A combination of stronger economic growth, declining interest rates, and expectations that the economy will get even better pushed the U.S. stock markets to another set of record highs this week. As fears of higher bond yields continue to fade, sectors that do well under lower interest rates took off this week. Commodities in general came back in favor and even the greatest laggard of all—gold—saw some fresh demand. That’s right, the precious metal I least favored at the beginning of the year actually came to life, although it has a long way to go before recapturing its former luster….
Insights & Advice
BMM Articles
A highway of opportunity
Most Americans seem excited and hopeful about the prospects for the Biden Administration’s infrastructure plan. Local politicians as well as their construction buddies are salivating at the possible promise of getting their share of this multi-trillion-dollar prize. But looking beyond the pork barrel, we might want to consider how innovation and technology could help America regain its first-class status in infrastructure. As of 2019, the United States is ranked 13th in the quality of its infrastructure, after countries like Singapore, Japan, Germany, and the United Kingdom among others. Of course, it may not be a fair comparison since the U.S….
Hope for parents of college bound students
Jobs and jabs
Bank of America (BoA) has been tracking the credit card use of clients who received the stimulus payments authorized by the American Rescue Plan (ARP). For the seven days ending March 27, 2021, aggregate credit card spending was up 82 percent from a year ago. Where is the money being spent? Everywhere. Furniture stands out, which reflects the heated home-building industry. And then electronics, clothing, airlines, home improvement, and restaurants (in that order of year-over-year growth). The two-year percentage change tells a better story because the world came to a halt the week of March 27, 2020. For the seven…
Stocks grind higher as bond yields retreat
April is usually a good month for markets. Historically, it is one of the three best months of the year for equities. We all know what happens in May (‘sell in May and go away’) but we will worry about that later. Over in the bond market, the bond vigilantes may have started to doubt their conviction that inflation is a fait accompli and so yields must go up. This week, yields declined a bit, which gave a boost to some sectors (gold and silver, for example), while banks pulled back a little. But Friday’s Producer Price Index report for…
Water is becoming a rare commodity
America is running out of water. During the next 50 years, the nation could see its fresh water supply reduced by one third. But if you think that’s a problem for the next generation, you are wrong. This year alone, as many as 83 out of 204 U.S. water basins could begin to feel the brunt of these shortages. And don’t think these shortages will only affect those regions that we would expect to be dry. The central and southern Great Plains, the Southwest and central Rocky Mountain states, as well as the South, Midwest, and parts of California are…
How the Berkshire economy emerges from the pandemic
On March 11, 2020, the World Health Organization (WHO) declared COVID-19 a pandemic, and the economy rapidly changed for the worst. The impact on Berkshire County was larger than that of the nation. According to Moody’s, the gross metro product of Pittsfield was down 6 percent in 2020. That compares to a 3.5 percent decrease for the United States’ gross domestic product (GDP). On a relative basis, employment in the Berkshires fell more than the nation and has been recovering more slowly. Notably, payrolls in the vital tourism sector are down significantly. According to Google Community Mobility Reports, 2021 year-to-date…
Preparing Teens for Financial Adulthood
Learning how to properly manage money is a crucial life skill that can take years to develop. For teens who may be earning an income for the first time, there can be a steep learning curve when it comes to financial literacy. Laying the foundation for this education early can help establish healthy financial habits that carry into adulthood. You can guide your teen by teaching them the basics of money management at home to help them build a strong foundation of financial literacy and avoid financial pitfalls along the way. Foster a habit of saving Whether it’s an allowance…
CAPITAL IDEAS: Where is my ‘stimmy’?
A “stimmy,” according to Merriam-Webster, is a slang term that refers to the stimulus payments made to Americans as part of COVID-19 relief packages. There’s not a lot of good data on how Americans have, so far, spent their 2021 stimmies. As an investor, it’s a good idea to consider where some of that roughly $400 billion in checks from the $1.9 trillion American Rescue Plan (ARP) will flow. Perhaps it will go where it has gone before? An October 2020 Federal Reserve study found that 29% of the first round of stimulus checks were spent. Of the amount spent, nearly two-thirds…
Will infrastructure spending boost clean energy stocks?
