Good Monday AM,
Apparently, there is a new strain of Covid that is 70% more easily transmitted and has effectively all but closed the southern part of the UK including London. Travel in or out has been halted. Shipments in and out have been halted. I’ll leave it there, but you can tell what the implications are. The vaccine makers suggest that the vaccine will protect against the new strains as well, although I am not sure how they know about the efficacy against a new strain they have not yet tested. Stocks started way down in a hole over the news. The Dow down 500. Bonds started strong.. The 10-yr opened at .88%. Since then, there has been a reversal. The Dow has erased all losses and is now up on the day. The 10-yr is backed up to .93%. This will be a volatile week with trading slowing each day moving towards the holidays.
Last night congress came to an agreement on a $900b stimulus package that is a small part of a $14 Trillion budget (funny how no one talks about that last part). The details are not out yet.
Interesting that a report from the Federal Reserve finds that people born between 1981 and 1997 (aka Millennials) are not the free-wheeling, globetrotting, financially wasteful millennials that their elders have smeared them as. Realistically, millennials aged 30 to 34 have annual expenditures almost exactly on par with those born between 1965 and 1980. No, the Fed said a couple years ago, the reason millennials are so broke is because most came of age in a recession they did not cause and they were being paid less in real terms than their elders. The average full-time labor earnings of a millennial male were over 10 percent lower than a comparable baby boomer’s in 1978, and the median labor earnings of women household heads were 3 percent lower than those of comparable Gen X household heads in 1998.
The MBA shared the following insight/predictions for our economy and interest rates. Please take a look about half way down the page. When clients ask what the expectation is, now you have it.
There is really no reason to float at this point.
Please remain safe and healthy, make today great!
