Stocks continued to grind higher this week. Strong corporate earnings are a quietly positive story for 2021, as 83% of companies have beaten their fourth quarter 2020 earnings estimates. That many companies besting expectations is a sign that analysts may have vastly underestimated the earnings recovery in play in the markets. It will take time, however, to determine if the earnings outperformance is a blip or part of an ongoing trend. Investors’ spirits continue to be buoyed by hopes for an economic recovery and, as a result, the price of oil has been on the rise. This week Brent Crude rose above $60 per barrel for the first time in a year and West Texas Intermediate (WTI) moved into the high $50s. Oil prices have benefited from higher expected economic growth combined with continued supply restraint from OPEC and others. However, part and parcel with increasing growth expectations and oil prices come concerns about rising inflation. One reason for these inflationary concerns is the looming potential of a significant fiscal stimulus plan. In contrast with prior early stage recoveries, the personal balance sheet for many consumers is already in good shape. While stimulus is no doubt needed in a number of pockets within the economy, given that the recovery is already underway, pricing pressures could emerge. The bond market in particular has been pricing in inflation expectations, with the yield on the 10-year Treasury bond reaching 1.18% this week, a rather significant jump from its low of 0.54% last summer. The other big story this week was that Tesla put $1.5 billion worth of the company’s cash into Bitcoin and announced that it plans to accept Bitcoin as payment for its vehicles in the near future. While some may view this as further legitimizing Bitcoin and cryptocurrency, the underlying machinations and uses of cryptocurrencies are still widely misunderstood and unregulated.* Stay safe and be well. Snow storm in the forecast for us Washingtonians..... Bryan Hendrickson, Financial Advisor *Investments in Bitcoin and cryptocurrency are highly speculative investments that involve high degrees of risk, including a partial or total loss of principals. Generally speaking, these types of investments are not suitable for any investor that cannot afford to lose their entire investment. Market comments are based on the S&P 500 index which is unmanaged and cannot be directly invested into. Past performance is no guarantee of future results. Investing involves risk and the potential to lose principal. The information provided, including references to individual companies and cryptocurrencies are for general informational and educational purposes only and is not a recommendation of any kind or investment advice. Forward-looking statements are subject to numerous assumptions, risks, and uncertainties, which change over time and cannot be guaranteed. |
Hendrickson's 2/11 Market Update
