| Gradient Investments Weekly Talking Points 04/05/2021 All data is for the week ended April 1, 2021. Markets were closed last Friday in observance of Good Friday. Stocks Stocks rose across all major global indices last week, with the benchmark S&P 500 rising 1.16% and the NASDAQ gaining 2.61%. The international developed markets index (MSCI EAFE) rose 0.53% while the emerging markets (MSCI EM) added 2.40%. Technology and communication services were the best performing sectors in the U.S. while consumer staples and utilities were the laggards. Growth outperformed value stocks.1 Fixed Income Interest rates rose and bond values declined last week, with the benchmark 10-year U.S. treasuries yield up 2 basis points to 1.69%. The yield curve was basically unchanged with the yields on shorter maturities increasing, and the yields on longer maturities declining slightly.2 Commodities West Texas crude oil (WTI) futures, started the week off down on the news of the containership stuck in the Suez Canal delaying oil delivery.3 WTI quickly recovered on Thursday to end the week up 4.94% on the news that OPEC+ would slowly increase production starting in May.4 The production may prove to be conservative as economies begin to reopen and demand may ramp more than supply, causing upward pressure on prices since production companies are foregoing growth in favor of paying down debt and paying out dividends.5 Economic Data Given the positive regional manufacturing surveys, it was logical that the national survey of producers jumped to 64.7% its best level in 38 years. (Note anything above 50% indicates growth.) The customer inventory index is extremely low, meaning inventories are very light. Because this is in combination with backlogs that are at all-time highs, we can expect manufacturing to continue to rise over the next few months.6 Jobs growth accelerated in March with 916,000 jobs added (at the high end of consensus expectations in the 750,000- 1 million range) led by leisure, hospitality, education, and construction. The payroll beat led the unemployment rate to fall to 6.0%. This month’s job growth compares to a loss of 701,000 jobs in March last year when the economy began its COVID-induced shutdown.7 Growth in U.S. home prices accelerated to a 15-year high in January, as the supply of homes for sale dropped to a new low. The national home price index rose 11.2% in the year that ended in January. Demand remains robust due to record-low interest rates and a desire for more space. Also, the inventory of homes available for sale was the lowest in nearly 40 years.8 Consumer confidence shot up from 90.4 in February to 109.7 in March. This compares to expectations for nearly 97. The index stood close to 132.6 in February of last year (a 20-year high) shortly before the coronavirus pandemic took hold in the U.S.9 Company News10Information and Communication Technology sector stock holdings across multiple Gradient strategies – including Square (SQ), Sprout Social (SPT), Taiwan Semiconductor (TSM), Netflix (NFLX), Snapchat (SNAP), Facebook (FB), Baidu (BIDU), Alphabet (GOOG), Synopsys (SNPS), and Paylocity (PCTY) – rose between 4.1% and 7.5% last week as inflationary fears subdued a bit, caused by a third straight week of a rising U.S. dollar.11 This created a catch-up trade in these sectors – which were strong last year and have underperformed recently as investors attention was diverted to sectors expected to benefit from the post-COVID environment. Taiwan Semiconductor (TSM), a G40i holding, committed to a $100 billion capital expenditure plan to boost capacity.12 The stock was also helped by Biden’s infrastructure plan which included $50 billion for semiconductor investment.13 Facebook (FB) and Alphabet (GOOG), both G33 and Core Select holdings, are planning to work together to place two giant subsea data cables between the U.S. West Coast and Singapore and Indonesia in order to provide faster internet service.14 In addition, recent pricing showed that digital advertising revenues are surging for the two companies. 15 |
| Did you know … The Plus Fours Routefinder is the world’s first satellite navigation – invented in the 1920s. While it doesn’t speak to you or give live traffic updates, it was very small and designed to be worn on the wrist. It relied on paper maps wound around tiny wooden rollers, which the driver turned en route. |