK AHEAD: COMPANIES REPORTING EARNINGS

Tuesday: Coupa Software (COUP).

Wednesday: Five Below (FIVE), Cintas Corporation (CTAS).

Thursday: FedEx Corporation (FDX), Nike, Inc. (NKE), Dollar General (DG).

Source: Zacks, March 12, 2021

Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.
 
 
THE WEEKLY RIDDLE
 
Where does today come before yesterday?

LAST WEEK’S RIDDLE: A woman walking along a canal sees a boat full of people, yet there isn't a single person on board. How could this be?

ANSWER: Everyone on board is married or partnered (not single).
 

Portfolio Advisory Council, LLC
A Registered Investment Advisory Since 1986
             
Investment advisory services offered through Portfolio Advisory Council, LLC, and an SEC Registered Investment Adviser.
 
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James W. Hamilton, CFS, AIF
713.574.6025
 
W. Thomas Sutton  CFP(R), ChFC, CLU
713.574.6020
 
Philip B. Moran, MBA, ChFC, CFP(R), AIF
713.574.6030
 
John C. Husbands

Visit us at www.pac1000.com 
Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost.
The forecasts or forward-looking statements are based on assumptions, may not materialize, and are subject to revision without notice.
The market indexes discussed are unmanaged, and generally, considered representative of their respective markets. Index performance is not indicative of the past performance of a particular investment. Indexes do not incur management fees, costs, and expenses. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results.
The Dow Jones Industrial Average is an unmanaged index that is generally considered representative of large-capitalization companies on the U.S. stock market. Nasdaq Composite is an index of the common stocks and similar securities listed on the Nasdaq stock market and is considered a broad indicator of the performance of technology and growth companies. The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) and serves as a benchmark of the performance of major international equity markets, as represented by 21 major MSCI indexes from Europe, Australia, and Southeast Asia. The S&P 500 Composite Index is an unmanaged group of securities that are considered to be representative of the stock market in general.
U.S. Treasury Notes are guaranteed by the federal government as to the timely payment of principal and interest. However, if you sell a Treasury Note prior to maturity, it may be worth more or less than the original price paid. Fixed income investments are subject to various risks including changes in interest rates, credit quality, inflation risk, market valuations, prepayments, corporate events, tax ramifications and other factors.
International investments carry additional risks, which include differences in financial reporting standards, currency exchange rates, political risks unique to a specific country, foreign taxes and regulations, and the potential for illiquid markets. These factors may result in greater share price volatility.
Please consult your financial professional for additional information.
This content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG is not affiliated with the named representative, financial professional, Registered Investment Advisor, Broker-Dealer, nor state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and they should not be considered a solicitation for the purchase or sale of any security.



CITATIONS:

1. The Wall Street Journal, March 12, 2021
2. The Wall Street Journal, March 12, 2021
3. The Wall Street Journal, March 12, 2021
4. Bloomberg.com, March 10, 2021
5. CNBC, March 11, 2021
6. The Wall Street Journal, March 10, 2021
7. The Street, March 11, 2021
8. Reproduction Prohibited without Express Permission - Copyright © 2011 Michael A. Higley