Copy

 

April brought more than showers. With those showers, the S&P 500 also grew about 4% during the month but basically all of that was in the first half of April. Not a bad growth cycle at all, condensed into just 2 weeks.
 

Capital Research Advisors Logo

Investment Advisory     Asset Management     Financial Planning

 forward to a friend  capitalresearchadvisors.com

4185-B Silver Peak Parkway, Suwanee, GA 30024

Tel: 770-925-1000 | Fax: 770-932-9685 | Email: info@capitalresearchadvisors.com



 

AS OF LATE   
   

     So, looking back to this time last year, March had seen a pretty horrific downturn for the markets and in April of last year, the big drop seemed to stop. April brought a rebound which recovered about half of the losses from March.
 

The full month of April for the S&P 500.

 

     Just as April did in 2020, April of this year brought about some strengths to stocks and was the best month in the last 5 months for US stocks. Remember though, even with the nice rebound in April of 2020, still by the end of October last year, stocks were still only back to break even and had made no money for stock investors in the first 10 months of 2020. The point being, markets move in big and small ways, not all of them in the favor of the buy and hold investor.

 

     What we saw in March of 2020 was a broad host of stocks falling in unison and yet when stocks begin to rebound the unity among stocks began to break up with many rising much quicker than others which seem to lag the market overall.

 

     We are seeing a good bit of this happening again. Some stocks are rising at a much faster pace than others and while this is a somewhat consistent theme over time there does seem to be a larger spread between some stocks this year and the remainder of the pack.  The remainder of the pack do not really seem to be able to show their strength(s) just yet. This is an impact across many different industries for a variety of reasons but much of it is directly related to a labor shortage for companies. (More on that later.)

 

     In the chart below, notice how the NASDAQ, the leader every month in 2020, is now the laggard in 2021. Also note, in the middle of the pack, ultra large stocks, as noted by the Dow Jones Industrial Average have basically matched the same performance of small stocks, as noted by the Russell 2000.


The Five Leading Stock Indexes in the U.S. The differences in them this year are quite notable!
 

     Twelve months ago, the jobs were few and the number of people looking for work was massive.  This year the whole situation has reversed and has turned the job market on its head! Whether it is production workers in manufacturing or transportation workers delivering raw products to manufacturers or delivering finished products to markets, labor shortage is a massive trouble spot for businesses currently.

 

     During the final weekend of the month of April, I spent some time with a CEO of a medical staffing company. He explained the shortage of workers is extremely problematic in the medical staffing business currently.  He said there have been times in the past in order to hire a nurse, they had to pay a hiring bonus. Sometimes that ranged between $1000 to $2,500. He went on to say that now the minimum hiring bonus is $5,000 and it often gets negotiated up from there. He also indicated that for certified nursing assistants (CNA), they had to pay $100 fee just for the qualified applicants to show up for the interview. He added that from June 30th of last year they are now having to start CNAs at a 13% premium to what they were paying the CNAs per hour just 9 months ago. He also added, “Even with the interview bonus and the increase in pay, they're still really hard to find”.

     In an interview with the COO of a large food service group he disclosed that each Friday they evaluate the volume of need for new employees. Then they compare that to the number of applicants they have had during that same period.  From there they set the new starting wages for the upcoming week and it has risen every week in the month of April.  They also have a bonus for new employees who stay for a full six weeks and are now contemplating adding an additional bonus for those staying to the twelve-week mark!  They are not sure they will need this since most new employees have not been there twelve weeks yet.  

     Additionally, some of the perks they have historically made available to customers are likely going away due to two factors.  1) the rising costs of those perks/benefits to customers and 2) the fact that finding labor to make those perks/benefits available to customers regularly just is making the costs of such items prohibitive!


     The CRA viewpoint is that certain segments of equity/stock (bonds are a whole different ball of a tangled mess) markets are on a great track and will comeback from the pandemic in great fashion and in the longer run be in better fashion to move forward than before.  We have also been clear that some portions of industry will not heal well, and many companies will actually fail, close their doors and be gone.

 

    (I did see an ad for the world's largest seller of hamburgers offering $50 for a completed application coupled with a completed interview starting at $14/hr. $14/hr. to help sell $3.90 hamburgers...)

 

    We can see below that the number of people out of work but looking for work has dropped by more than 90% in 14 months!

Yet we cannot find enough employees in the U.S. 

