Weekly Economic and Stock Market Commentary: November 8, 2021

November ushers in the traditionally strong season for investments. Since we started last week at record levels, the traditionally weak season of May through October didn’t stink, either. Markets had a great week, with substantial gains across the board.

The House of Representatives passed the bipartisan infrastructure bill that has been stuck in traffic for quite some time. I won’t speak to the merits, or lack thereof, in the bill. However, I can say that “crumbling roads, bridges, airports, ports, and schools” seem to be perpetual laments of our elected officials of both parties. It’s amazing that we continually spend significant amounts of money without much apparent positive impact.

We don’t know the details yet, and I will provide more of them when they become available, but the bill passed Friday night contains tax provisions that supposedly came out of the other bill Congress is contemplating.

The IRS announced the 2022 401k and IRA contribution limits. I will give the short version here, and you can call me to get the details.

The maximum deferral will be $20,500, with catch-up provisions of $6,500. IRA contributions will be $6,000 for those under 50 and $7,000 for those 50 or older.

The risk indicators moved in the right direction. The OTC bullish percent indicator moved to offense, and we have a good field position. I recommend WEALTH ACCUMULATION in all market areas.

Remember, Xs mean OFFENSE or wealth accumulation, while Os mean DEFENSE, or wealth preservation.

Below is where our indicators stand as of November 5, 2021 (Courtesy Dorsey, Wright, and Associates).

The Department of Labor announced the US economy added 531,000 jobs in October. The unemployment rate dropped to 4.6%. The revisions to September and August figures showed a net gain of 233,000. The revisions did not add enough jobs to bring those numbers back to the economists’ estimates for those months. The economy is still 4 million jobs below the January 2020 level. Wages grew at 4.9% in the past year, losing ground to the 5.3% increase in consumer prices. This report was the first full month of reporting after the expiration of enhanced unemployment benefits. It is too early to say if those enhanced benefits held back employment, but this is one month of data leaning in that direction.

The Commerce Department provided a report on the September balance of trade. If you guessed the US imported more than it exported, you won. The imbalance was a record $80.9 billion dollars. Imports rose 0.6% to $288.5 billion. Exports dropped 3% during the month. One economist cited inflation as a cause of the imbalance. Mind you that these numbers came at the same time as a “supply chain glitch” that restricted the off-loading of cargo ships at our ports.