Fed’s Comments Push Equities Up
Sowell acknowledged that inflation had increased notably in recent months, but he reiterated that he saw it as transitory due to supply issues and the reopening of the economy. He believes the labor market has a long way to go and needs continued support. The bullish comments on supporting the economy for as long as it takes pushed equities higher for the week.
Fed Views Looking Hawkish by 2023
On Wednesday, the Fed raised its inflation expectations, saying that it is considering tapering its purchases of Treasuries and mortgage securities and showed a slightly more hawkish view towards 2023 rate hikes. Read more about expectations associated with Powell’s upcoming congressional testimony.
Used Car/Truck Prices Spike
The demand for used cars and trucks has surged as semiconductor shortages have crippled new car production and populations have shifted to suburbs. Read more about what is driving consumer prices up in the Week Ahead.
Meme Stocks Grabbing Headlines
Last week, meme stocks grabbed the headlines while stocks in general inched to record highs. Read more about upcoming economic reports and possible Fed responses in the Week Ahead.
Monthly Performance Report May 2021
Inflation pressures amid an economic re-opening continued to spook the markets intra-month in the wake
of GDP seen expanding at 7% this year and 2022 forecast at 3.3%. As a result, the S&P 500 fluctuated for most of May, ending the month with a gain of 0.70%.
WHAT IS BITCOIN? IT’S FOMO (FEAR OF MISSING OUT)
What is Bitcoin? I find that this question is coming up a bit these days, especially within and outside the halls of Sowell Management. One finds oneself wondering if this is that “canary in the coal mine” moment?…
Inflation Returns. Is it Transitory?
Fast-rising inflation returned in April, with CPI rising 4.2% from a year ago. This price increase could be transitory as supply shortages and reopening surge in demand is temporarily pushing prices higher. Read more about the effect on market volatility in the Week Ahead.
Monthly Performance Report April 2021
The S&P 500 Index posted its best monthly return in 2021 of 5.3% certainly with the help of the FAANG stocks but not entirely. FAANG is an acronym referring to the stocks of the five most popular and best-performing American technology companies: Facebook, Amazon, Apple, Netflix and Alphabet (formerly known as Google). The five FAANG stocks which account for 16.9% of the S&P 500 by index weight also had the company of the Real Estate sector and importantly the Retail and Financial sectors delivering outperformance outpacing the broad index. This surge was certainly in the wake of strong first quarter corporate earnings results and from the expectations of surging consumption demand over the next several years fueled by innovation. TSMC, the world’s largest manufacturer of advanced semiconductors, plans to spend an additional $100 billion to expand its chip capacity on top of its already planned record capital expenditure of as much as $28 billion this year. At the center of the global chip supply bottleneck is innovation occurring from smart refrigerators to smart cars and everything in between – it is not all about the FAANGs.
Monthly Performance Report March 2021
As we have been echoing throughout Sowell’s weekly commentary, the economy continues to rebound from the covid pandemic woes and unlike 2020 much of March and most of 2021’s equity markets are riding the Value and Interest Rate wave, a market phenomenon not seen since the 2000-2005 timeframe if this continues. The S&P 500 posted strong gains of 4.4% in the month of March but underneath it all tells a much different story. Value stocks (underpinned by Financials and Industrials) trounced Growth stocks (underpinned by Technology and Consumer Discretionary) by 4.4% in March as reflected by the table below and the accompanying StyleAnalytics report.
Monthly Performance Report February 2021
Fueled by improving economic conditions and market liquidity from the expectation of Biden’s pandemic stimulus, on the surface equity markets measured by the S&P 500 again posted another month of strong gains returning 2.76%. However, the composition of those gains extended over the last six-months tell a vastly different story from the last several years which was largely led by high growth stocks. Unlike 2020 where over a period of 8 consecutive months growths stocks (i.e., Technology and Consumer Discretionary) outperformed value stocks (i.e., Financials and Industrials), over the last 6 months value stocks outperformed growth stocks by a cumulative margin of