Happy Sunday! I hope you have been able to get outside this weekend and take in some of the early signs of spring. Like the new beginnings that spring offers, I also see the light at the end of the pandemic tunnel. Make no mistake, there is still plenty of work to be done, but the signs are there for sure. As of Saturday afternoon, the Senate passed their own version of the $1.9 trillion Covid relief bill. The House plans to take a final vote for approval on Tuesday, setting the stage for more stimulus. The debate all along has been centered around what exactly will be the purpose of this round of funding. Be certain there is added “pork” in this one for good measure. It will be interesting to see the headlines that will emerge as both sides continue to argue the merits. Key takeaways from this round of funding include direct payments of up to $1,400 to many Americans, a $300 weekly boost to jobless benefits into September and an expansion of the child tax credit for one year. It also puts new funding into Covid-19 vaccine distribution and testing, rental assistance for struggling households as well as additional reopening costs for K-12 schools. Major concessions included tossing out the federally mandated minimum wage increase to $15/hour and lowering the total income threshold for those families receiving the new stimulus checks. Like any major new legislation, there will be winners, losers, and whiners. The spending spree continues in Washington with no end in sight.
One thing we are seeing is a major uptick in Americans getting back to work. The jobs growth in February was much higher than expected as the service economy begins to get itself back on track. With more Americans becoming vaccinated, herd immunity on the rise and states continuing to relax restrictions, it is clear, that we as a nation are ready to begin to move on. The volatility and pace of action in our financial markets again ticked higher over the past week. The bond market is sending signals that inflation could be on the rise much faster than expected. Fed Chairman Powell did little to ease these concerns on Thursday setting things in motion for a roller coaster ride to end the week. Friday alone saw a whip saw in the markets we had not seen in some time. The tech-heavy Nasdaq exchange has clearly lost some of its momentum as the high-fliers of last year remain under pressure. Could this truly be a warning sign or simply an opportunity? One thing is certain, Washington seems intent on keeping the easy flow of money for now.
Americans have continued to save at a record pace. As we witnessed on Friday afternoon, any significant pull back in the market brings cash from the sidelines. With interest rates remaining low, “parking” at the bank is simply not a good long-term option for now. This summer will prove interesting indeed. As our house-bound restrictions become loosened, a new-found sense of freedom may be unleashed. Spending, in full force, will resume. How long it lasts will be the question? As always, we will be watching and planning our next moves.
Stay safe and healthy!
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