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with Rob West
Economic Update: Booming with Mark Biller Wednesday, April 28, 2021
Investing icon John Templeton once wrote that it’s dangerous to think “this time is different.” But it’s also true that no one alive has ever before gone through the past year’s market conditions. Dramatic market fluctuations and unprecedented government intervention has left many investors wondering “Where are we now?” Today I welcome investing expert Mark Biller to help answer that then it’s your calls at 800-525-7000.   ·      It's been over a year since the COVID shutdowns began … and already six months since the positive vaccine announcements re-ignited the U.S. stock market. We’re three months into those vaccines starting to be administered (in size) here in the U.S. A lot of people have strong feelings about each of those subjects! ·      Mark wrote an article earlier this month that simply looks objectively at a handful of important data points that paint a pretty convincing picture of where the U.S. economic recovery stands. And then from there, he translated that to the more difficult challenge of relating what that means for our investments in the months ahead. ·      So our big-picture framework since the vaccine news came out last November has been that, starting in the 2nd quarter of this year, we were likely to see really strong economic and market data. That was based largely on the fact that we would hit really easy year-over-year comparisons from last year, plus we’d finally see a broad economic re-opening and we’d have all the recent massive government/central bank support. ·      As the March data started rolling in earlier in April, that shifted from a future possibility to a present reality. The numbers have started to rip higher and we haven’t even gotten to the heart of the second quarter yet. ·      March nonfarm employment showed an increase of +916k jobs, up from February's already significant +379k. Expectations were +660k. The jobs recovery is in full swing (although there's still a long way to go) ·      The March growth number for US “goods manufacturing” was the highest in roughly 40 years.  ·      On the “services” side of the economy … March growth was also surprisingly strong. This was really interesting because everyone expected it would take longer for these services growth numbers to pick up again, but these numbers indicated services growth was already picking up fast. Again, this was "highest in 25 years" type stuff. ·      Finally, US Consumer Confidence was up big in March vs February. That shows the re-opening optimism out there among normal folks. ·      Those four numbers hit the most important points: employment, goods, services, and consumer confidence. All flying higher and beating expectations. ·      The economy does not equal the stock market. It's natural to think that a booming economy is going to be great for stocks, but it's important to recognize that stocks have been pricing in this economic re-opening for many months already.  ·      Eventually the market is going to look past the easy comparisons of a year ago and the numbers are going to start looking weaker relative to the booming numbers we’re seeing now. And when the economy is largely re-opened, while that’s great, ironically the market loses the obvious optimistic future story that has propelled it over the past year. ·      The huge wild card in all of this is the massive support provided by the government and the Fed. With the money supply growing so fast, it’s reasonable to wonder if a big part of the reason all kinds of asset prices are rising is that they’re just being repriced higher to adjust for less valuable dollars.   Mark Biller, executive editor at Sound Mind Investing, has been our guest today. You can read his article, “Economic Update: Booming” at SoundMindInvesting.org.   Here are a couple of questions we answered from our callers on today’s program:   ·      My wife and I have income from IRAs and Social Security. We also have rental properties. What is the best way to set up our will for the money to go exactly where we want it to go.  ·      I would like to save for college for my children. What is the best way to do this?     Ask your questions at (800) 525-7000 or email them to [email protected] Visit our website at MoneyWise.org where you can connect with a MoneyWise Coach, purchase books, and even download free, helpful resources like the MoneyWise app. Like and Follow us on Facebook at MoneyWise Media for videos and the very latest discussion! Remember that it’s your prayerful and financial support that keeps MoneyWise on the air. Help us continue this outreach by clicking the Donate tab at the top of the page.

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