Who would have thought, as the economy continues to gain steam, interest rates would go lower? As I did not expect a huge spike in rates, the decrease in the 10 Year US Treasury on March 31, 2021 from 1.75% to 1.46% last Friday is thought provoking.
Last week our Consumer Price Index (CPI) which represents food, energy, groceries, housing costs and sales across various goods, increased 5% from a year prior, the largest increase since August 2008.
“Core Inflation,” which strips out food and energy prices, rose 3.8% – close to the largest increase in 3 decades.
Interest rates staying resiliently low is suggesting that investors are believing Chairman Powell that “inflation is transitory.” This week the Federal Reserve meets, so the verbiage that comes from the meeting will be worth paying attention to, in light of red-hot data!
Lower Rates Push Technology (Growth Stocks) Higher
Value stocks, year-to-date, are significantly beating growth stocks, however the discussion is starting to change. Because rates have decreased, investors are starting to believe that post-pandemic, the economy will revert to the levels of growth last seen, December 2019, which is just fine by me.
Month to date, including last week, we are seeing at least a brief return to the growth stock leadership.
For the week, the Dow Jones retreated (-.78%), the S&P rose .43%, the Russell 2000 2.18% and the Nasdaq Composite 1.85%. Month-to-date, large growth stocks are up approximately 2.10% and large value is flattish, up .26%.
Over the pond, foreign stocks rose .34% with emerging market stocks flat up slightly, .09%
So, will growth or value lead us forward? My philosophy (for years), is to not overweight growth or value, however to have diversified client portfolios that closely equal-weight both categories. Keep in mind, market timing has proven time and time again to be very challenging.
A Huge Smile
My favorite part of the weekend, happened on Sunday around, 2:30pm. Michelle’s dad (Bob) had his fishing pole cast out in the bay. A bunch of us, including Bob, were sitting on the deck enjoying a gorgeous afternoon looking out at the water.
The pole started to bend a couple of times, then Bob walked without any rush to the fishing pole. You could tell the man has done this countless times. As he reeled in an 8-pound shark, everyone walked to the end of the dock to watch. The smile on Ellen’s daughters face, (Millie, age 3) was so special. To see a 3-year-old witness the live shark being reeled in, then held upside down by Bob was absolutely priceless.
Just reminds me, it’s really the simply things in life that are the most special!!!