Market Highlights

Economic

• March consumer confidence rose to 109.7, as the economy starts to reopen
• Retail sales rose 9.8% in March, with auto sales up to 17.75 million units, above estimates
• Non-farm payrolls in March increased 916 thousand, better than an expected 625 thousand
• Unemployment fell to 6.0%, with underemployment falling to 10.7%
• U.S. industrial production rose 1.4%, following a decline of -2.2% in February
• Housing prices rose 11% on a year-over-year basis, with an increase in supply to 4 months
• New home construction numbers were 1.73 million in March, the highest number in 13 years
• Existing home sales were strong at 6.01 million in March, but down 3.7% from February
• U.S. manufacturing expansion is picking up, with March ISM at 63, ahead of estimates
• Personal income was down -7% and consumer spending was down -1.2% in February
• GDP was up 4.3% in Q4, with parts of the economy reopening, and should grow 6% in 2021

Inflation

• March core inflation was 2.6% for CPI and 4.2% for PPI on a year-over-year basis
• Crude oil rose to $67.98, with demand coming back as we restart the economy
• Deflation has been the worry for some time, but long term inflation remains concerning

Monetary Policy

• The Fed cut the Fed Funds rate to 0.0% and kept the Discount rate at 0.25%
• The Fed changed its inflation target to an average of 2% to avoid deflation
• World Central Banks continue to cut rates and add liquidity by purchasing bonds and ETFs
• The Fed said they will not raise interest rates until 2023 to give visibility to businesses

International

• The Coronavirus has killed more than 3.1 million people with 150 million infected
• Worldwide debt has grown to some $281 trillion, according to the Institute of International Finance
• India and southeast Asian nations have been hit with a third wave of COVID 19
• President Biden will give technology and vaccines to nations struggling with the Coronavirus

Interest Rates

• Ten-year Treasury yields rose from 1.06% to 1.74% and now stand at 1.63%
• Libor, the inter-bank lending standard, is 0.18%, and is set to be phased out in 2021
• Mortgage rates rose slightly, as the 30-year fixed rate increased to 2.85%
• Yields on $18 trillion of worldwide debt is negative, with Swiss 10yr -0.28%, German 10yr -0.23%

Earnings

• Reported corporate earnings are beating estimates 84% of the time and revenues are beating 77%
• First quarter results are up 23.8% from a year ago, making it the highest growth rate since 201
• Markets are projecting positive year-over-year growth in 2021 and beyond

Market Outlook

• Q1 S&P 500 rose 6.2%, setting new records, and we believe the secular Bull Market will continue
• Market volatility picked up in January with buyers shifting from growth stocks to value stock
• Energy, Financials, and Industrials were the best performing groups as the market broadens out
• The S&P 500 is trading at 21.9 times forward earnings, above its 25-year average

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