The U.S. government, under both the Trump and Biden Administrations, has provided unprecedented fiscal stimulus to help Americans weather the economic disruption from the coronavirus pandemic. however, the recent $1.9 trillion stimulus package has also clearly been aimed at addressing inequality by allocating billions in stimulus checks to lower- and middle-income households, expanding unemployment relief and directing tax credits to families with children. These large-scale fiscal transfers have the potential to boost demand more than a package of equal size, which was more directed at the rich since lower- and middle-income consumers spend, rather than save, a greater portion of their income. As we show in the chart, according to the BLS Consumer Expenditure Survey, in 2019, the top 10% of households spent only 65% of their income, saving the rest, while the bottom 90% spent essentially all of their income. Moreover, while the top 10% devoted just 20% of the dollars they did spend to goods, this percentage rose to 37% for the bottom 90%. As America imports a far greater share of the goods it consumes compared to services, fiscal stimulus aimed at the lower 90% of households also has the potential to boost imports. In short, the remarkable income distribution of the American rescue plan should make it particularly potent in hastening an economic recovery but also in leading to higher inflation and worsening our trade deficit.
— J. P. Morgan
Happy Monday. Good Luck out there this week.
Global Spotlight
China finalizes its sweeping Hong Kong electoral reform. From March 29-30, the National People’s Congress Standing Committee will meet in Beijing to finalize the details of changes approved March 11 to Hong Kong’s Legislative Council and the Chief Executive Election Committee that will limit the ability of the pro-democracy opposition to gain power.
The Biden administration might be nearing completion of its review of U.S. North Korea policy. According to unconfirmed leaks, the administration also plans to meet with national security officials from Japan and South Korea the week of March 29 to discuss the results of the U.S. policy review.
Chinese State Councilor and Foreign Minister Wang Yi finishes his multicountry Middle East tour on March 30. Wang will visit Bahrain, Iran, Saudi Arabia, Turkey and the United Arab Emirates in official visits, and will pay a working visit to Oman.
Five Indian state or union territories hold assembly elections over the next month as Indian Prime Minister Narenda Modi and his ruling Bhartiya Janata Party aim to expand their traditional power base. Assam, Kerala, Puducherry, Tamil Nadu and West Bengal are all holding elections.
OPEC+ holds an extraordinary summit. The April 1 meeting will see the group decide its May production policy, while its Joint Ministerial Monitoring Committee will meet March 31 to discuss compliance levels.
Stratfor.com
Economic Calendar
Briefing.com has a good U.S. economic calendar for the week. Here are the main U.S. releases.
- March Jobs Report
- Manufacturing PMIs
Briefing.com
Last Weeks Numbers
Review Last weeks numbers here.
This week I am looking at the chart that Jill Mislinski from Advisor Perspective to show what the SPX did last week. Notice the small, short squeeze at the end of the day Friday. Powell had some hawkish rhetoric earlier in the week and people that went short, had to buy em back at the end of the week.
Earnings
Source I/B/E/S data from Refinitiv
Aggregate Estimates and Revisions
- 20Q4 earnings are expected to be 3.8% from 19Q4. Excluding the energy sector, the earnings growth estimate is 7.8%.
- Of the 498 companies in the S&P 500 that have reported earnings to date for 20Q4, 79.3% have reported earnings above analyst expectations. This compares to a long-term average of 65% and prior four quarter average of 76%.
- 20Q4 revenue is expected to be 2.7% from 19Q4. Excluding the energy sector, the growth estimate is 6.1%.
- During the week of Mar 29, five S&P 500 companies are expected to report quarterly earnings.
If you find this post helpful, please pass along to the investment community. If you would like to see any additional information, drop us a line and let us know.
