Equity markets continue to move with virus numbers globally. This week also saw a blockage to major worldwide trade routes in the Suez Canal.
States are beginning to open economies more freely in what will be a true test for virus spread. The first quarter of 2021 closes out this week with continued positive trends for the economy and global investment markets.
Lastly, the IRS confirmed this week they will "harmonize" the deadline for retirement account contributions (IRA, Roth, SEP) with the extended May 17th deadline for on-time filers.
Here's what I'm reading this week:
- The recent government bond yield spike has pressured tech stocks, yet BlackRock are still constructive on technology both on tactical and strategic horizons.
- The Federal Reserve made clear its intent to stay behind the curve on inflation, keeping short-term rates low for longer than they would have in the past.
- Investors will focus on U.S. nonfarm payrolls data this week to gauge the restart in the labor market.
The federal budget deficit hit an all-time record high of $3.1 trillion last year. Given the additional stimulus recently passed and the potential coming infrastructure bill, at some point there will likely need to be change to the tax code. First Trust sees the following as an initial possible first step:
Instead, we think the tax hike, which will likely be implemented on January 1, 2022, includes the following parts.
- 1. A top rate back up to 39.6%
- 2. A corporate rate, now 21%, close to 28%.
- 3. A top rate on capital gains and dividends at about 24% versus the current 20%
- 4. A lower exemption for the estate tax.
Savings Rates Have SIGNIFICANTLY Increased During the Pandemic -- Capital Group
“Once there’s an all-clear, I expect the desire to travel plus the ability for many consumers to spend means we could see a powerful recovery, even if it takes a few years,” says equity portfolio manager Lisa Thompson.
“This crisis is much different than the global financial crisis in 2008 or any of the other crises I’ve seen in my career. Today, looser fiscal policy, looser monetary policy, a very strong banking system and high personal savings rates could help drive a very sharp pickup in demand.”