The big talk, not only in markets but also in politics, is whether the new stimulus round will overheat the economy.
Bank of America’s research investment committee says it will not, and brings new data to the table. First, Census Bureau data cited data showing that 73% of households receiving a $ 600 stimulus check saved or paid off 73% of debt. Consumer credit also fell unexpectedly in January.
Bank of America also surveyed 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 debt, pay off debt or invest.
What does this mean for investors? Bank of America says no more than a temporary inflation rebound count. Supply disruptions will be alleviated as the workforce returns to work, plus advances in artificial intelligence and automation could mean fewer industrial jobs could return. If wage growth does accelerate, it can afford to accelerate research and development.
The Research Investment Committee recommends that it recommend prudent yields for allocating bonds – corporate and municipal bonds with high yields, leveraged loans, preference shares and convertible bonds outperform the general bond market. Equities are said to be buying small-cap growth as it declines, and the Nasdaq Composite COMP,
at 11,600 (which is 12% below Tuesday’s close).
Finance is his favorite sector, as it can win anyway. If Bank of America’s inflation analysis is wrong, banks will benefit from a tighter yield curve and more housing and lending activities. If done right, banks will be attractive, given higher share buybacks and attractive returns.
The buzz
The House of Representatives must vote on the $ 1.9 billion stimulus plan already approved by the US Senate, after which it will go to the White House for the signing of President Joe Biden. 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 that is suddenly overwhelmed by the outlook for inflation.
Maryland is becoming the newest state to relax many of its COVID-19 restrictions.
According to the South China Morning Post, the US and China are sending their leading diplomats to Alaska in an effort to restore relations with the Biden government.
Pfizer PFE,
and BioNTech BNTX,
agreed to supply 4 million extra doses of coronavirus vaccine to the European Union.
Roblox Corp. fetched a reference price of $ 45 per share from the New York Stock Exchange as the mid-centric gaming platform is set to announce through a direct listing on Wednesday.
Luxury home builder Toll Brothers TOL,
reported a 70% jump in first-quarter profit.
The market
After Tuesday’s big increase in technology stocks and bonds, it looked calmer earlier. US futures contracts ES00,
NQ00,
slightly decreased, and the yield on the ten-year treasury TMUBMUSD10Y,
rose to 1.56%.
Bitcoin futures contract BTC.1,
climbed more than $ 55,000.
The graph
Bernstein Research’s portfolio strategies cut the economic cycle into four different parts and tested how well different investment style factors performed. Value stocks performed best in the current ‘recovery’ of the economic cycle.
Related story: Here’s what the 2016 Value Collection says about how far current progress can go
Random reading
Announcer John Oliver’s warning to Meghan Markle of 2018 before her wedding to Prince Harry proves the money.
Ended Dr. Seuss books sell for thousands of dollars in Canada.
There’s going to be a Hollywood movie made from the true story that a bear consumed a coffee bag of cocaine. For any ursine readers of this newsletter, it did not end well.
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