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Updates & Insights (3/26/2021) Thumbnail

Updates & Insights (3/26/2021)

Active vs. Passive Investing: It's Time to Understand the Difference Once and For All 

Even with the onset of COVID-19, major online brokers saw new accounts grow as much as 170 percent in the first quarter of 2020. For investors, whether they are working with an advisor or taking a DIY approach, it’s important to understand the fundamental differences between two common investing practices - active and passive.  Click here to read. 

Legislative Movement

Democrats are moving forward in planning for Biden's upcoming approximately $3 trillion "Build Back Better" policy effort, which may involve almost $1 trillion in an infrastructure/clean-energy push and other spending.  Priorities include childcare, education and healthcare reform. Recent reporting suggests that Democrats are looking to pay for infrastructure through a hike in the corporate tax rate and offset other priorities with taxes on high-income individuals. Of note: centrist Sen. Manchin said yesterday that the plan should be paid for by tax increases, though Treasury Secretary Yellen testified yesterday that the US still has room to borrow.

Market Highlights: 

Claims Beat: Weekly initial claims came in at 684,000 vs. the 710,000 Briefing.com consensus. Weekly continuing claims came in at 3.9 million. There are some signs of improvement in labor market this week after a bad batch of February data. Vaccine progress and patchwork state reopening are likely beginning to lead to some service sector rehiring. Still, the reopening is likely to be slow and steady over the coming months, and one week doesn’t make a trend. Labor market data is increasingly important to monitor as the Fed has staked forward path on major employment recovery.

Fed-speak: There is not much new information from Fed Chair Powell's appearance before House Financial Services committee. Powell reiterated that the Fed will communicate tapering well in advance but also reiterated that highly accommodative policy is appropriate right now. Elsewhere, Dallas Fed President Kaplan (non-voter) told CNBC he advocated for a 2022 rate hike, though he said the Fed isn't ready to be less accommodative. Fed Governor Brainard reiterated that the Fed will be "patient rather than pre-emptive". St. Louis Fed President Bullard (non-voter) said he expects fast economic growth this year, and doesn't see inflation falling much in 2022.

Market Response: Although equities sold off following Powell’s testimony, the bond market continues to stabilize. The 10-year Treasury yield eased down for a third straight day to 1.64%, from 1.68% on Monday. Expectations for an economic recovery have pushed bond yields higher in recent weeks, posing a challenge to tech companies and other industries that have benefited from low borrowing costs. Metrics for forward inflation expectations have also paused thus far this week, though remain near multi-year highs.

Good News: 

Chimps From Two Czech Zoos are Zooming Each Other Every Day: If there was anyone in our society who didn’t know how to use Zoom, they do now. The demand for the superior video call platform has obliterated all others over the course of the pandemic, and its popularity is even crossing the species boundary. Chimpanzees at two Czech zoos are, like the rest of us, staying in contact via Zoom, as the zoo staff seek to give them some company and stimulation during the long hours of isolation. 

Southwest Air Employee Goes to ‘Infinity and Beyond’ to Reunite Buzz Lightyear With Excited Toddler: When duty calls, Buzz Lightyear is honor-bound to answer. At least that’s what one mom told her distraught toddler when he accidentally left his Buzz action figure behind on an airplane in the flurry of an unexpected, last-minute trip. While the senior members of the Davis family didn’t expect to see Buzz again, the plucky astronaut made the return trip home in style—thanks to outstanding efforts by the Southwest airlines ground crew at Clinton National Airport Little Rock, Arkansas.

After Illegally Bulldozing Historic London Pub, Developers Were Ordered to Rebuild it ‘Brick by Brick’: A favorite neighborhood pub, which seemed set by to be turned into a block of apartments by developers, has been saved by a council ruling that designated the old watering hole as a historic building. Built in Maida Vale in the 1920s, the Carlton Tavern, with its distinctive tiled sign, had one of its walls sheared clean off by bulldozers. Reporting on the story, James Tapper at the Guardian explains this is a classic trick played by real estate developers—to intentionally damage buildings in order to have them condemned. This time however, the culprits have been ordered to rebuild the Carlton’s wall “brick by brick” to its original state, something which has left the campaigners who fought for the rights of their tavern “flabbergasted.”

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