The Week in Review: September 26 – October 2

Not There Yet! The Actual Meaning of Zero

The week dawned with expectations for a vote on the $1.2 trillion infrastructure bill and the massive $3.5 trillion “Build Back Better” reconciliation bill. We’ve previously said that tying together the two bills — one of which seemed expensive but logical and is enjoying bipartisan appeal and the other a massively expensive wish list supported by progressives — would be a mistake. Taking the obvious win and passing the infrastructure bill would garner support from both chambers of Congress, but making one dependent upon the other could potentially doom both. For the moment, that appears to be the case.
As of last week, progressives were holding the infrastructure bill hostage while moderates balked at voting for the $3.5 trillion reconciliation bill. Add in the spiciness of continuing to fund the government and the debt ceiling debate, which Treasury Secretary Janet Yellen urged be suspended permanently, and we arrive at our current stalemate.
Democratic Sens. Joe Manchin of West Virginia and Kyrsten Sinema of Arizona oppose the current $3.5 trillion proposal, and Sen. Manchin went on record saying he would not support any bill over $1.5 trillion. But progressives feel that settling on $3.5 trillion was compromise enough to their initial ask of $6 trillion. The bill is 2,500 pages long and mentions taxes more than 1,800 times, despite the president and speaker of the House maintaining that the cost would be zerodollars.
Now we’re at the current crossroads. Infrastructure might still get done but will most likely alienate progressives and fracture the ruling Democrats. Why does this matter to the markets? Much of this spending was likely anticipated and priced in, so when you have uncertainty like we are now, markets don’t like it. All this infighting and bickering seems to have contributed to markets having their worst month since March 2020, although they shook off some concerns and took off on Oct. 1 as Merck announced a COVID pill that cuts down on some of the worst effects of the virus.
In our view, it would be beneficial to get infrastructure done since it will help communities. We also need to fix Social Security and Medicare, which will help everyone. The debate over the bills is far from over, so please stay tuned.

You, Sir, Are A Dangerous Man

The usually low-key and “reserved” Federal Reserve had an interesting week. Two officials resigned, citing reasons from health concerns to not becoming a “distraction.” Whatever their reasons, Eric Rosengren of Boston and Robert Kaplan of Dallas left in the wake of being caught in a trading scandal and violating the Fed’s rules on investments.
Fed Chairman Jerome Powell stated in testimony before the Senate that his earlier call on inflation being transitory (aka temporary) was premature. His word for our current situation: frustrating.” That seems to be an understatement. We’ve said before that inflation was real, not a blip, and would cause us pain for a while. You can only hide the obvious for so long; in fact, inflation is running at 30-year highs by some measures.
The statement prompted Sen. Elizabeth Warren to tear into Chairman Powell with another concern. Calling Powell a dangerous man in leading an effort to weaken the nation’s banking system, she vowed to oppose his renomination. “Your record gives me grave concerns,” Sen. Warren said. “Over and over, you have acted to make our banking system less safe, and that makes you a dangerous man to head up the Fed, and it’s why I will oppose your renomination.” Ouch.
An active movement not to reappoint Powell as chair will only add to the uncertainty of upcoming Fed actions and potentially create more market turmoil. Powell has stubbornly adhered to maintaining artificially low rates and quantitative-easing shenanigans. However, the market isn’t anticipating his departure. If that’s on the table, we now have to be concerned about who his potential replacement might be and how they will manage the Fed.

