It’s Spring and economic recovery is in the air.
Last week, the Bureau of Economic Analysis reported the U.S. economy grew at a 6.4 percent annualized rate for the first three months of 2021. While that’s good news for companies and workers, asset managers are checking their expectations.
The stock market reflects what investors think may happen in the future. During the past year, major U.S. stock indices moved higher as investors anticipated vaccines and economic recovery, reported Patti Domm of CNBC. Since its March 2020 low, the Standard & Poor’s 500 Index has gained 88 percent.
Amidst strong signs of recovery in the United States, some asset managers are positioning for “inflation and tapering,” according to a source cited by Naomi Rovnick of Financial Times. “Investors have topped up their cash holdings at the fastest rate since March 2020 as debate intensifies over whether stock markets will continue rallying now the U.S. economic recovery from the pandemic is firmly under way.”
Investors were feeling cautious last week, but there were no signs of tapering, which occurs when the Federal Reserve begins to buy fewer bonds. On Wednesday, the Fed left its supportive policies in place.
When the Fed begins to change course and rates move higher, equity market valuations may adjust. “The main worry for stocks is that higher bond yields translate into lower equity valuations. Higher yields reduce the current value of future profits and therefore can reduce earnings multiples,” reported Jacob Sonenshine of Barron’s.
Profits were strong during the first quarter of 2021. U.S. companies continued to report exceptional earnings last week. With 60 percent of firms in the Standard & Poor’s 500 Index reporting, the blended earnings growth rate was 45.8 percent. More than 8 of 10 companies have reported better than expected earnings, reported John Butters of FactSet.
Major U.S. stock indices finished the week flat to down. Rates on 10-year Treasuries edged higher. (The one-year numbers in the scorecard below remain noteworthy. They reflect the strong recovery of U.S. stocks from last year’s coronavirus downturn to the present day.)
Estimates Suggest There Will Be 25 Million By 2100.
Take a guess: electric vehicles, household robots, wild elephants, centenarians, or streaming services per household?
- Electric vehicles. There may be far more than 25 million – estimates suggest 145 million – on the road by 2030.
- Household robots. Domestic robots that offer companionship or help with tasks like lawn mowing, vacuuming, and mopping are becoming popular. Estimates suggest about 55 million domestic bots will be sold next year.
- Wild elephants. From 1989 to 2018, the number of elephants in the wild doubled to 34,000, reported Earth.org.
- Streaming services per household. Currently, the average number of streaming services per household is four. There’s room for growth, but probably not that much.
- Centenarians. The world is in the midst of a longevity revolution and, by 2100, there may be as many as 25 million centenarians – people age 100 or older – around the globe, according to a source cited by Science Direct.
The world’s 65 and older population is growing rapidly.
According to the most recent population estimates from the United Nations, “…1 in 6 people in the world will be over the age 65 by 2050, up from 1 in 11 in 2019. The latest projections also show the number of people aged 80 or over will triple in the next 30 years. In many regions, the population aged 65 will double by 2050, while global life expectancy beyond 65 will increase by 19 years.”
Longevity deserves more thought than it often receives. It is an essential part of every financial and retirement plan, influencing savings goals, investment choices, and retirement income levels. Yet, people often underestimate their potential longevity.
In the United States, the average life expectancy at age 65 is 19 years, according to the Centers for Disease Control (CDC). Consequently, many people assume they should plan to live to age 84. However, the CDC estimate is an average. Half of 65-year-olds will live beyond age 84. When it comes to planning for the future, having above average expectations for longevity may be a good idea.
America Loves (electric?) Pickup Trucks
It’s true, 5 of the 10 bestselling vehicles in 2020 were pickups (20% of all vehicles sold in the US last year were pickups). Plus, the F-150 has been the bestselling vehicle for 39 straight years.
Will electric trucks attract pickup buyers? Probably. Telsa has already received hundreds of thousands of preorders for its Cybertruck, and Rivian will deliver its first R1T pickups to customers this June. Ford plans to begin production on its electric F-150 early next year. And Toyota is bringing an electric powertrain to its pickup line.
More and more people report a willingness to buy electric, and electric trucks perform so well, they could attract people who might not otherwise buy anything electric.