Issue 10 – The Extra-Saving Is More of a Wealth Transfer than an Income Transfer. Historic Times Usher Historic Markets

A Snapshot of the Market for the Week Ended March 12, 2021:

President Biden’s message of hope on Friday that all adults will be eligible to get a vaccine no later than May hit the market, especially the tech sector. Yet the S&P 500 was up 101 points or 2.6% to end the week at 3943. The arrangement is clear. The equity market is seeing a sector rotation but not a correction as the bond market is seeking a new equilibrium in light of a vastly improved economic outlook. As bond yields rise, the greenback rallies, but when rates settle, the dollar falls. Based on past cycles, this pattern is likely to continue until the ten-year Treasury yields reach a level that is in sync with the long-term path of N-GDP. I’m placing my bets on 1.75% to 2.00% yield. On this one history is pretty clear that rising interest rates which are not central bank induced are not usually adverse to stock markets.


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By Hubert Marleau

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By Hubert Marleau

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