Oh, What A Feeling…Dancin’ On The (Debt) Ceiling

A government shutdown was narrowly avoided last Thursday, as Congress reached a last-minute agreement to fund the government into early December. That national emergency is temporarily averted, but the debt ceiling still needs to be addressed.
When Ronald Reagan left office in 1988, the total national debt was around $2.7 trillion. Now it’s close to $29 trillion — and that’s before the potential new spending. The debt ceiling was at $22 trillion as recently as 2019, and now we’re asking to raise it again.
The debt ceiling conversation can get academic and hard to follow, but here’s a simplified way to make sense of the situation. Let’s say the debt ceiling is your credit card limit and the national debt is your actual balance. If you have a positive difference between your limit and your balance, you have available credit.
Right now, the U.S. government has zero available credit. (This is the appropriate time for the use of the word “zero.”) If you as an individual hit or exceed your credit card limit, your bank most likely won’t call you to ask if you want your limit raised. Instead, they would ask you to make a payment and start putting a dent in your balance ASAP.
We take this risk every time we, as a country, borrow and spend up to our limit, only to get maxed out and go through the process again. At what level will creditors stop funding our borrowing and demand payment? In my opinion, it might be sooner than we think.

Coming this Week

  • The ADP employment report on Wednesday is expected to be better than the +373,000 last month, as is the jobs report on Friday. Last month’s non-farm payroll report was awful, missing estimates badly (up 235,000 vs. expectations of an increase between 700,000 and 800,000). With many enhanced benefits quietly rolling off in September, it will be important to note if we make a dent in the nearly 11 million job openings currently available in our economy.



  • Fed officials will be speaking this week, with two of them noticeably missing, as detailed above.


  • Watch the bond auction on Thursday. There are rumblings that investors may be asking for a premium from the government to roll over their debt.


Have a great week!


The Week in Review: September 20 – September 24

Rocky September Grinds On

The market has been hovering near recent record highs this month and not retreating in any significant manner. Despite that, the market is showing signs that it’s worried about what may happen in the near future. We continue to experience slowing growth, higher inflation, a loss in consumer confidence and the very real potential of higher taxes, both personal and corporate. I don’t mean to sound like Chicken Little — but it seems more things could go wrong than right in the next three to six months.

One warning sign is that we’re currently off the average rate of occurrence for market corrections. We haven’t had a 5% correction yet this year. (We’ve normally had a couple by now.) We also haven’t seen a 10% correction in over a year. (The typical average is one per year.) Sure, we’ve been treated to a phenomenal run since the pandemic sell-off in February and March 2020. Tilting hard into the market was a no-brainer as we rocketed back to new records by the end of summer 2020 — and the party continued almost uninterrupted through the election until now.

My concern is that if you did lean heavily into the market and are overexposed to equities, it’s time to rebalance to target. What we’ve experienced in the markets during the pandemic has been unprecedented. If we do have a correction, we most likely won’t see the kind of rebound we saw after the pandemic or even after Q4 2018. It took four years to recover from the depths of March 2009 and rise past the records set in 2007, and that recovery actually happened sooner than people expected.

Rebalancing to target will likely provide the opportunity for added gains and help improve the chances of reaching your goals. If you require funds in the next one to three years, it’s crucial to sit down and review your goals and needs to make sure you’re still on track. In my opinion, this is not the time to get greedy by staying overexposed and risking losing a 20% year-to-date gain for an additional 2% in return.

Remember the old saying: “The time to fix the roof is when it’s not raining.” Markets have been kind so far this year, and rewards have been generous, but now is the time to plan and adjust as needed.

Challenges for The Big Spend

A couple of weeks after the messy Afghanistan exit and its aftermath, and one week after President Joe Biden proposed sweeping vaccination mandates via an OSHA “workaround,” the massive $3.5 trillion spending package has begun to lose steam. Sen. Joe Manchin had already signaled a desire for a pause and in a 50-50 Senate, thats as good as a hard stop. More Democrats have begun voicing reservations as the bills details have emerged.
Among key points of the plan: higher taxes on the rich (and everyone else), higher corporate taxes (which the people absorb via higher prices) and higher capital gains taxes on investors and even 401(k) accounts. Its important to note that none of this is set in stone; these things may or may not happen, and if they do, their final form is still uncertain. What is certain is that there are many distractions right now, and these distractions are giving key folks like Sen. Manchin and Sen. Kyrsten Sinema the opportunity to delay the movement of this massive spending package. My view is that the longer the bill is delayed, the more uncertain the outcome. And uncertainty around the bill may be contributing to the uncertainty we’re seeing in the markets.

