Private Client Group

April 26th, 2021

Early Inflation Signs, Job Market Strength, U.S. New Businesses Up

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Zacks Investment Management provides insight into the biggest news stories, and key factors that we believe are currently impacting the market such as:

Early Signs of Inflation Appearing – For most people, inflation is a pretty vague concept left to economists and market wonks. That is, until inflation hits home. U.S. consumers may start to notice price upticks on everyday items. Proctor & Gamble announced last week that it would start to charge more for household staples this fall, pushing prices of everyday goods like Gillette razors, diapers, and detergents higher. In providing rationale for higher prices, Proctor & Gamble cited a common factor influencing many companies across many sectors: higher costs for raw materials. With demand returning to the market faster than expected, and with supply chains still under strain, the cost of input materials like resin and pulp have been on the rise, and the cost of transporting goods is also feeling the pressure. Eventually, these costs tend to trickle down to the consumer level, and Proctor & Gamble’s announcement – which followed a similar announcement from their rival Kimberly Clark – is evidence of this price inflation taking place. Small businesses tend to feel these pressures more than multinationals, because small players tend to have less leverage to push back on higher costs and less leeway to pass those costs onto consumers.1

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Download Our Dean’s List of Investment Strategies!
 
You can’t predict how certain factors like inflation will impact the market. Yes, demand is returning faster than expected and more opportunities are growing, but you never know how the pandemic will continue to affect and shape the economy in other ways. Knowing the right investment strategy can make a huge difference in preparing your long-term investments for success and helping you navigate these challenging and unprecedented times.
 
To help you learn more about strategies that cater to different investment objectives, we have created our Dean’s List of Investment Strategies. Our Dean’s List describes four of our investment strategies that are ranked in the top of their respective classes by Morningstar (as of 3/31/21).2
 
If you have $500,000 or more to invest and want to learn about five of our top strategies, click on the link below.
 
Learn More About Our Top-Ranked Strategies!2
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Is the U.S. Jobs Market Stronger Than Most Think? Here’s a stat that suggests the U.S. jobs market has a long way to go: The country has 8.4 million fewer jobs than it did pre-pandemic, and the unemployment rate is north of 6%. But a closer look suggests that the U.S. labor market may be substantially stronger than many people think. In the Fed’s recently published Beige book, a common theme emerged: employers reporting shortages of workers and issues staffing. Areas with a shortage of workers include drivers, entry-level, low wage workers, child care, nurses, and information technology. In other words, a fairly diverse range of job openings, which one would think suggests that if someone really wants a job in the U.S. economy today, they could find one. The opposite appears to be true at the current moment, however. The labor force is estimated to be 5 million lower than it was before the pandemic, as many people dropped out of the labor force for a variety of reasons – boomers retiring, parents needing to stay home for child care, people fearful of catching and spreading the virus, and/or those who are content living on expanded unemployment benefits. The bottom line, in our view, is that the U.S. economy and jobs market may actually be on firmer footing than most believe.3

(Yet) Another Reason Not to Bet Against the U.S. Economy – Another area of the U.S. economy where perception may be disconnected from reality: new business formation. Many people may expect that the U.S. economy lost millions of jobs and hundreds of thousands of businesses permanently over the last year, creating a hole that could take years to fill. But the reality is that the hole is being filled far faster than most anticipate. Case in point: applications for new businesses hit nearly 1.4 million in Q1 2021, which marks the second highest quarterly total in over 15 years. Applications for businesses that could employ multiple workers also approached its highest quarterly tally, indicating that entrepreneurs have been emboldened by what they see as an opportunity for new growth. To be fair, some of these business start-ups may be because some people cannot find the jobs they want, or because they do not want to work in a crowded office or space with a lot of public interaction. But the takeaway is still clear: The U.S. economy is still pushing ahead, with innovators and new growth opportunities forming in the wake of a major recession. Another reason not to bet against the U.S. economy.4

