The Market Today
35 Percent of Adult Population to Go
by Craig Dismuke, Dudley Carter
CORONAVIRUS UPDATE (VS Coronavirus Chartbook – PDF)
Over 50 Percent of Adults Have Now Received as Least One Dose: The C.D.C. reported over the weekend that number of adults (18+) who have already received at least one vaccine dose is now over 50%. In data released last week, the Census Bureau Pulse Survey on vaccines showed the percent of persons definitely or probably not getting a vaccine dropping to 15.5% (survey ending Mar. 30). The population of unvaccinated persons who plan to be vaccinated, now down to 35%, is shrinking rapidly.
Corporate Earnings Pinch Hit for A Quiet Economic Calendar: This week’s economic calendar is sparse with only a handful of reports Wednesday and Thursday. With little on the economic calendar, focus will be on D.C., Brussels, and corporate earnings reports. Companies reporting today include Coca-Cola, IBM, and United.
Part Two of Build Back Better – The American Families Plan: The White House is expected to unveil the second part of President Biden’s economic priorities sometime over the next week-and-a-half. According to Politico, “the American Families Plan… will likely include some $2 trillion more in spending and major tax changes for individuals.” They cite a variety of tax increases as under consideration: “raising the top marginal tax rate back to 39.6 percent, … taxing capital gains as ordinary income above a certain threshold (the top rate is almost 24 percent now), … and eliminating the so-called stepped-up basis at death, a provision sometimes known as the “Angel of Death” loophole because it can allow the wealthy to pass on assets to heirs tax-free.” The article also references tax proposals made by Biden during his campaign: “ curtailing itemized deductions for the rich, increasing their Social Security taxes and stiffening the estate tax.”
24 HOURS OF MARKET ACTIVITY
A quiet week for the economic data has begun with a relatively quiet start for global markets. After a positive day of trading across most of Asia, European equities softened and U.S. futures slipped below Friday’s record levels. However, the degrees of the moves were relatively modest. An absence of economic data means investors are likely to stay tuned in to corporations’ quarterly earnings announcements for insight into executives’ expectations for the economic recovery in the months ahead. Coca-Cola released revenue and earnings results earlier this morning that beat expectations and the company said demand in March matched levels from before the pandemic. “We are encouraged by improvements in our business, especially in markets where vaccine availability is increasing and economies are opening up,” the Company’s CEO said. While shares of Coca-Cola rose nearly 2%, the broader market had edged lower. At 7:20 a.m. CT, S&P futures were more than 0.2% lower. Despite softer equities, Treasury yields had inched higher, although moves were modest. The 10-year yield had added 0.4 bps to 1.58%.
ICYMI – April 16, 2021 Weekly Market Recap: Last week was packed with key economic data, an influx of Fedspeak, and notable developments on vaccines. Fed Chair Powell said in a Sunday-evening interview that the economy was at an “inflection point” and officials were expecting the recovery to move “much more quickly.” The Beige Book, released on Wednesday, echoed that optimism and noted that activity had “accelerated to a moderate pace” through early April. The early week data showed the effects of the American Rescue Plan on the fiscal situation and hot headline CPI inflation. The 12-month budget deficit hit a record $4.1t in March while the details behind the firmer inflation were less concerning. On the medical front, the FDA recommended pausing use of the Johnson & Johnson vaccine while it reviewed a handful of cases of blood clots. Moderna, however, said its shot appeared to be 90% effective six months after the second dose. Pfizer’s CEO expects a third booster shot will be needed within 12 months. However, Thursday proved to be the most interesting day of the week. Treasury yields tumbled sharply shortly after retail sales, jobless claims, and a couple of Fed surveys handily beat expectations, signaling the recovery was accelerating. Technical factors were named as the primary culprit for yields’ paradoxical plunge after momentum picked up as the 10-year yield broke below 1.60%. Other economic reports also showed activity picked back up after February’s weather-related slowdown, adding to optimism around the recovery that helped lift the S&P 500 and Dow both to record levels. For the week, the S&P 500 added 1.4% while the 10-year Treasury yield fell 7.9 bps to 1.58%. Click here to view the full recap.