 

     While the above changes in of jobless claim is for the last 16 months, they only count those persons actively looking for work! If someone has left the job "seeking" market due to sickness, having to care for someone else, their former company has closed and it is hard for them to relocate, etc., they are automatically not counted at all and are dropped from this chart. Also, for the U.S., approximately 140,000 working adults died in the last 16 months so naturally they are not on this chart either. That too is a bit misleading since about 97,000 employed adults leave the full-time work force each year due to death. 
 

    So, it seems this whole inflation topic stays on the forefront of many minds as of late.  The head of The Federal Reserve as well as the Secretary of the Treasury are talking (and squawking) about the clear signs of inflation (though there is some attempt to downplay it all).  The Federal Reserve thinks it is "transitionary" (it won't last long) and yet the new Secretary of the Treasury thinks we will have to start raising interest rates to try to cool the economy. Historically the Fed has acted much too slow and much too conservatively to keep inflation at bay and then........ then they do too much on the back end and overshoot inflation only to have to hit the brakes hard late in the process. It would be hilarious if it were not so costly to so many (the poor are hurt the worst during inflationary times). 

     A few of you might be wondering what is the big deal about inflation and how much of an impact can it really make? 

     Briefly, before we look ahead, let's click here and look back to a graph from last month which referred to some inflating areas of our economy. Bear that in mind as we look at this next graph. 

     Here we see some key areas of commodities which are having rapid price elevations.  First, it seems that a cup of "JO" will continue to rise for the coffee junkies of the world.  The world's largest seller of coffee will soon raise prices again due to the price of coffee rising on the world market,
shown in our graph. Up more than 15%.

     Housing costs are still rising due to limited supply of homes (remember all those articles about millennials still living at home?  It seems they now want to move out and get their own place) as well as the skyrocketing price of lumber (wood), shown in the graph as well. Up 20% since January 1 and more than 40% in the last six months.

     Next we look at
copper which is used in the manufacturing of so many things.  The device you are reading this email on and the construction boom going on around the world currently is keeping a tremendous demand on the supply of copper. Up more than 30% itself and the demand for it keeps growing!

     Lastly in our graph,
there is corn.  Such a staple in so many food areas.  Corn is up more than 40% in 2021 more than 60% in 6 months. If Poor Richards's Almanack is accurate this year, rainfall in the mid-west will be low in July, August and September so beef prices could keep rising


Below we see four major commodities which are outpacing the rise of the S&OP 500 so far this year by a wide margin.  Inflation is pounding on the door and is becoming unrelenting in some areas. 

     

    Each of these commodities and more will continue to move higher, each negatively impacting our wallets.


We remain watchful!


Ken Graves, Chief Investment Officer

Capital Research Advisors, LLC
 
 

 

CaptialResearchAdvisors.com 

Capital Research Advisors, LLC, 
4185 B Silver Peak Parkway, 
Suwanee, GA 30024 
770-925-1000 
800 -767- 5364 
All rights reserved

 


Mortgages (click here)  

 

There is still time!  The average interest rate for a single family home currently financed in the U.S. for more than 3 years is 4.1%!  Refinance that house and shove money into your pockets.

Mortgage rates.. we have been pointing them out for a long time.  Talking about them heading lower and lower and now, the great opportunities may be gone.  
There is an old saying about housing though,

"If housing subsidies, the economy dies."


WE SAID IT LAST MONTH! In our newsletter last month the following statement. With the ongoing onslaught of data, we stand by this completely. All of it.

"Barring some new, unforeseen interruption, this economy is going to run. Not all at once but it will run."



Your Life Can Be Your Bucket List.

 

I am 98.
 

I was born in 1922. I have lived through The Great Depression, a world war, the tumultuous 1960s, September 11, the loss of two sons and most recently the love of my life.
 

All along the way I knew that at some point I would start writing books and telling stories. In my late 80s I began with a memoir. I followed that with a trilogy of gritty crime novels loosely based on my father’s true to life story. Other books followed.

 

Contrary to the conventional wisdom about age, my late 80s and 90s have been by far my most productive and satisfying time of life. In a national radio interview a few years ago I was asked about my writing process. I told the interviewer that I go into my writing room every morning and meet with my characters and let them tell me what they are going to do that day.

 

I am blessed with a great team of advisers and experts who I also listen to. They help me accomplish my goals and they have my best interest at heart. I listen carefully to them. To the culture that worships youth, not so much.
 

So, who are your characters? Who are your advisers? Who are you listening to? It’s important because what you listen to and give credence will become what you believe about yourself and the world.
 

