Stocks & Stimulus // Rates Around the World // Traffic

Stocks for the Week

Checks are hitting checking accounts as you’re reading.  $1.9 Trillion stimulating dollars, on the way.

Last week the stock market moved aggressively higher, in spite of rising rates and the potential impact.

For the week, The Dow Jones rose 4.07%, the S&P 500 2.69%, the Nasdaq Composite 3.12% and the SmallCap Russell 2000, a whopping 7.36%.

Who can argue at this point!  As we’ve been discussing, massive free dollars, combined with pent-up-demand, vaccinations and an incredibly dovish Fed EQUALS spending on a lot of “stuff.”

How much higher will the stocks go?  Rates, will in fact, have something to do with it!

As always, time will tell!

Rates Around the World

A week doesn’t pass without us having a few conversations with clients about low interest rates.  My Amex High-Yield Savings has moved down to .40% and that’s actually a great rate today, respectively!

Our US 10 Year US Treasury Yield is hovering around 1.64%.  The rate on the US  1-Year note is a whopping .079%.  Even hard to calculate!!

So, can you obtain a better rate over the pond?

  • Germany; to receive a positive rate you need to purchase a 30 year, which will pay you .228%/year. All others are negative yielding.  Yes, you read correctly!
  • Italy; rates under a 6-year hold are negative. A 10-year Italian Government Bond yields .623%/year.
  • France; rates below 15-year holds are negative. A 15 Year Bond yields .28943%/year
  • Japan; a 30-year yields .657%
  • Canada; all rates are positive with a 30-year bond yielding 2.012%/year
  • UK; all rates are positive with a 30-year bond yielding 1.386%

Traffic is Back! Inflation?

Can’t help but notice, traffic is back!

More traffic from more demand has moved the price of oil higher, than pre-pandemic.

On 12/31/2019, the price of a barrel of Oil was $61.06.  On 12/31/2020 the price was $48.52.

Last Friday, the price was $65.61.  Certainly, OPEC and other issues impact the price of oil, however demand is a significant input that determines price.  One of the major wire-houses recently increased their target from 62 to 72.

Is this an inflationary sign?  Most think not, at least not yet.

I’m doing a lot of reading on what our expert “economists” are debating, about inflation going forward.  Many feel the amount of stimulus, along with the potential upcoming infrastructure stimulus, will cause significant inflation.  Others, including our Federal Reserve Chairman believe upcoming inflation will be transitory.

So far, rising market interest rates have only caused small, temporary market pull-backs.  I certainly hope this pattern continues!  Not going to bank on it, however! 

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Paul Levin CFP®, ChFC®, RICP®

Retirement Income Certified Professional®