It would appear that the market conditions have cooled off a bit this week as earnings have begun. We have a decrease in Energy and Oil, uptick in Precious Metals, and a sizable increase in the VIX, indicating once again that we are in the area of being cautious.
Our rebalances are completed in our portfolios.
The Mutual fund portfolios saw the largest rotation we have ever seen from the best of category to the back of the line, resulting in numerous new names and fund families this quarter. There was such a drastic difference this time that we reconstructed our processes and layers of due diligence just to make sure we hadn’t missed anything, and we hadn’t. Our processes worked, designed to catch any issues with the underlying fund managers.
As previously mentioned, we may very well see a corrective move or a sideways consolidation these next several months, which quite frankly would be beneficial for continued optimism in the markets in the near term.
Individual Equity portfolios continue to outperform packaged products as expected with the seemingly transitional state of the markets at present.
When you have been doing this a while, not much surprises you anymore…including snow in late April followed by 85 degrees the week after!
Till we speak again, enjoy…well, something. Find something to bring a smile to your face!
General Market Commentary
Stocks reached record highs last week, riding the tailwind of improving economic data and a strong start to the earnings season.
The Dow Jones Industrial Average rose 1.18%, while the Standard & Poor’s 500 gained 1.37%. The Nasdaq Composite index added 1.09%. The MSCI EAFE index, which tracks developed overseas stock markets, climbed 1.00%.1,2,3
Earnings, Economic Data
Stocks rallied early in the week on strong retail sales, a sharp drop in initial jobless claims, and a retreat in bond yields. Stocks then climbed to fresh record highs on Thursday, with the Dow Jones Industrial Average rising above 34,000 for the first time and the S&P 500 approaching 4,200.4
The market overcame some initial jitters arising from health authorities recommending a pause on a COVID-19 vaccine. Stocks also looked past an increase in the Consumer Price Index and a Federal Reserve report that indicated businesses were raising prices.
A surge in housing starts helped the rally, with stock prices moving higher to close out the week.
The Economic Pulse
Last week provided insight into the economic recovery, and the numbers vindicated the optimism that has driven markets higher.
An acceleration in inflation was expected, but came in at a rate (+2.6%) that didn’t appear to rattle the markets. It was, however, retail sales (an increase of 9.8%), new jobless claims (576,000--the lowest level since March 14, 2020), continuing unemployment claims (the lowest four-week moving average since March 28, 2020), and housing starts (+19.4%) that emboldened investors.5,6,7,8,9
Confirmation of this recovery came with the start of the new earnings season, which kicked off with strong earnings that, in some cases, exceeded Wall Street consensus expectations.
This Week: Key Economic Data
Thursday: Jobless Claims. Existing Home Sales. Index of Leading Economic Indicators.
Friday: New Home Sales. Purchasing Managers Index (PMI) Composite Flash.Source: Econoday, April 16, 2021The 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.
This Week: Companies Reporting Earnings
Monday: International Business Machines (IBM), Coca-Cola (KO).
Tuesday: Netflix, Inc. (NFLX), Johnson & Johnson (JNJ), Lockheed Martin (LMT), United Airlines (UAL), Procter & Gamble (PG), Abbott Laboratories (ABT), CSX Corporation (CSX).
Wednesday: Verizon Communications (VZ), Lam Research (LRCX), Anthem, Inc. (ANTM), Chipotle Mexican Grill, Inc. (CMG), Crown Castle International (CCI).
Thursday: AT&T (T), Intel Corporation (INTC), Snap (SNAP), Blackstone Group (BX), American Airlines (AAL), Southwest Airlines (LUV), Union Pacific (UNP), D.R. Horton, inc. (DHI), Credit Suisse Group (CS), Dow, Inc. (DOW).
Friday: American Express (AXP), KimberlyClark Corporation (KMB).Source: Zacks, April 16, 2021Companies 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 hardest tumble a man can make is to fall over his own bluff.”
– Ambrose Bierce
IRS Program Helps Seniors Prepare Taxes
The IRS has a tool called Free File, which offers online tax preparation, direct deposit of refunds, and electronic filing choices. This tool can be helpful for taxpayers on a fixed budget, including seniors and retirees. Here are some things to know about the tool:
IRS Free File can be found at IRS.gov and features some big names in the tax software provider world.
To use the tool, taxpayers can browse multiple offers.
The eligibility standards for using Free File depend on the tax partner, but they are usually based on income, age, and state residency.
Free File has a majority of the most common forms needed when filing your taxes. Even if you have a unique tax situation, you may still be able to use Free File.
Some Free File products are available in Spanish.
You can also search for credits and deductions in Free File.
Some providers in Free File also offer state return preparation. You can use the lookup tool in Free File to find the tax partner that might be appropriate for your state requirements.
Taxpayers can access Free File through their computers, smartphones, or tablets. The site is designed for mobile usage.
* This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax professional.
Tip adapted from IRS.gov10
Aloe Vera: One Powerful Plant
Aloe vera is one of those medicinal plants that can be used for almost everything. It is a cactus-type plant that grows well in many climates and has thick, juicy leaves that store water. Because of this, aloe vera is loved for its hydrating properties. Let's look at some of the many benefits of aloe and how you can include it in your daily routine.
We talked last week about natural beauty ingredients and aloe vera is a common one. The thick, sticky gel that is in aloe leaves has some powerful bioactive compounds, including vitamins, minerals, amino acids, and antioxidants.
Aloe vera is also known for its healing properties. It may help heal wounds and treat skin problems with its antibacterial, antiviral, and antiseptic properties. Also, it can be used as a topical treatment for first and second-degree burns.
Lastly, aloe vera might also help lower blood sugar levels by enhancing insulin sensitivity and improving blood sugar management. There has been some preliminary evidence that aloe vera may have benefits for people with prediabetes or type 2 diabetes.
Tip adapted from Medical News Today11
What number is 4 more than the number that is double one-fifth of one-tenth of 900?
Last week’s riddle: Ian bought a bag of apples on Friday and ate a third of them. On Saturday he ate half of the remaining apples. On Sunday he looked in the bag and found that just two apples were left. How many apples were originally in the bag? Answer: 6. He had 6 apples to start with, ate 2 the first day and 2 the second day.
Lake Michigan Dunes at Green Point Dunes Nature Preserve, Michigan.
Footnotes and Sources
1. The Wall Street Journal, April 16, 2021
2. The Wall Street Journal, April 16, 2021
3. The Wall Street Journal, April 16, 2021
4. The Wall Street Journal, April 13, 2021
5. CNBC, April 15, 2021
6. The Wall Street Journal, April 15, 2021
7. Department of Labor News Release, April 15, 2021
8. Department of Labor News Release, April 15, 2021
9. Reuters, April 16, 2021
10. IRS.gov, February 23, 2021
11. Medicalnewstoday.com, May 14, 2020
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.
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