Dow went up 14, advancers over decliners 5-4 & NAZ jumped 216. The MLP index was fractionally lower to the 163s & the REIT index fell 1+ to the 401s. Junk bond funds drifted sideways & Treasuries were bid higher for a slightly higher yields. Oil rose to 61 & gold recovered 20 to 1706.
AMJ (Alerian MLP index tracking fund)
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US private employers added more jobs in Mar than at any point over the previous 5 months as a reopening of the economy boosted growth in the service sector, according to the ADP National Employment Report. The economy added 517K private-sector jobs this month, below the 550K that was expected. Feb's reading of 117K jobs added was revised up to 176K. “Job growth in the service sector significantly outpaced its recent monthly average, led with notable increase by the leisure and hospitality industry,” said Nela Richardson, chief economist at ADP. “This sector has the most opportunity to improve as the economy continues to gradually reopen and the vaccine is made more widely available.” The leisure & hospitality sector added 169K jobs, helping the service sector to an increase of 437K jobs. The goods-producing sector gained 80K jobs amid strength in manufacturing & construction. Only 2 sectors lost jobs during Mar. Natural resources/mining saw a decline of 1K jobs & information services shed 7K. The stronger-than-expected ADP reading could be a precursor to Fri's employment report for Mar. The Labor Dept is expected to say the economy added 650K nonfarm jobs this month, up from a much stronger-than-expected increase of 379K jobs in Feb. The unemployment rate is anticipated to fall to 6% from last month's 6.2%, the lowest since Mar 2020.
ADP jobs report shows biggest gains since September
Pres Biden will detail his proposal to revamp the nation's infrastructure, alongside a revenue-raising plan that aims to ensure the nation's largest corps are paying their fair share in taxrs. Dubbed the American Jobs Plan, the White House said the “once-in-a-century capital investment” in US infrastructure will create “millions” of good-paying jobs & position America to “out-compete” China by spending about 1% of GDP per year over the course of 8 years. Overall, the plan is to spend $2T over the course of the coming decade. Among the key tenets of the plan are modernizing 20K miles of highway, repairing 10K small bridges & 10 economically significant bridges, eliminating all lead pipes in drinking water systems, expanding access to high-speed broadband, modernizing schools & upgrading veteran's hospitals. The plan also aims to create better-paying jobs for care workers & allocate $100B to workforce development programs targeted at underserved groups & students. Overall, the administration intends to spend around $650B on revamping bridges & roads, $300B on housing infrastructure, $300B on reviving US manufacturing, $400B on care for the elderly & disabled, $400B on clean-energy credits, as well as an unspecified amount on broadband, water systems & other measures. In order to pay for this legislation, Biden also proposed what he has called the Made in America Tax Plan, which would raise the corp tax rate to 28% from 21%. It would also increase the minimum tax on multinational corps to 21% & “calculate it on a country-by-country basis so it hits profits in tax havens,” alongside several other efforts to eliminate perceived loopholes in the corp tax code. Those changes, the White House said, will raise $2T over 15 years – paying off the initial investment in the infrastructure plan & reducing deficits thereafter. Yesterday, the Business Roundtable said it would oppose any effort to raise the corp tax rate to fund the legislation – though it supports the overall idea of investing in the nation's infrastructure. “Policymakers should avoid creating new barriers to job creation and economic growth, particularly during the recovery,” Business Roundtable Pres & CEO Joshua Bolten said..
$2T infrastructure proposal includes funding by corporate tax hike
The US housing market is suffering from its lowest supply in history & that is taking an increasingly hard toll on sales. Pending home sales, a measure of signed contracts on existing homes, fell a wider-than-expected 10.6% in Feb compared with Jan, according to the National Association of Realtors, & were 0.5% lower year over year. “The demand for a home purchase is widespread, multiple offers are prevalent, and days-on-market are swift,” said the Realtor's chief economist, Lawrence Yun. “But contracts are not clicking due to record-low inventory.” There were just 1.03M homes for sale at the end of Feb, a 29.5% drop compared with Feb 2020. That is the largest annual decline ever & the lowest supply on record. Sales are now varying dramatically by price point because supply is so lean on the low end & more plentiful on the higher end. Homes priced above $250K have seen the most active sales, but Yun notes that homes priced above $500K to less than $1M are starting to see the same low inventory problems. “Potential buyers may have to enlarge their geographic search areas, given the current tight market,” Yun added. “If there were a larger pool of inventory to select from – ideally a five- or a six-month supply – then more buyers would be able to purchase properties at an affordable price.” A recent rise in mortgage rates does not appear to be affecting homebuyer demand that much. The average rate on the popular 30-year fixed loan started the year below 3% and is now at 3.45%, according to Mortgage News Daily, but still low. Home prices, however, are climbing quickly. They are up more than 11% from a year ago. Price increases are strongest at the lower end of the market, where supply is weakest & bidding wars are rampant.
Pending home sales fell over 10% in February, as record low supply stifles the housing market
Investors are not sure what to make of the infrastructure plan. More spending is generally welcome. However, gov is noted for being reckless with money (can you spell pork?). Additionally higher corp taxes have a way of working their way thru to higher prices & will add substantially to gov deficits requiring more borrowing. There is a lot to think about in this plan.
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