[Chart courtesy of MarketWatch.com]

1. Moving the markets

Despite the markets having moved in a tight range, and pretty much ended the session unchanged, it was enough of a gain for the S&P 500 to score another record close.

All eyes were on the release of the Fed minutes, which showed continued commitment by the Central Bank to support an accommodative policy, read lower interest rates and asset purchases, so that the economy can fully recover.

The minutes included this statement:

Participants noted that it would likely be some time until substantial further progress toward the Committee’s maximum-employment and price-stability goals would be realized and that, consistent with the Committee’s outcome-based guidance, asset purchases would continue at least at the current pace until then.

The cheerleader of the day award goes to JPM’s Jamie Dimon, whose annual letter included this ecstatic assessment:

I have little doubt that with excess savings, new stimulus savings, huge deficit spending, more QE, a new potential infrastructure bill, a successful vaccine and euphoria around the end of the pandemic, the U.S. economy will likely boom, this boom could easily run into 2023 because all the spending could extend well into 2023.

Excitement, optimism, and strong forecasts were plentiful, but for today’s session the markets shrugged most it off to mere jawboning, but some areas were affected negatively.

SmallCaps were hammered again, while the major indexes stoically resisted even Yellen’s Tax America plan, including the Fed’s Kaplan warning “I do worry about excesses and imbalances.”  

Bond yields traded in a tight range with the 10-year vacillating around the 1.65% level, although the US Dollar managed to bounce a tad thereby keeping Gold in check.

In the end, it was a nothing day where treading water was the overriding theme.

[Chart courtesy of MarketWatch.com]

1. Moving the markets

With the markets having surged into April, it was time for the pace to slow down, and that is what we saw today.

The S&P 500 broke a 3-day winning streak with the indexes coming off their record highs, although by only a small margin.

Bond yields continued to ease up with the 5-year dropping below 0.90%, the US Dollar stumbled further, and both helped GLD to rebound with a +0.82% gain.

For sure, the historic stimulus efforts, despite their questionable long-term consequences, have helped equities to regain a solid footing after a wild ride in March. In addition, the vaccination rollout assisted in more businesses opening thereby paving the road for more optimism about the future direction of the markets.

The $2 trillion infrastructure proposal is still subject to much deliberation and pushback, while far from being a certainty in its present form. The size of the bill is still under discussion, as are some of the consequences, namely the impact of an increase in corporate taxes to 28%, along with other yet to be named tax hikes.

In the meantime, Q1 earnings season is on deck with the big banks kicking off the event next week.

[Chart courtesy of MarketWatch.com]

1. Moving the markets

The futures markets already indicated upward equity momentum based on Friday’s jobs report (markets were closed), which generated some 916k jobs in March, was well above the expected 647k, yet it fell short of the 1.8 million whisper number.

In other words, it fell into “goldilocks” territory meaning not too strong and not too weak. That’s all the markets wanted to hear, and the rally was on and did not let up throughout the entire session.

The major indexes closed solidly in the green, led by the tech sector, with the S&P 500 seeing its recently conquered 4k level merely as a vanishing point in the rear-view mirror. The Dow closed at a record high with this bounce in US job growth increasing optimism of a sharp economic recovery.

With the US Services Industry’s activity surging to a record high, voices abound that we are now back in the first innings of a “V-shape” recovery. Of course, that assumes that no more sudden shutdowns are being forced on businesses.

Helping matters was an easing of bond yields with the widely followed 10-year falling to 1.71%.

It’s interesting to note that SmallCaps were lagging the major indexes in today’s rally fest and were being outperformed by MidCaps. Leading the pack was the Nasdaq with the QQQs managing a firmly +2% gain, as “growth” outperformed “value” by a wide margin.

The US Dollar index got hammered all the way back to its 200-day M/A, but this drop was not enough to spark a gold recovery with the precious metal doing nothing but treading water.

As ZH/Bloomberg pointed out in this chart, the global bank balance sheets have stagnated, and it looks like more ammunition in form of an increase in debt is needed to keep this party going.

[Chart courtesy of MarketWatch.com]

1. Moving the markets

The major indexes greeted the month of April with a bang and a solid close in the green. The Dow lagged somewhat, but the S&P 500 made up for it by conquering its 4,000-milestone marker without hesitation.

Tech stocks took the lead today and were powered by lower bond yields and a declining US Dollar, both of which combined to push gold higher with the GLD ETF adding a robust +1.27%.

The continued but spotty reopening of the US economy was a positive for equities, but concerns linger as to when we might reach the end of the coronavirus tunnel. However, the main driver is the ongoing reckless fiscal and monetary support, which is unprecedented and presents potential consequences that nobody likes to address.

On the other hand, higher taxes could pose a threat to corporate earnings and subsequently to stock prices. These concerns, while present, are largely ignored with most traders focusing on the more immediate benefit like maintaining the bullish theme.

On the economic front, the main number for the day, namely first-time filings for jobless benefits, rose from the prior week’s 684k to 719k. In other words, there is no consistent improvement other than an occasional temporary drop. Looking at the big picture, there are still over 18 million Americans getting jobless benefits. Ouch!

Tomorrow, Good Friday, the markets will be closed, but the Payroll Report announcement will be on deck. The only asset class, which will trade until noon are bonds, and they might respond in a big way (negatively), should the report hit the whisper number of 1.8 million, which would be triple the expectations.  In that case, Monday’s session might see fireworks.

[Chart courtesy of MarketWatch.com]

1. Moving the markets

The S&P 500 made a valiant effort to reach its magic 4,000 mark but fell short yet scored its best month since November. Today, it seemed like the rotation was back into the tech sector with the Nasdaq popping 1.52%, while the S&P was helped higher due to its tech heavy components.

Giving an assist was Biden’s big infrastructure plan, despite not only the negative connotations because of increased tax rates for corporations but also due to the closure of a variety of tax loopholes.

Regardless of the tech sector’s resurgence today, for the quarter it has been the laggard with a gain of 3% vs. the Dow’s and S&P’s 8% and 6.2% respectively. CNBC explained the reason this way:

The Nasdaq has been the relative underperformer as technology stocks are especially sensitive to rising rates because they depend on borrowing money cheaply to invest in their future growth.

Traders and investors alike are concerned about the possible negative impact of the massive stimulus/infrastructure plan with Tom Essaye of Sevens Report pointing straight to the underlying issues:

“Economic stimulus is no longer 100% virtuous in the eyes of the market, that’s because it will bring with it 1) Higher yields, 2) Rising inflation expectations and 3) Erosion of the idea that the Fed will be on hold for the entirety of 2021. Additionally, all this stimulus is being used to offset and usher in tax increases on individuals, corporations and investments.”

Well said, but I believe that the initial reaction will be positive for some market sectors, which we try to get exposure in.

Despite bond yields inching higher, the US Dollar was just about unchanged, which allowed GLD to finally have a decent showing by gaining +1.52%.

Concerns still abound that volatility might pick up over the next week due to large 60/40 funds having to adjust their holdings back to model on a massive scale, according to JPM. The reason is that US stocks have dramatically outperformed US Treasuries, as Bloomberg shows here.

So far, none of this forced month-end selling has materialized.