Delta, The Fed and A Governor Recall to Vote

While the Delta variant seems to be slowing, if not cresting, the economy appears lethargic and uninspired. The road to fully reopening has been painful; there seem to be new complications each week, from consumer sentiment or vaccine and mask mandates to inflation, supply chain worries or some random crisis. Even the Federal Reserve hasn’t been spared, as an insider trading probe has forced the mostly private Fed into the spotlight.
California residents chose to stick with Gov. Gavin Newsom last week.
In some bizarre way, their vote not to recall validated some of his more onerous policies instituted during the pandemic. What does Californias recall election mean for our markets or economy? California is the fifthlargest economy in the world and a significant portion of our national economy. If it continues down its current path, it may not bode well for our nation’s full recovery. Gov. Newsom’s pandemic policies caused enough of a stir to trigger a recall, but his easy win means the jury is out on whether his policies will become a blueprint for the rest of the country. On the flip side, maybe this was just a wacky recall election in a deeply Democratic state that had zero chance of success. I’m hoping it was the latter since California’s policies were highly detrimental to small businesses and have held California back from more fully reopening.

Coming this Week

  • The big event this week will be the Fed meeting on Tuesday and Wednesday. They’re not expected to do anything, but the market will be watching for any hints as to whether the Fed has changed its tune on the economy or its current stance that inflation is “transitory.” Any signal that the Fed will begin tapering (scaling back on buying bonds) sooner than the end of the year will be upsetting to markets.


  • There is a bond auction on Thursday, and depending on how the Fed meeting ends, the auction may be impactful. So far, Fed Chair Jerome Powell has threaded the needle by speaking a lot without really acting a lot. If speeches begin to turn into actions, the bond auction may get a little dicey.


  • Existing Home Sales and New Home Sales (Wednesday and Friday, respectively) will give us a status on the housing markets.


  • Finally, Fed officials Loretta Mester, Michelle Bowman and Richard Clarida will give speeches this week. Chairman Powell will also speak on Friday, hopefully ending the week in a consistent manner without any potential surprises.


Have a great week!

The Week in Review: April 18 – April 24

Uneven Return to Normal
Last week, we surpassed 200 million vaccine doses administered in the U.S. I will freely admit that I had my doubts that we would achieve 100 million doses in 100 days, as President Joe Biden had promised, even though we had 400 million doses of vaccines ordered. But Biden has announced that 200 million doses have been administered in only 92 days. That’s great news, and the prior administration should get some credit; however, so long as people continue to get vaccinated and the economy continues to reopen, that’s all that matters.

Europe seems to have stabilized from its earlier vaccine troubles. However, infection news from Asia is still disturbing, with India reporting 300,000 infections in one day last week.

Collectively, this news creates conflicting and uneven messaging. If this continues, it may impact our recovery and stall our economy, which could result in much angst and volatility in the markets.

Waiting for the Next Big Thing
Domestically, the market sputtered last week, as President Biden proposed hikes in the capital gains tax rate and Republicans offered a $568 billion counterproposal to the huge, $2 trillion infrastructure plan. I have written before about unforced policy errors that could impact the markets and the recovery. In my opinion, the Keystone XL pipeline shutdown was one such error, and the bungling of vaccinations (which thankfully hasn’t happened) would be another. Imposing higher taxes could also be problematic. Markets and investors simply do not like higher taxes, and the proposed tax hike will have negative implications for markets if it comes to fruition.

The overgrown infrastructure plan has met resistance as expected. Markets are convinced that the $2 trillion plan will move through Congress mostly unaltered, and this has been priced in, but this wouldn’t be the first time the market has gotten ahead of itself. I would keep an eye on this. If this unravels, we could have trouble.

