Weekly Economic and Stock Market Commentary – May 10, 2021
As for the stock market specifically:
As I said plenty of times before, it is a good thing to start the week at record high levels. The Nasdaq Composite still sits about 3% from its high point. I see no reason to complain about any of those numbers. For the fun of it, the small and mid-cap indices also are at record levels.
The OTC bullish percent indicator fell to Os again last week. The other risk assessors fell, too, but not enough for me to change my general investment opinion. The declines of the NYSE and Optionable Bullish Percent indicators came despite good movement for prices. That leads to a split recommendation of WEALTH ACCUMULATION for NYSE stocks and WEALTH PRESERVATION for OTC stocks.
Remember, Xs mean OFFENSE or wealth accumulation, while Os mean DEFENSE, or wealth preservation.
Below is where our indicators stand as of March 7th, 2021 (Courtesy Dorsey, Wright, and Associates).
On a general note:
The political parties are arguing as to the meaning of the report. One side wants to send more “free money” to the population, while the other side is ending the extra unemployment benefits that started in April 2019.
Treasury Secretary Yellen came out one morning last week to say that higher interest rates may be necessary to contain inflation. Later that day she took to the microphone again to say that she didn’t mean the first comment. It was reminiscent of Gilda Radnor’s Saturday Night Live Emily Litella character making bold pronouncements only to come back seconds later to say “Never mind.”
The Treasury Department earned its pay last week with a couple more reports that related to each other. First, the department said the government will fall short of its revenue obligations by about $1.3 trillion dollars for the next 6 months. They also asked that Congress raise the debt ceiling again. The federal debt is expected to reach 108% of Gross Domestic Product this year. At the present time, there is no debt ceiling. However, under the law, the debt ceiling will return on July 31st unless Congress agrees that it won’t return.
This appears to be another casting session for bad television where each side says the other side has a problem controlling their spending.