Weekly Economic and Stock Market Commentary – April 19, 2021
As for the stock market specifically:
It was another good week for investors here and around the world as the major market averages had strong weeks. The Dow Jones Industrial Average and Standard and Poor’s 500 once again closed the week at record highs. We’ll be happy to take it.
I know from conversations with many of you that there is a sense that this cannot go on forever. You’ve heard me say that trees don’t grow in the sky. You’ve also heard me say that crystal balls don’t work. So, what do we have? For me, and for the past 19 ½ years, it’s our indicators. More on that is a moment.
Last week also saw a resurgence of the growth stocks. For the last month, growth generally took a beating, while value stocks did well. We’ll keep a sharp eye to see if this was an anomaly or the beginning of a new trend.
The indicators went in different directions, with 2 of them gaining, and 1 falling for the week. . I continue to recommend WEALTH ACCUMULATION.
Below is where our indicators stand as of April 16, 2021 (Courtesy Dorsey, Wright, and Associates).
On a general note:
The Department of Commerce had a big week last week. I will start with the retail sales figures for March. Please bear in mind that March saw many Americans get $1,400 stimulus checks. Retail sales rose 9.8% compared to February. That is the largest gain I can remember, although I spend very little time trying to remember economic news beyond the date I write these commentaries. The article I saw said it was the largest since last May. Spending at bars, restaurants and retail clothing did best last month, with restaurants gaining 13.4% during the month. In a related report, Industrial Production rose by 2.3% compared to February.
The Labor Department reported the Consumer Price Index rose 0.4% compared to February. Much of the gain came from a 9.1% increase in gasoline. The Core CPI, which removes the impact of food and energy price changes, rose 0.3% for the month. Overall, consumer prices rose by 2.6% compared to March 2020. The annual change in core prices was 1.6%. The solution is to not eat or use energy.
The Treasury Department announced the budget deficit as of the end of March. For the first 6 months of Fiscal 2021, the US budget deficit is $1,700,000,000,000. A good chunk of that came in March when the latest round of stimulus checks went out. I still am wondering when the stimulus becomes self-sustaining, as Keynes promised us nearly 90 years ago. In any event, the deficit increased by $660 billion dollars in March. That came despite the Treasury seeing an increase in tax collections by 13%.