Existing home sales for March disappointed, coming in at 6.01 million instead of the projected 6.19 million. (Still, the market continues to be red hot.) Lockdown darling Netflix took a hit, with subscriber growth slowing and cancellations picking up as people spend less time streaming and more time outside.

Canary in a Coal Mine?
Remember the song by The Police from 1980? “First to fall over when the atmosphere is less than perfect. Your sensibilities are shaken by the slightest defect.”

Every time we do a postmortem on why the market stumbles or goes into correction territory, we find the one or two glaring warnings of things to come. Please humor me as I discuss some potential “canaries in the coal mine” that may tell us markets are about to teach us yet another lesson.

Like the miners who carried canaries into the mines as an early warning against carbon dioxide and other toxic gases, I am confident there will be some market event(s) that should have told it was high time to cash in our winnings, rebalance or reposition for the rough patch that lay ahead. These would be events similar to the Bear Stearns collapse and sale for $2/share to J.P. Morgan in March 2008 or watching bubble poster child buying Super Bowl advertising. What will be the defining moment when we all collectively say, “Yup, should have seen that coming a mile away?” For your consideration, I offer not one but two possibilities: Dogecoin and the European Super League.

Dogecoin debuted last week and was briefly worth more than $50 billion. That’s more than Ford. You know, the company that makes the cars and trucks a large portion of America drives. You might even have one in the driveway. How much Dogecoin do you have jingling in your pocket? To be fair, I’m not a fan of cryptocurrencies as a substitute for real currencies run by government and central banks. If crypto moves in a significant way to become an alternative and infringe on actual state-run currencies, it will likely be crushed quickly. All you need to see is how the U.S. government outlawed holding gold during the Great Depression so it could manipulate the currency. Perhaps it might be fine not as currency but as an instrument of speculation?

The European Soccer League collapse is even easier to understand. In an insanely greedy undertaking, where money is made hand over fist (or in soccer’s case, hand over foot), some of the greediest decided to get greedier. The fans and players rebelled, forcing the venture to collapse.

Coming this Week

  • The Federal Reserve will meet Tuesday and Wednesday. No one is expecting any change to the Fed’s current stance.
  • First quarter GDP is expected on Thursday. Estimates range from a 6% to 8% annual rate, which would validate the data we’ve been seeing. Anything below that range should cause concern.
  • We will see more earnings this week. We’ll also get Consumer Confidence and Consumer Sentiment on Tuesday and Friday, respectively. And don’t overlook Personal Consumption Expenditure, which will be released Friday.
  • And of course, on Thursday we’ll get initial weekly unemployment claims, which dropped again last week from 586,000 to 547,000. That’s great news, and we need to continue on that path as the economy fires up.

Have a great week!

The Week in Review: April 11 – 17

Nice Start to Earnings Season Pushses Markets to New Highs

Markets continue to grind higher as the economy reopens, hospitalizations and deaths plummet, vaccinations become more widespread and unemployment claims drop. Simultaneously, economic data seems to keep getting stronger and earnings appear to be good. U.S. consumers used their stimulus checks to boost retail sales to their highest levels in almost a year.

What can go wrong, you ask? I think the better question is: What can go right? Recently we’ve had easy money from the Federal Reserve, a government unencumbered by the burdens of fiscal discipline, an economy that will finally reopen, solid and improving data, etc. Somehow, to me, all this feels ephemeral, like we’re about to wake up from a very pleasant dream only to find ourselves in a mess. I have preached before that unprecedented borrowing and spending by the government, plus an over-accommodating, weakened Fed and the potential of increased taxes, does not appear as a recipe for success. However, I’ve been surprised by how markets have shrugged off concerns and continued their upward march.

I am confident about one thing: When the market decides to care (and it certainly will), its move will be violent and swift. You need only to look back at last year when the market didn’t care about coronavirus and focused solely on the China trade deal. Seemingly overnight, the market got nervous about the virus’s impact on global supply chains and it only took a month for it all to come crashing down.