Retirement and aging can be a daunting thing, especially if you have been a high achiever. The idea of leaving that environment where you have lists and accomplish great things every day to one where you have to make your own agenda is challenging. But I am here to tell you that you can write your own story.

Here are a few tips on how to accomplish that:

 

Change the way you see aging and retirement. 

Getting older is actually a great thing in many ways. You have more time. You are comfortable in your own skin. You don’t feel like you have anything to prove like you did when you were younger. There’s no competition really except competing with yourself. You are smarter than you have ever been. You have the wisdom that years bring. You have more and deeper relationships.

People will take your calls because of your relationship and reputation. You have more options. Choose among them and ask for help to accomplish them. Don’t believe the myths about getting older. They are only true if you choose to buy into them.

Retire Early. Build Wealth. Feel Secure.

 

Dream a little dream. Remember when you were a kid and you sat out on the grass in your yard and looked at the sky and daydreamed about doing something amazing someday? Well, what did you dream about? I dreamed of being a writer. I even wrote an article way back in 1963 for The Saturday Review about writing and being published. Then, when I reached a certain point in my life where I had time and energy and ideas I got started. I turned off the TV and started chasing my long-held dream.
 

Re-connect to your childhood or your young adult self for a little while. Try to remember what it was like to think the world is your oyster and anything is possible.
 

Find helpers and encouragers. If writing is your thing, go out and find a writer’s group in your town. Meet with other authors. Hear their writing stories.
 

If you want to paint, go take a painting class. Set up a room in your house so that it’s easy to paint and hard to ignore it.
 

A friend of mine is handy and loves fixing things. He hung out a shingle and found more work than he could do. He chooses the projects he likes and says “no” to the rest. When he doesn’t know how to do something he asks his ‘advisers’ at Home Depot or checks it out on YouTube.

 

Believe you can. There are a lot of people out there like me these days. The world of aging is changing every day. We are all living longer and healthier lives. Surround yourself with young and old friends who love what you are doing and tell you that you can. Avoid the naysayers who think you are too old because they are wrong.
 

Start having success in whatever you decide to do. Success is the jet fuel to keep going.

Your life is an amazing story. It doesn’t end when you stop working at a formal job, nor should it. In many ways, it just begins.
 

Babette Hughes grew up in the time of Prohibition and bootleggers. Her father was one of the first bootleggers in the country, and was murdered by the Mafia in a turf war at the age of 29. Babette was just 2 years old at the time. She is the author of the Kate Brady series, as well as several other books.

 

 

 forward to a friend 

This report/summary is to be considered general in nature, reflects our opinions and is based on our best judgment at the time of writing. All information is deemed to be from reliable sources but we cannot guarantee its accuracy. No warranties are given or implied as to their promise of occurrence in the future or their accuracy. It is the readers’ responsibility to decide if any of our opinions are suitable for their own individual situation, and in what manner to use the information. No specific decisions should be made based on this report. These opinions should not be construed as a solicitation for any service. Past performance does not guarantee future results. The opinions expressed in this piece are those of the author and do not necessarily reflect the opinions of Ceros Financial Services, Inc.

Securities offered through Ceros Financial Services, (Not affiliated with Capital Research Advisors, LLC) 1445 Research Boulevard Suite 530 Rockville, MD

(866) 842-3356 Member FINRA/SIPC

 unsubscribe from this list | update subscription preferences 

IMPORTANT DISCLOSURES

All the information in our newsletter is believed to be reliable and much of it is based on the proprietary research of Capital Research Advisors, LLC itself. However, because of the volume of information we review and the frequency with which it changes the information can only be provided as is on a best efforts basis. The information is not intended to be actionable investment research and therefore should not be used as such. Sources for this information include, but are not limited to, CBS MarketWatch, Big Charts, Bloomberg, Streetscape, Money/CNN, Futuresource, Stock Chart, Yahoo Finance, AmiBroker and http://www.newyorkfed.org/

CaptialResearchAdvisors.com

Capital Research Advisors, LLC,
4185 B Silver Peak Parkway,
Suwanee, GA 30024
770-925-1000
800 -767- 5364
All rights reserved







This email was sent to <<Email Address>>
why did I get this?    unsubscribe from this list    update subscription preferences
Capital Research Advisors, LLC · 4185 B Silver Peak Parkway · Suwanee, GA 30024 · USA

Email Marketing Powered by Mailchimp