Labor Day is only a week away….WOW! 4 months remain in 2021. I hope you’ve enjoyed your summer!
The remainder of 2021 promises to be news-filled, for sure!
Afghanistan, currently on the top of our minds, hoping all US personnel find safe grounds quickly. The after-effects? Time will tell. Keep in mind terrorists are so much more patient than us.
Covid! Will we be asked to obtain a booster shot 8 months from the date of our last shot? I now hear they’re thinking of 5 months. Are we now peaking with the new Delta-Variant cases, as many are suggesting? I hope so. Will back to school become an issue? Will employees going back to their offices become an issue? Of course, this is all critical. What happens will impact consumer sentiment, which impacts consumer spending, which of course drives our economy.
Jerome Powell! Our chairman did not disappoint at last Friday’s virtual Jackson Hole meeting. Powell finally said we are likely to begin reducing our monthly asset purchases (quantitative easing) sometime prior to year-end. He went on to say this has nothing to do with future interest rates increases, as that data set is very different.
Infrastructure Bills! Politics! Over 4.5 billion of new spending is being proposed. Certainly not new news. This topic alone has a ton of potential impact. Taxation, retirement issues, estate issues, all may be impacted with change. Our eyes and ears will be wide open! No matter what happens, we must look for planning opportunities!!
Employment! We’ve seen huge job gains during this recovery, however there are still many shortages of labor in certain industries. Potential employees have the negotiating advantage for now, which is driving the cost of labor higher. This is an area I would love to see the tea leaves a year from now.
Economy! Has economic growth peaked for now? Massive stimulus has pushed GDP higher significantly. Many individuals received checks totaling $3200 (tax-free) to spend this year, and certainly did so. Not to mention the extra unemployment compensation that expires in a week or so. Everyone does expect the economy to slow from current levels, however will we end up with a 2% economy or a 3.5% GDP economy? Pretty big difference!
The market! In my opinion, the market currently wants Powell to reduce asset purchases, as most investors recognize the economy is in much better shape than in March of 2020, and question why we currently have the same juice being injected! Where will the markets finish this year? Will the forth-coming news continue to push the markets to new record highs? Most believe the answer is yes!
Markets See More Gains
Markets rose last week as Chairman Powell reassured investors stimulus reduction will be very gradual.
The Dow Jones rose .98%, the S&P 500 1.54%, the Nasdaq Composite 2.82% and the Russell 2000 Small Caps leading the way, up 5.06%.
International stocks did not disappoint as foreign stock rose 1.86% and Emerging Market stocks 4.29%.
Bond yields remain range bond with the 10 Year US Treasury finishing Friday with a yield of 1.31%.
I hope everyone enjoys the Labor Day holiday, and let’s buckle our seatbelts for what promises to be a news-filled 4 months!