Speaking of China, their first quarter 2021 GDP growth came in at 18.3% compared to a year earlier. They also saw retail sales increase by 34.2% in March, so it appears they’ve shaken off any coronavirus-related economic hangover. It seems that China is back on track on its mission to become the world’s No. 1 economy.

Home Sweet Home

Be it a humble shack or a sprawling mansion, there’s no place like home. Housing has boomed since the onset of the pandemic. People wanted out of crowded, locked down cities and away from crime and riots. But while suburbia seemed idyllic, there was a problem: the lack of available housing, both new and existing. Just like with everything else, demand surged and supply dried up. Cost of building materials shot through the roof (pardon the pun).

In my opinion, people are getting desperate and making some unorthodox buying decisions, such as foregoing inspections or buying homes virtually. U.S. home prices grew 11.2% year over year in January 2021, and there doesn’t seem to be an end in sight. I urge buyers toward caution; I have seen this before and – despite all the reasons why it’s different this time – the result will be the same. Greed and oversupply will take over and at some point, people will not continue to pay ever-increasing prices.

Vaccines, Infrastructure and Inflation

OK, there’s not really any logical connection between these three things, but I wanted to cover them just the same.

First up: The Johnson & Johnson vaccine. Distribution was halted because a few (six) of the recipients developed rare blood clots and one person died. The market didn’t even flinch at the halt, and that’s the beauty of having multiple vaccines available (unlike Europe, which bet the house on the AstraZeneca vaccine). I don’t think a delay as Johnson & Johnson reviews and tweaks its vaccine for safety will have a material impact on our reopening. The economy is opening back up and Johnson & Johnson’s stumble will be a non-event to the broader market.

Second, everyone wants infrastructure – until you start defining what it really is and isn’t. Right now, the Biden administration needs to do some selling to get more people on board in my opinion. Individual parts of the bill have found broad support, but other parts leave people confused and frustrated.

Finally, inflation. The March inflation number came in at 2.6% year over year, largely on the back of gas prices, which were up 9.1%. The national average for regular unleaded (I almost feel like that’s a cuss phrase – “regular unleaded!”) is closing in on $3/gallon. Add the surge in retail sales mentioned above and housing costs exploding, and it’s hard for me to buy into the “inflation is under control” argument. As I said before, things are good at the moment, but it’s really hard to see what else can go right to move us upward from here. The market can – and will – find ways to prove us wrong.

Coming this Week:

  • After really strong earnings from banks this past week, we can expect more strength given the overall weak levels year over year from the pandemic. This week we will see earnings from the likes of vaccine providers Johnson & Johnson and Pfizer, as well as lockdown darling Netflix and Bank of America Corp.
  • We need to see initial unemployment claims continue to drop. Last week’s showing of 576,000 was the lowest since the early days of the pandemic.
    Mortgage applications plus existing and new home sales will be released in the latter half of the week. The data will highlight the health of the housing market.
  • We’ll see leading indicators and the PMI composite on Thursday and Friday, giving us a glimpse into inflationary pressures.

Have a great week!

The Week in Review: April 4 – 10

Blowout jobs number on Good Friday lights the fuse
Despite markets being closed on April 2 in celebration of Good Friday, we still got the Bureau of Labor Statistics (BLS) employment situation for March 2021. Expectations for the “jobs report” were for +675,000 new jobs in March, which would have been impressive on its own accord. However, the actual number came in well past that at 916,000 The unemployment rate also dropped from 6.2% to 6.0%, which is really good news!

Markets went off on Monday after waiting out the long Easter weekend. The S&P 500 set new records, which in my view is always better than the Dow given its broader representative nature. I doubt it was the stimulus that caused this explosion to nearly 4,100 on the S&P 500. A little over a year ago, I remember having conversations with people who thought the S&P 500 would drop below 2,000. (It bottomed out at 2,237.40 on March 23, 2020.) My thinking is that the market feels the Federal Reserve will continue to keep rates low for as long as it can to get unemployment back to pre-pandemic levels.

