The economic data is surging. The ISM Non-Manufacturing Index surged to the highest level since the 1997 inception on this data point. The reading exceeded even the most optimistic projection by a large margin. The report, covering the industries that make up almost 90% of the economy, follows figures last week indicating manufacturers expanded by the most since 1983.

The data also showed prices paid for materials jumped to the highest since July 2008 and delivery times lengthened. The group’s manufacturing report last week showed a supplier deliveries index at an almost 47 year high.

Wow! I guess we are currently in a capitol V recovery.

Changing topics and one that has yet to garner any attention is Treasury Yellen’s proposal to institute a minimum global tax rate in an effort to “harmonize corporate tax rates across the world’s major economies to avoid a race to the bottom by countries competing to lure corporations with lower taxes.” Yellen said this “is part of an effort to restore global leadership and credibility with US allies following the unilateralist approach of the Trump era.”

The Treasury Secretary further commented “it is about making sure that governments have stable tax systems that raise sufficient revenue to invest in essential public goods and respond to crises, and that all citizens fairly share the burden of financing government.”

Recently I have become a movie buff, critically watching movies for potential underlying and potential upcoming social trends. [Note: My family’s DVD library consist of over 400 titles bought from second hand DVD stores for pennies on the dollar] Reading Yellen’s proposal all I was thinking about is “The Republic” and “The New World Order” of the Star Wars saga.

Will such an ambitious global agenda become reality? Will corporations and countries alike abandon their sovereignty? Is this a dystopian fantasy?

The President commented that he was going to reshape America and the world. Most dismissed the comments as nothing other than election dogma. I think the odds of the above occurring is remote but perhaps quoting Marty McFly in Back to the Future “I guess you guys are not ready for that yet but your kids are going to love it” is appropriate.

Continuing with the movie theme, the Biden Administration’s crime and tax position is the opposite of what brings political success according to Martin Sheen in the movie American Presidency when Sheen stated to the President played by Mike Douglas “Hard on crime and soft on taxes is always a good policy.”

Commenting upon yesterday’s market activity, equities led by technology staged a modest advance. Treasuries were essentially unchanged in the face of stellar economic data.

Last night the foreign markets were mixed. London was up 1.23%, Paris up 0.62% and Frankfurt up 1.10%. China was down 0.04%, Japan down 1.30% and Hang Seng closed for a holiday.

The Dow should open flat. The 10-year is up 1/32 to yield 1.70%.


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.