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Updates & Insights (3/12/2021) Thumbnail

Updates & Insights (3/12/2021)

The Inflation Question

 Inflation concerns have re-entered the conversation recently in a big way over fears that 2020’s stimulus policies could make higher inflation inevitable. By definition, inflation is simply the decline of purchasing power over time: one dollar buys less than it used to. It’s commonly measured by the price movement for a basket of goods and services that represents the expenses in an average person’s life—rent, gasoline, food, haircuts, and so on. If the price of the basket is rising, that’s inflation (and if it’s falling, deflation). Both high inflation and deflation are bad for different reasons, so the Federal Reserve targets an average ~2% inflation rate over time. This is their “goldilocks” level—not too hot (the economy is overheating!), not too cold (demand is crashing!). But what causes inflation? Click here to find out.

COVID-19 Stimulus Bill Signed into Law: What the New Stimulus Bill Means for You

Tax credits and other implications of the American Rescue Plan Act

The signature feature of the recently enacted American Rescue Plan Act of 2021 was a fresh round of stimulus payments, with checks of up to $1,400 to be issued to qualifying individuals, both adults and children. But that’s not the only effect it might have on your financial planning for this year. Here is a thumbnail guide to ARPA’s tax credits and other benefits that you may be able to take advantage of.

Market Highlights: 

  • Slight Claims Beat: The weekly initial jobless claims came in at  712,000 vs. the Briefing.com consensus of 725,000. Continuing jobless claims were down to 4.1 million. Although the lockdown restrictions are beginning to ease in patchwork fashion across the country, there is not yet enough momentum to see spillover effects in the labor market. Still, with the vaccine rollout gaining steam and additional vaccine supply coming online, there are hopes that labor market impairment will begin to show meaningful improvement soon.
  • US-China Meetings on Docket: US and China are set to hold first face-to-face meetings since the US Presidential election. Top officials are set to engage in a range of issues, including subjects where there are deep disagreements. The meeting is not seen as particularly important from a broad market perspective, but will likely be a key first step in addressing tensions. Elsewhere, The Chinese Semiconductor Industry Association (CSIA) has agreed to work with its US counterpart on chip-related issues, including potential export controls and supply chain security.
  • Value Rotation: Value-focused ETFs have attracted inflows for ten straight weeks (with further inflows into equities expected post-stimulus checks) and when combined with the market rally, have seen a $100 billion jump in assets since November. Many have argued that value should continue to outperform growth as the economic reopening gains momentum. Credit Suisse also noted that the more economically sensitive names delivered stronger earnings surprises in Q4, while value is expected to beat growth by >800 basis points in terms of 2021 earnings per share growth. Also, the value trade has now recouped all of its pandemic losses.

Good News:  

  • Alaska becomes 1st state to remove eligibility requirements for COVID-19 vaccine: Officials in Alaska shared some good news on Tuesday evening, announcing that anyone 16 and older who lives or works in the state is now eligible for the COVID-19 vaccine. Alaska is the first state to drop eligibility requirements for the vaccine, giving access to all. Previously, health care workers, educators, and senior citizens were given top priority, followed by people who work essential jobs, those at risk for developing a serious illness from COVID-19, and anyone 55 or older. "Soon, this virus will be a preventable disease if people choose to get vaccinated," Dr. Anne Zink, Alaska's chief medical officer. 
  • Dentist Gives Orphaned Koala a New Foot: When a koala was found next to its dying mother, becoming an orphan wasn’t its only misfortune. The rescuer also noticed the marsupial was missing a foot. Luckily, of all people, a local dental prosthetist has been able to help this little one out. The story of how the prosthetist managed to save the day is an amazing one. The koala’s helper, Marley Christian from Friends of the Koala, was doing her best for Triumph the koala. She’d been using dolls’ socks to cover his stump—a birth defect. The socks seemed to help clear the discomfort Triumph appeared to feel whenever he tried to put weight on the limb, but Christian felt she couldn’t stop there. Click here to read the full story. 
  • Glow In The Dark Shark: A recent study off the eastern coast New Zealand confirmed that the five-foot-long kitefin shark (Dalatias licha) is a glowing species. Bioluminescence is a well-established evolutionary phenomenon among deep sea life, and it’s not the first time it’s been documented in sharks. The confirmation that the kitefin does in fact emit bio-light makes it the largest animal to display this characteristic.

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