Good Thursday AM,
Running late, here is a little insight from Dan Rawitch “Bonds are continuing a steady march up in price. The yield has now dropped 11 bps on the ten year so far this month. I did not like the selling that came across the tape, latterly every 15 minutes into the close. There is still a big seller out there that is taking the opportunity to dump shares on every spike in price. Traders call this overhang and it will continue to hold back big price increases until the seller is out. The good news is that so far this month there has been enough buying to offset the selling and allow for slow increases in price. The MBS has broken above a key resistance level, this only matters if we close above the resistance. If this happens, we could see a much bigger and faster climb in prices. The ten year has yet to crack its resistance but it is on its way to give it a try. The news was bond friendly with Jobless claims spiking once again. How can we consider an economy with 750,000 NEW people filing for unemployment each week? Are these people living off their stimulus checks, or are there not enough jobs? Either way, people out of work lowers production in our country and we cannot consume what we cannot produce. I remain bullish both short and long term, but be careful if we do not close above resistance today.” Layman’s terms. If we hold gains into the close, we float, if we lose ground, we lock.
Two quick quips to share…
- What’s the real plan here? It can’t be to tax 45 companies. Biden softens his tax plan aimed at highly profitable companies that pay little. A 15% minimum tax on companies that report large profits to investors but low tax payments would only affect 45 companies, according to details released by the Treasury Department.
- This does not end well. $814 billion — the amount of money, as of late February, that investors had borrowed against their portfolios, up 49% from the year before. That jump in borrowing marks the fastest annual increase since 2007. Retail investors on Robinhood and major players like Archegos Capital Management, which lost billions of dollars in days last month, have both contributed to the trend. Some analysts warn that run-ups in margin investing can contribute to market bubbles and that today’s levels of borrowing would hurt investors if the market has a downturn.
Please remain safe and healthy, make today great!