In his Daily Market Notes report to investors, while commenting on the Dow’s strongest month, Louis Navellier wrote:
Dow's Strongest Month In 50 Years
Over the last 100 years, 50 years, and 20 years, the average gain for April for the Dow is 1.47% (3rd strongest month), 2.24% (strongest month), and 2.51% (2nd strongest month), respectively. The primary reason that April is a seasonally strong month is due to new pension funding. The other reason is that the better weather in April lifts investor sentiment, and this year buoyant sentiment is likely to be boosted by a strong earnings season against a weaker quarter a year ago. Second-quarter earnings growth is likely to be more pronounced, offering the prospect of a longer rally in stocks.
The Metolius Capital unlevered benchmark strategy has returned 5.6% for the year to the end of March. That's according to a copy of the firm's March investor update, which ValueWalk has been able to review. The manager's enhanced fund, which is 2.5x levered, has returned 14.1%. The funds returned 13.6% and 33.7% respectively in 2020. Read More
Economic Nirvana Abounds
The Atlanta Fed recently raised its first-quarter GDP estimate to a 6% annual pace (will be updated again on Wednesday) . . . The U.S. is expected to boost global GDP growth more in 2021 than China for the first time since 2005 . . . Since the U.S. is a robust consumer-driven market, the U.S. has the potential to keep pace and exceed China’s overall GDP growth in 2021, since the U.S. economy is about one-third larger than China . . . March retail sales are expected to be stunning due the $1,400 stimulus checks that were sent out by the federal government. The $600 debit cards that were sent out by the federal government caused retail sales to rise 7.6% in January . . . Consumer goods demand is so high that some container ships are waiting up to 8 days at some U.S. ports to unload their goods.
In addition to the 916,000 new payroll jobs were created in March, the January and February payroll reports were revised higher to 233,000 in January (up from 166,000 previously estimated) and 468,000 in February (up from 379,000 previously estimated). Further, hotels and restaurants added 280,000 new jobs in March as many states lifted Covid-19 restrictions.
Average hourly earnings actually declined 0.1% in March, which is indicative that many lower-wage workers are returning to the workforce. Many companies are starting to report labor shortages, so strong payroll growth is likely to spike in the coming months.
ISM Shows Strength
The ISM Manufacturing Index surged to a 37-year high (since December 1983) of 64.7 in March, up from 60.8 in February. This was a big surprise since economists were expecting the index to rise to 61.3 in March. The increase was driven by the manufacturing component and the employment component which presages an increase in U.S. manufacturing output.
The non-manufacturing index surged to an all-time high of 63.7 in March. The sharp rise in both indexes was exaggerated by February’s big freeze, however, that the indices rose in tandem suggest the spikes longer-term strength.