Technologies staged a handsome advance yesterday as the President is proposing a $2.25 trillion stimulus that could potentially reward ESG investing.  At this juncture stimulus is a good word.  However, at some juncture it may become a bad word as both cost push (wage) and demand pull (product) inflation further accelerates amplified by insatiable demand for funds by the US government to pay for this spending.

Tomorrow March’s BLS employment report is released.  Will it show an upside surprise?  The odds suggest yes as the ADP Private Sector Employment Survey was stronger than expected.  Consumer Confidence was also greater than expected, the result of the increase in the number of jobs available.

A major issue at hand is tomorrow equity markets are closed and the bond market closes at 1:00 as it is Good Friday.  Trading staffs will be thinned at best.  I vividly recall 1994 when the employment data was released on Good Friday and the bond market sold off around 8 points because of the dearth of participants. Equity volatility increased dramatically when the markets reopened on Monday.

Consensus is expecting a 6.0% unemployment rate, a 638k and 650k increase private sector and non-farm payrolls, respectively, a 34.7 hour work week, a 0.1% increase in average hourly earnings and a 61.5% labor participation rate.

Many times, I have commented about the violent rotation.  Bank America remarked yesterday “outwardly markets look pretty calm but beneath the surface the churn has been the most violent in history.”  The Bank further stated the rotation is being exacerbated by “the most concentrated market in history which in turn could take a prolonged period to unwind.”

Continuing with the violent rotation theme, Treasuries had their worst quarter since 1980 according to Barclays.  Few have recognized the carnage that has occurred in “a risk-free investment.”  Perhaps attention will become riveted when the 23% drop in the largest long dated Treasury ETF (TLT) increases to a 40% loss if 10-year yield rises to around 2.5%.

What will happen today?

Last night the foreign markets were up.  London was up 0.45%, Paris up 0.22% and Frankfurt up 0.33%.  China was up 0.71%, Japan up 0.72% and Hang Seng up 1.97%.

The Dow should open flat but the NASDAQ about 0.5% higher on the ESG euphoria surrounding the President’s infrastructure speech.   The ISM Manufacturing Index is released at 1000.  Will this top tier data point impact the markets?  Most will scrutinize the prices paid sub index for pricing pressures.  The 10-year is up 7/32 to yield 1.72%.


The views expressed herein are those of Kent Engelke and do not necessarily reflect those of Capitol Securities Management. The information contained herein has been compiled from sources believed to be reliable; however, there is no guarantee of its accuracy or completeness. Any opinions expressed are statements of judgment on this date and are subject to certain risks and uncertainties which could cause actual results to differ materially from those currently anticipated or projected. Any future dividends, interest, yields and event dates listed may be subject to change. An investor cannot invest in an index, and its returns are not indicative of the performance of any specific investment. Past performance is not indicative of future results. The material provided in Daily Market Commentaries or on this website should be used for informational purposes only and in no way should be relied upon for financial advice. Please be sure to consult your own financial advisor when making decisions regarding your financial management. Members of FINRA and SIPC, Capitol Securities Management is a privately owned full-service retail brokerage and investment advisory firm headquartered in Richmond, Virginia. For nearly 30 years, we have been serving the needs of our investors. Today, more than 200 Capitol Securities Management investment professionals and support staff serve approximately 18,000 customer accounts from Southern Florida to the New England coast.