Thursday’s session told the story of a market where investors were shaking off recent jitters and refocused on fear of missing out.  Safe havens were lower, as Technology picked up momentum.

S&P 500 Index	+1.18%
Communication Services XLC	+1.72%
Consumer Discretionary XLY	+0.80%
Consumer Staples XLP		-0.48%
Energy XLE	+2.55%
Financials XLF	+1.23%
Health Care XLV		-0.30%
Industrials XLI	+0.34%
Materials XLB	+0.88%
Real Estate XLRE	+1.60%
Technology XLK	+2.01%
Utilities XLU		-0.09%

In addition, the fear index (VIX) tumbled more than 10% on the session and more than 19% on the week to its lowest level since the pandemic began.

Portfolio Approach

On Thursday, we added to Technology in our Hotline Model Portfolio.

Today’s Session

Today, Treasury Secretary Yellen will unveil her plan for a universal global minimum tax rate among G20 nations.  The problem with her plan is why would any nation change their tax rates when they could gain even more US corporations after the Biden tax hike?  As the world has gone to lower taxes, global prosperity has increased.

Region	Tax rate
Asia	20.06%
Europe	19.99%
EU 27	21.47%
G20	26.96%

 

Jobs Report and the Fed

The headline report was strong, as 916,000 jobs were created.  I think the composition of jobs, amount of long term unemployed, and the fact millions are still looking for work, gives the Fed leverage, if they so desire to use it.  At the very least, it gives them the time they have promised before the next rate hike (2024).

Real Unemployment Number and Other Lowlights

• 9.7 million unemployed +4.0 million from February 2020
• 21.0% teleworked from 22.7%
• 11.4 million lost job due to employers closed during pandemic 13.3 million in February
• 3.7 million prevented from looking for work due to pandemic from 4.2m

Meanwhile, the U6 unemployment number, which is a far better proxy for the health of the economy, edged down to 10.7%.  The number is down a lot from the April peek, but it hasn’t moved much in months.  Moreover, we are talking about almost eleven percent unemployment.  It’s an unfathomable number.

U6 Unemployment rate

High Frequency Data

The big jobs report was not a surprise, as high frequency data had many on the street looking for a number north of one million jobs.

These trends should continue, as long as not upended by vaccine passports and other schemes that actually make the public less trustful of the vaccine.  (If you have the vaccine, why worry about those that do not?)

Meanwhile, air travel continues its strong rebound.

Comments

Charles, how is what Yellen is doing not collusion? If any other "company" was setting "prices" with "competitors", the DOJ would be all over it! Bryant on 4/5/2021 10:06:36 AM

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