The COVID-19 pandemic impacted markets and economies around the world, and now that we are finding new ways to adjust, you never know where the market will be headed in just a few months’ time. Finding the right investment strategy can make a huge difference when managing the highs and lows of the market. To help you learn more about strategies that cater to different investment objectives, we have created our Dean’s List of Investment Strategies.5
 
Our Dean’s List describes four of our investment strategies that are ranked in the top of their respective classes, according to Morningstar (as of 3/31/21).5 If you have $500,000 or more to invest and want to learn more about these strategies, click on the link below to see how they could potentially benefit you.

Disclosure

1 Wall Street Journal. April 20, 2021. https://www.wsj.com/articles/procter-gamble-will-raise-prices-in-september-11618916498

2 ZIM may amend or rescind the “Dean’s List of Investment Strategies” guide for any reason and at ZIM’s discretion.

3 Wall Street Journal. April 21, 2021. https://www.wsj.com/articles/the-job-market-is-tighter-than-you-think-11619006400?mod=searchresults_pos2&page=1

4 Census. April 14, 2021. https://www.census.gov/econ/bfs/index.html

5 ZIM may amend or rescind the “Dean’s List of Investment Strategies” guide for any reason and at ZIM’s discretion.

DISCLOSURE

Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.

Zacks Investment Management, Inc. is a wholly-owned subsidiary of Zacks Investment Research. Zacks Investment Management is an independent Registered Investment Advisory firm and acts as an investment manager for individuals and institutions. Zacks Investment Research is a provider of earnings data and other financial data to institutions and to individuals.

This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. Do not act or rely upon the information and advice given in this publication without seeking the services of competent and professional legal, tax, or accounting counsel. Publication and distribution of this article is not intended to create, and the information contained herein does not constitute, an attorney-client relationship. No recommendation or advice is being given as to whether any investment or strategy is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole.

Any projections, targets, or estimates in this report are forward looking statements and are based on the firm’s research, analysis, and assumptions. Due to rapidly changing market conditions and the complexity of investment decisions, supplemental information and other sources may be required to make informed investment decisions based on your individual investment objectives and suitability specifications. All expressions of opinions are subject to change without notice. Clients should seek financial advice regarding the appropriateness of investing in any security or investment strategy discussed in this presentation.

Certain economic and market information contained herein has been obtained from published sources prepared by other parties. Zacks Investment Management does not assume any responsibility for the accuracy or completeness of such information. Further, no third party has assumed responsibility for independently verifying the information contained herein and accordingly no such persons make any representations with respect to the accuracy, completeness or reasonableness of the information provided herein. Unless otherwise indicated, market analysis and conclusions are based upon opinions or assumptions that Zacks Investment Management considers to be reasonable. Any investment inherently involves a high degree of risk, beyond any specific risks discussed herein.

The S&P 500 Index is a well-known, unmanaged index of the prices of 500 large-company common stocks, mainly blue-chip stocks, selected by Standard & Poor’s. The S&P 500 Index assumes reinvestment of dividends but does not reflect advisory fees. The volatility of the benchmark may be materially different from the individual performance obtained by a specific investor. An investor cannot invest directly in an index.

Returns for each strategy and the corresponding Morningstar Universe reflect the annualized returns for the periods indicated. The Morningstar Universes used for comparative analysis are constructed by Morningstar (median performance) and data is provided to Zacks by Zephyr Style Advisor. The percentile ranking for each Zacks Strategy is based on the gross comparison for Zacks Strategies vs. the indicated universe rounded up to the nearest whole percentile. Other managers included in universe by Morningstar may exhibit style drift when compared to Zacks Investment Management portfolio. Neither Zacks Investment Management nor Zacks Investment Research has any affiliation with Morningstar. Neither Zacks Investment Management nor Zacks Investment Research had any influence of the process Morningstar used to determine this ranking.
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