There has been a lot of talk about the stimulus, but that bill’s impact is not likely even close to being felt and isn’t influencing hiring. In my opinion, the real reason for the stellar employment number is the continued reopening of America thanks to vaccinations. Nearly one-third of Americans have been vaccinated, states are lifting restrictions, deaths from infections are way down, spring has sprung and consumers are confident. That’s my take on why jobs are growing. Businesses are cranking up and markets love all that easy credit out there.

The challenge now is not to flood the engine. Too much liquidity could be bad, and the markets may sense that already. For now, everything seems to be in balance. However, when Federal Reserve Chairman Jerome Powell Fed won’t raise rates until at least 2023 while others say we may see a hike next year, the odds of a policy misstep grow when money starts flying around. One indicator suggests the market could be overheating. Recent data from Wall Street’s self-regulatory arm, the Financial Industry Regulatory Authority (FINRA), showed that investors borrowed record sums of money to buy stocks. Run-ups in margin debt can contribute to bubbles and subsequent declines could amplify losses, as last week’s Archegos saga demonstrated.

California Dreamin’
Great news from California! (No, seriously, I mean it this time.) It appears that the state is trying to reopen fully by mid-June. That’s only two months from now and comes after over a year of lockdowns, much economic pain and the likely recall election of Governor Gavin Newsom. It is indeed a powerful testament to the vaccine distribution efforts being made at the state level. The distribution got off to a rocky start in December and January, but momentum has been building since the vaccines began arriving in late January. Without the vaccines, talk of full reopening would likely not be possible.

History will judge whether California, New York, Florida or Texas were successful in their approaches to dealing with the pandemic. But this announcement from California is huge and could be one of the final hurdles to fully reopening our economy and moving forward.

Have I got a great deal for you!
Treasury Secretary Janet Yellen began floating the idea last week that other countries should raise their corporate rates, just as the Biden administration is proposing to raise U.S. corporate tax rates from 21% to as much as 28%. It sounds noble and magnanimous on the surface, but in reality, it would likely be a self-started dumpster fire. In my opinion, it’s the kind of policy mistake on par with forgetting to put the oil plug back on before adding new oil to your car.

From my point of view, a proposal like this, if enacted, is the surest way to blow up our economy. At 21%, we are just below the average for developed countries, which is 21.5%. But at 28%, only three developed European countries would be higher — Portugal, Germany and France. Lower corporate taxes attract corporations, so jobs flow from higher-taxed countries to lower ones. That’s the core fixature of globalization. Now we want countries to “volunteer” to become less competitive? Two words come to mind here: “Bad idea.”

The proposal is confusing and illogical to me. I thought the current administration was pro-globalization and against the “America First” agenda of the prior administration. My concern is that this will disadvantage us competitively, and other countries will cheat and hurt our economy to benefit their own.

Coming this week
CPI will shed light today on whether we see inflationary signs yet.
The Housing Market Index and Housing Starts and Permits will be released on Thursday and Friday, respectively.
Consumer Sentiment should be a bright spot on Friday.
This week’s other major drivers will include the discussion surrounding the infrastructure bill and the tax bill proposals intended to pay for the infrastructure bill.

Have a great week!

The Week in Review: March 28 – April 3

Another Multi-trillion Dollar Deal?
President Joe Biden announced his new infrastructure plan last week, which is expected to clock in at $2.25 trillion. The proposal is on the heels of last month’s $1.9 trillion stimulus package. In his first 2+ months of presidency, Joe Biden is proposing spending nearly $4 trillion. Think about that for a second: $4 trillion!

My very earnest hope is that this money ends up making our roads, bridges, airports, seaports and rail depots safer, better and more competitive. But my realistic self tells me that this bill – just like the stimulus plan – will likely be a misguided hodgepodge of extraneous funding for pet projects and political favorites.

