It is hard to believe March is already knocking on our door. We had a bit of a warm-up here in Baltimore this week which has certainly been refreshing. However, while time marches on, some things remain the same.
Oh, the politics of it all! We heard again from Fed Chair Powell who remains steadfast in his belief that we are far from our full employment goals. Jobless claims did drop sharply week over week, and the need for more “help” was reiterated during his testimony. One of the biggest hurdles to overcome in the next stimulus bill was the minimum wage debate. As of this writing, the portion of the plan containing the $15/hour minimum wage phase in, was dropped, allowing for a higher chance that the Bill will move forward. Like any Bill of this size, more debate will be waged, but one of the biggest obstacles appears to now be cleared from its path.
The markets saw a bit more volatility this week, as the technology stocks, who had been the leaders, came under pressure. As we have stated in the past, this is healthy in our view. A lot of this was driven by the sharp increases in treasury yields which created some selling in equities. While inflation concerns have been relatively low, it is showing up in certain segments like lumber and copper. This contributes to the rise in housing costs and that market has been red hot. Personally, I have started to notice increases in certain everyday things like groceries. I have 3 teenage boys at home and feeding them daily is not cheap! While the Fed may not be seeing inflationary concerns on the macro level just yet, we are feeling it in our wallets to some degree. Conventional wisdom holds that as treasury yields increase, investors will tend to shift from equities into safety as the returns in bonds improve. These will be things we are watching and closely monitoring moving forward. It is far too early to determine if this is indeed a new trend or simply a near-term opportunity.
We have a full moon occurring Saturday night. Be careful out there!!