In today\u2019s Steady\nInvestor, we look at what is going on in the markets and our key takeaways and\nquestions for investors to consider, such as:<\/p>\n\n\n\n
$1.9 Trillion\nStimulus Bill Becomes Law \u2013 <\/strong>The U.S. government has not shied away from passing\nmassive spending bills and running trillion-dollar deficits in an effort to\nusher the economy through the pandemic. This week, $1.9 trillion more dollars\nare being injected into the economy, which is likely to course its way through\nthe real economy and the capital markets, in our view. There\u2019s an old saying\nthat investors should not \u201cfight the Fed.\u201d Well, investors shouldn\u2019t fight the\nfederal government, either. All told, the government has spent nearly $5\ntrillion in an effort to keep the economy moving, which is probably about\ndouble what was actually needed, in our opinion. Nevertheless, economists\nexpect the latest round of stimulus \u2013 and the money that came before it \u2013 to generate\nthe fastest annual GDP growth the U.S. has seen since 1983. The notion of 5+%\nGDP growth in 2021 is not farfetched. In the bill are $1,400 checks to\nindividuals making under $75,000 a year, and $2,800 checks to married couples\nmaking under $150,000. Parents with children under 17 would also receive a\n$1,400 check for each child. The bill also has an extension of the $300\/weekly\nunemployment benefit boost, one-year of an expanded child credit, and billions\nfor schools, vaccine distribution, and state and local governments.1<\/sup><\/p>\n\n\n\n __________________________________________________________________________<\/p>\n\n\n\n Is the Market on Its Way to a Full Recovery?<\/a><\/strong><\/p>\n\n\n\n There will always be events that shift the market, such as,\nthe stimulus bill being passed and treasury yields driving higher. We are\ncurrently witnessing a very volatile market, and in times like these, investors\nmay emotionally attach themselves to news and headlines that affect their\nfinancial decision-making process. The market has always fully recovered, but\nwhat about this time? How soon will it recover?<\/p>\n\n\n\n Feeling uncertain about what\u2019s to come is normal, but don\u2019t\ngive into fear and panic! As difficult as it is to remain calm in this\nenvironment, focus your actions right now to better plan your financial future.\n<\/p>\n\n\n\n That\u2019s why we have put together a free investing playbook with insights and guidance to help you seek success when investing through these unprecedented times. If you have $500,000 or more to invest, get our free investing playbook today.<\/p>\n\n\n\n Download – <\/a>The Black Swan Investing Playbook<\/a>2<\/a><\/sup><\/em><\/strong><\/p>\n\n\n\n __________________________________________________________________________<\/p>\n\n\n\n What\u2019s Driving\nTreasury Yields Higher? <\/strong>We have written before about the sell-off in U.S.\nTreasuries thus far in 2021. When Treasury bond yields are pressured higher,\nthe prices of the bonds fall \u2013 hence characterizing it as a \u201csell-off.\u201d The\nbenchmark 10-year U.S. Treasury note started the year under 1% and is now\ntrading above 1.5%, a move many believe is tied to the expectations of an\neconomic recovery and possibly higher inflation in the coming months and years.\nBut there could be more at play \u2013 analysts and traders on Wall Street have\nnoted that the volume of Treasuries flooding the market is bordering\n\u2018out-of-hand\u2019 territory. Because of the trillions of dollars being spent by the\nfederal government during the pandemic (see story above), they are issuing debt\n(Treasury bonds) at a breakneck pace. As we know from macroeconomics 101, when\nsupply goes up quickly, prices tend to fall. It follows that net new supply of\n2- to 30-year U.S. Treasury bonds is on pace to reach $3 trillion this year, up\nfrom $1.7 trillion in 2020 and just $990 billion in 2019. Fed purchases of\nTreasuries are also going down, leaving the market with excess supply. Even\nstill, the demand for Treasuries remains relatively strong, which is at least\nensuring the market functions efficiently.3<\/sup><\/p>\n\n\n\n Cashing Out of Homes\n\u2013 <\/strong>Homeowners have been refinancing their homes to extract cash at levels\nnot seen since the financial crisis. In 2020, U.S. homeowners withdrew $152.7\nbillion in home equity, which marked a 42% increase from 2019 and is the most borrowed\nequity since 2007. This trend is worth watching, as it could be another\nindicator of consumer and investor sentiment shifting too far into \u201crisk-on\u201d\nmode. To be fair, home prices have risen solidly on the heels of rising demand,\nas millennials shift from big cities to the suburbs and increasingly consider\nbuying versus renting. Home prices rose throughout 2020, even as the pandemic\nbruised other parts of the economy. Some homeowners say they pulled cash to\ncushion against uncertainty, while others are opting to redecorate or remodel\nhomes. In the cases where homeowners are pulling cash out of homes to invest in\na strong stock market, there should be concern about too much risk-taking.4<\/sup><\/p>\n\n\n\n Life during the pandemic has not been easy and may have caused\nuncertainty when trying to plan your financial future. While it\u2019s difficult to\nremain calm, it\u2019s also important to take actions right now that have the\ngreatest potential to define your financial future. <\/p>\n\n\n\n That\u2019s why we have put together a free investing playbook5<\/sup>\nwith insights and guidance to help you seek success when investing through\nthese unprecedented times. If you have $500,000 or more to invest, get our free\ninvesting playbook today. You\u2019ll learn about seven time-tested guidelines to\nhelp you seek investing success.<\/p>\n","protected":false},"excerpt":{"rendered":" Historic stimulus bill becomes law, rising Treasury yields may signal inflation, homeowner refinancing hits record highs<\/p>\n","protected":false},"author":3,"featured_media":7426,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[71,73,1],"tags":[],"class_list":["post-9407","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-private-client-group","category-steady-investors-week","category-uncategorized"],"acf":[],"_links":{"self":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/9407","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/comments?post=9407"}],"version-history":[{"count":1,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/9407\/revisions"}],"predecessor-version":[{"id":10431,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/9407\/revisions\/10431"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/"}],"wp:attachment":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/media?parent=9407"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/categories?post=9407"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/tags?post=9407"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}