The hiccup late last year in the stock market is fully over as stocks are back to new highs. Job data continues to come in quite impressively, and GDP expectations for first quarter have improved. Plus there's good news on electric cars and the African forests.
Enjoy this week's The Friday Buzz, and have a great weekend!
- S&P 500 Sets a New Record This Week: On Tuesday this week the S&P 500 Stock Index hit a new closing high of 2933.68 eclipsing the previous high set back in September. The markets have now fully recovered from the fourth quarter 20% swoon.
- Fed Watch – Cain Out, Moore Shaky: This week Herman Cain withdrew his nomination for a Federal Reserve Board seat. Sights are set now on Stephen Moore's nomination which looks shaky as people dig into his past. With their actions, Senate Republicans have sent a message to the White House to put forth stronger nominees as well as perform better background checks. This bodes well for maintaining Fed independence.
- Electric Cars Dominate New Sales in Norway: Last month, 60% of all new car sales in Norway were for electric cars. Electric car sales are up almost 100% from the previous March with Tesla's Model 3 representing half the sales. Remarkable. How did this story sneak up on me with all of Elon's Tweeting?
- You Get a Job, and You Get a Job – Everyone Gets a Job! The U.S. unemployment rate remains near multi-decade lows and has been there for a while. In another sign of the powerful job market, the initial jobless claims are now at a low last seen in 1969 - in absolute terms, not percentages. Jobless claims are as low now as when the U.S. population was 40% smaller in the late 60's. Wow! Check out the chart:
- First Quarter GDP: The Gross Domestic Product (GDP) will be released Friday morning for Q1. Consensus estimates are for a 2.5% increase. The Federal Reserves Atlanta GDP Now forecast is calling for 2.8%. That is way up from early March when the GDP Now forecast was only 0.3%. Anything above 2.0% will be viewed as solid growth from what many were initially considering a very weak quarter.
- Changes Coming to 401(k)s and 529s? A bill moving through the House of Representatives would represent the biggest changes in retirement and college savings plans since 2006. Current proposals include making retirement plans easier to offer for small businesses, covering part-time employees, increasing the required minimum distribution to age 72, and expanding the use of 529s to include covering new expenses such as student loans. There is a long way to go, but so far there has been bipartisan support for the bill. We will keep a very close eye on any changes and how they could affect clients.
- Modern Monetary Theory Gaining Support in Congress: I keep hearing and reading more and more about how Congress is embracing Modern Monetary Theory. The main principles and elements of the theory is that increasing government debt for urgent needs or on items that will increase economic returns may be appropriate. That makes sense except what Congress often states as "urgent and appropriate" quite often is just the opposite. I am very leery of giving Congress no resistance regarding deficits…
- The Great Green Wall of Africa: Much of the African landscape has been degraded by poor land management, huge population growth and climate change, turning forests into desert. Ten years ago, about a dozen countries embarked on a plan to replant the forests across Africa, calling it The Great Green Wall. Now 20 nations are representing in the effort. Currently 15% of the Green Wall is complete and it is already improving the water supply and lives of people of the region. When completed, it will be the largest living structure on Earth at almost 5000 miles long and three times bigger than the Great Barrier Reef of Australia! There is good news out there if you look!
- Book Recommendation - Do The Work: Overcome Resistance and Get Out of Your Own Way: I have been a fan of Steven Pressfield ever since I read The War of Art a few years ago. Do The Work is just as good and displays Pressfield's familiar raw emotional style using writing as a metaphor for accomplishing any activity. It's a relatively quick read which I recommend. I gave a copy to my son Mitchell who is a budding actor and writer, and he found it practical and captivating. Points for Dad!
Have a great weekend!