The big talk, not only in the markets, but also in politics, is whether the new round of stimuli will overheat the economy.
The Bank of America’s research investment committee says no, and brings some new data to the table. First, he cited data from the Census Bureau showing that of the families that received a $ 600 stimulus check in the first half of February, 73% saved or paid off debts. Consumer credit also dropped unexpectedly in January.
Bank of America also interviewed more than 3,000 people to ask how they would spend the new stimulus check. Even in the lowest income category, 53% say they plan to save, pay debts or invest.
So, what does this mean for investors? Bank of America says it does not expect anything more than a temporary recovery from inflation. Supply disruptions will be alleviated when the workforce returns to work, and progress in artificial intelligence and automation may mean fewer industrial jobs to return to. If wage growth really accelerates, companies can afford to accelerate research and development.
The investment research committee recommends what it calls prudent yield for bond allocation – high-yield corporate and municipal bonds, leveraged loans, preferred shares and convertible bonds outperform the bond market in general. For stocks, it says buy small cap growth when it falls, and the Nasdaq Composite COMP,
at 11,600 (which is 12% below Tuesday’s close).
The financial sector is his favorite sector, as he can win anyway. If Bank of America’s analysis of inflation is wrong, banks would benefit from a steeper yield curve and more real estate and loan activity. If you’re right, banks would be attractive, given higher stock repurchases and attractive yields.
The buzz
The House of Representatives is expected to vote on the $ 1.9 trillion stimulus plan already approved by the United States Senate, at which point it will go to the White House for President Joe Biden’s signature. The Congressional Budget Office estimates that $ 1.1 trillion will be spent in 2021.
US consumer price data for February will be the focus of a market suddenly obsessed with the prospect of an explosion in inflation.
Maryland became the last state to relax many of its COVID-19 restrictions.
The United States and China are discussing sending their top diplomats to Alaska in an attempt to restart relations for the Biden government, according to the South China Morning Post.
Pfizer PFE,
and BioNTech BNTX,
agreed to provide 4 million extra doses of the chorananvirus vaccine to the European Union.
Roblox Corp. obtained a reference price of $ 45 per share on the New York Stock Exchange, while the gaming platform aimed at teenagers is preparing to go public through a direct listing on Wednesday.
Luxury home builder Toll Brothers TOL,
reported a 70% jump in its first quarter profit.
The market
After Tuesday’s big surge in stocks and tech titles, it looked calmer at first. US stock futures ES00,
NQ00,
fell slightly, and the 10-year Treasury yield TMUBMUSD10Y,
rose to 1.56%.
Bitcoin Futures BTC.1,
went up more than $ 55,000.
The graph
Bernstein Research portfolio strategists divided the economic cycle into four different parts and tested the performance of different investment style factors. Value stocks fared better in the current “recovery” part of the economic cycle.
Related story: Here’s what the 2016 value rally says about how far the current breakthrough can go
Random readings
The 2018 announcement by announcer John Oliver to Meghan Markle before her marriage to Prince Harry proved to be good.
Dr Seuss’ discontinued books are selling for thousands of dollars in Canada.
There will be a Hollywood film based on the true story that a bear consumed the equivalent of a backpack of cocaine. For all the bear readers of this newsletter, it did not end well.
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