I’m not saying the country doesn’t need infrastructure spending; one short road trip confirms our roads and bridges are a mess. My question: I already see construction everywhere on our highways, so what additional projects do they need? Airports are dated, sloppy and shabby, but I always see construction when I’m in an airport, so what else? I keep going back to our debt level and the potential for that debt to slow down future economic growth. If the money is spent wisely, it would be an investment for the future of our country. But if it isn’t, we are simply rearranging the deck chairs on the Titanic.
About 65% of our country’s infrastructure is privately owned, with 30% owned by states. That leaves just 5% owned by the federal government. Where, exactly, is all this money going to go? Private firms? No, they use the capital markets. States? No again, they use their own tax-gathering options, like sales and real estate taxes. Will we build the Hoover Dam higher, or will this be just another way to spread money to pet projects?

The other shoe to drop pretty soon (and this is one ugly pair of shoes, in my opinion) is the discussion of taxes to pay for all the debt. Capital gains, higher corporate tax rates and higher taxes on individuals will negatively impact the market and economy. We need to see how this all plays out; sometimes, the best option is to leave things be, see how they go and inject aid judiciously. Hyper liquidity, limited supplies, high levels of debt, increased taxes and an economy that is set to reopen fully may be too severe a shock and potentially lead to much higher inflation. This could be a toxic brew unlike anything I have seen in my entire time in the investment business. Forewarned is forearmed.

More Hedge Fund Drama falls on Deaf Ears while the 10-year tells us Time might be running out
Last week we found out there was a huge margin call on positions held by Archegos Capital, creating a scramble on the part of large banks worldwide to cover them as Archegos was forced to sell.

Archegos held large and leveraged bets in U.S. media stocks ViacomCBS and Discovery and a few Chinese internet ADRs such as Baidu, Tencent and Vipshop. Some of the positions were held via total return swaps, a type of derivative that allows investors to take big, leveraged stakes without disclosing those positions publicly. In other words, they were a secret.

These bets started to go south after ViacomCBS’ $3 billion stock offering through Morgan Stanley and JPMorgan fell apart. It triggered a domino effect where prime brokers rushed to exit the positions on Archegos’ behalf and resulted in a massive margin call, where brokerages demand that an investor deposit additional money or securities into the account when a position falls sharply in value. Brokerages usually sell the securities in block trades, often at a discount to the current share price, in an attempt to recover losses.

Billions were lost as shares were shed. However, the markets didn’t seem to notice as the S&P 500 rose over 4,000 for the first time. That’s alarming! Nomura and Credit Swiss lost nearly $9 billion. This may be an anomaly, but it could also be a wake-up call. After the GameStop nonsense, we may be seeing a disregard for risk – and that seldom ends well.

Nothing like clear Sinai to get the global economy to breathe easierOK, it was a bad pun, but the unblocking of the Suez Canal was important and needed to be done quickly. The obstruction of the canal – a major artery for goods and raw materials (especially oil) from the Middle East and Asia to Europe – for a prolonged period would have been devastating to a region already struggling and falling behind as a result of the coronavirus. The good news is the Ever Given was dislodged and commerce has reopened. However, the incident highlighted the fragility of global supply chains and the need for better infrastructure. (It all comes back to the same things, doesn’t it?)

Coming this Week:
  • The market is back to work after the long Easter weekend. Data will be sparse this week. The biggest scheduled news is the release of the minutes from the last meeting of the Federal Reserve’s Federal Open Market Committee (FOMC). Any insights into the mindset of Federal Reserve members will be of interest, and the minutes will be examined closely to see just how united they may be on the Fed’s current stance on rates.
  • Last Friday, the March employment situation blew past expectations; consensus called for an increase of 625,000 jobs, and the actual number was 916,000.Expectations are that initial weekly claims will continue to fall. We’ll see if that encouraging trend continues on Thursday.

Have a great week!