Renewable energy stocks were all the rage last year. This year, however, not so much, with clean energy funds taking hits of between 25-50%. Will President Biden’s proposed $3 trillion infrastructure bill breathe new life into this sector? President Biden ran on a platform that included the build out of an infrastructure plan that would “achieve net-zero emissions, economy-wide, by no later than 2050.” By the time of his November election last year, investors had bid up the clean energy sector, which includes everything from electric cars and clean water to solar and wind power, by over 200% in some…
CAPITAL IDEAS: What a year
“It was the best of times, it was the worst of times … it was the season of light, it was the season of darkness, it was the spring of hope, it was the winter of despair.” — Charles Dickens The year 2020 was dreadful. Our neighbors, friends, and family lost jobs as the economy struggled with COVID-19. Tragically, some of us lost loved ones to the virus. I keep those losses in mind as I review the year for the stock market. My intention isn’t to spike the ball in celebration of how well the stock market performed. Instead, it…
Cross currents confuse investors
You would think that with a $1.9 trillion spending package, an increasing rate of coronavirus vaccinations, and a potential $3 trillion infrastructure package waiting in the wings, the market would be at record highs. The fact it is not should tell you something about the indecision plaguing investors. When good news fails to impress, it usually means stocks (or at least some stocks) are headed lower. That should come as little surprise to readers. I advised investors to raise cash last month in preparation for what I see as a buying opportunity this month. The challenge: when do you put…
Cannabis catalysts coming soon
Last week, a bipartisan slate of U.S. Senate co-sponsors introduced the Secure and Fair Enforcement Banking Act (the SAFE Act) that would allow the cannabis industry to tap the federal banking system. If passed, this could be a game changer for marijuana companies. The SAFE Act has already been passed by the House back in September 2019 but was never brought up for a hearing, much less a vote, in the Senate. The bill’s author, Congressman Ed Perlmutter, a Colorado Democrat, has introduced several versions of this bill many times over the last eight years. During that time, the legalization…
Financial Femmes
As a 24-year-old woman, when I tell people I’m a financial advisor, I sometimes get some squints and questioning looks. Or even a face that suggests “aw, how sweet.” Little do these people know, females are a massive presence in the finance space. Yet, according to Cerulli.com, 18.1% of financial advisors are women. Do those statistics represent what you see when you look around your community? Of course not. So why is the financial field so heavily dominated by white men? Well, this may come as a shock to you, but much of the world is as well. Women couldn’t…
How the Berkshire economy emerges from the pandemic
On March 11, 2020, the World Health Organization (WHO) declared COVID-19 a pandemic, and the economy rapidly changed for the worse. The impact on Berkshire County was larger than that of the nation. According to Moody’s, the Gross Metro Product of Pittsfield was down 6% in 2020. That compares to a 3.5% decrease for the country’s Gross Domestic Product (GDP) as a whole. On a relative basis, employment in the Berkshires fell more than the nation and has been recovering more slowly. Notably, payrolls in the vital tourism sector are down significantly. According to Google Community Mobility Reports, 2021 year-to-date traffic is…
Rising rates create headwinds for stocks
The saga of rising interest rates in the long end of the U.S. Treasury market continued this week. Investors, fearing runaway inflation, sold both bonds and stocks. Will the selling continue, or is this a buying opportunity? It depends upon which asset class we are talking about. Yields on the 10, 20, and 30-year U.S. Treasury Bonds, I believe, will continue to rise. How far? It is possible that the benchmark “Tens” could finish the year at 2%. In the short-term, however, I expect yields to fall a bit on profit-taking. Last week, I warned readers that the rise in…