Kuby's Commentary

The S&P 500 reached another record high on Thursday after robust U.S. growth figures, as the first-quarter GDP expanded at 6.4%, beating estimates of a 6.1% annualized rate. That left the world's largest economy within 1% of its peak reached in late 2019, just before the coronavirus pandemic came to the U.S.

The Labor Department also revealed that 553,000 new weekly jobless claims were filed in its latest report, marking another pandemic low, although still double the longer-term average rate.

The Conference Board's consumer confidence index raced to a reading of 121.7 this month. That was the highest level since February 2020, just before the onset of the COVID-19 pandemic and followed a reading of 109.0 in March.

Due to the number and magnitude of positive earnings surprises during the week, the earnings growth rate for the first quarter growth rate increased to 45.8%, compared to an earnings growth rate of 33.8% last week and an earnings growth rate of 23.8% at the end of the first quarter (March 31).

On Friday, the Bureau of Labor Statistics releases the jobs report for April, with expectations for a gain of nearly one million jobs.

A record 84% of companies have reported actual EPS above estimates, by a record 23.6% amount. The blended earnings growth rate for the first quarter is now 33.8% today, compared to an earnings growth rate of 30.3% last week and an earnings growth rate expectation of 23.8% at the end of the first quarter (March 31).

The party on Wall Street had a sobering moment midweek when news of proposed tax increase by President Biden circulated. News of the proposal triggered sharp declines for two days on Wall Street, but a rally on Friday recouped most of the losses.

Cryptocurrencies were hit hard, with Bitcoin down over 20% from its recent peak of $64,829. It is worth noting that the recent sell-off still leaves Bitcoin up over 30% YTD and almost 400% over the last twelve months.

There will be several important economic releases this week, such as Consumer Confidence on Tuesday and Personal Income and Expenditures on Friday.

US jobless claims plunged to 576,000 last week, their lowest level of the COVID-19 pandemic, and far lower than the consensus forecast expected of 700,000 claims. On the earnings front, a record number of companies are beating estimates by a record amount, leading to the strongest growth in over a decade.

Retail inflation for March came in hotter than expected, but apparently not hot enough to burn bond investors, as yields in the Ten-Year Treasury actually declined 10 basis points to 1.57% during the week.

Market participants seem unconcerned with those inflationary risks, or any risks for that matter. As evidence, the VIX (traditionally viewed as the "fear" index, but possibly a "complacency" index too) sank 2.6% to its lowest level since the pandemic hit in February 2020.

Investors continued getting what they want, as well as what they need, despite some storm clouds forming on the horizon.

Stocks rallied to close once again at record levels Friday, with the S&P 500 topping 4,100, as investors ignored concerns about inflation even while March core producer prices (PPI), which excludes the more short-term volatile food and energy components of the economy, increased by the most in more than nine years on an annualized basis.

On the economic data front, first-time claims for unemployment insurance totaled 744,000, well above the expectation for 694,000 from economists. Continuing claims provided some good news on the labor front, with the total dropping to its lowest level since March 21, 2020.

Earnings season begins with 23 S&P 500 companies, including most of the largest banks, on deck to report results. The bar is set pretty high, as the S&P 500 is expected to report (year-over-year) earnings growth of 24.5% for the first quarter.

The S&P 500 crossed over the 4,000 threshold on April Fools' Day to set another record, finishing up +1.14%. Small caps were not joking around, with the Russell 2000 gaining +1.46%, and the Tech sector pranked its detractors by bouncing +3.15%. The most significant economic release was the jobs report, which was reported on Friday when the stock market closed for the holiday. It was a very strong number. Saturday marked the first time the country reported more than four million Covid-19 vaccine doses in a single day. Earnings season is right around the corner, and analysts have increased estimates during the first quarter for S&P 500 earnings by 6% to $39.86, marking the largest increase in the bottom-up EPS estimate during a quarter since FactSet began tracking the quarterly bottom-up EPS estimate in 2002.

The rebound in employment is underway and will be a key driving factor for the anticipated economic recovery. It was another unusual week in the markets, with the S&P 500 gaining 1.57%, while the Nasdaq Composite declined 0.58% and the Russell 2000 fell for the fifth time in the past six weeks, losing 2.8%. The market experienced a sample of how swift and unpleasant the unwind ride can be late last week as shares of Chinese tech giants and U.S. media conglomerates plummeted on block trades by Goldman Sachs and Morgan Stanley. The jobs report for March on Friday will be in focus, with the consensus forecast that the economy added 525,000 nonfarm payrolls. COVID-19 vaccinations are on the rise, but so are coronavirus cases.

The Big Bad Bond Market once again bared its jagged teeth, as the yield on the Ten-Year Treasury climbed another 10 basis points to breach the 1.75% level for the first time in 14 months. The selling pressure on both stocks and bonds resumed on Thursday afternoon and Friday morning accounting for all of the weekly decline. Investors turned to the Brick House Chairman, Jerome Powell, to protect us from the huff and puff of the Big Bad Bond Market, and on Wednesday, Powell's familiar refrain of near-zero short-term rates and $120 billion a month of bond purchases briefly calmed the markets. , U.S. new weekly jobless claims unexpectedly rose last week to 770,000 even amid a wave of abating social distancing restrictions and improving weather. The Bureau of Economic Analysis will issue reports later in the week on the strength of the recovery. On Thursday, it will release its final estimate of 4th fourth quarter GDP, which is expected to be unchanged from the last estimate in February of 4.1%. The more interesting report will come on Friday with the release of personal income and spending for February.

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Securities are offered through Mid Atlantic Capital Corporation (MACC), a registered Broker Dealer, Member FINRA/SIPC. Advisory services offered through North Star Investment Management Corp. (NSIMC). a Registered Investment Adviser. North Star Investment Management Corp. is not a subsidiary or control affiliate of MACC.

The information provided in this commentary is not an offer to sell or the solicitation of an offer to purchase any security, product, or brokerage service. The information is not intended to be used as the basis for investment decisions, nor should the information be construed as advice designed to meet the particular needs of any investor. This commentary is presented to illustrate examples of the securities that North Star Investment Management Corporation and/or its affiliates ("North Star") may have bought for client accounts and the diversity of markets in which North Star Investments may invest, and may not be representative of current or future investments. You should not assume that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this commentary will be profitable or will be equal to any corresponding performance levels that might be indicated. Past performance is no guarantee of future results. Investments in securities involve risks including the possible loss of the principal invested. North Star and others associated with it, including employees, may have positions in and effect transactions in securities of companies mentioned or indirectly referenced in this commentary. North Star may buy, sell or hold these securities in proprietary or client accounts. North Star will not be providing regular updates or advising you of any changes in the views expressed herein. Investors should consider their investment objectives, risk tolerance, and financial situation and needs before investing in any security. Tax considerations, commissions, fees and other costs should be carefully evaluated with one's investment and/or tax advisors. Information provided is obtained from sources deemed to be reliable, but North Star cannot guarantee the accuracy or completeness of the information. This material may not be reproduced, distributed or transmitted to any other person in whole or in part without the prior written consent of North Star. A copy of North Star Investment Management Corporation's Form ADV Brochure, Privacy Notice and Business Continuity Plan summary can be obtained by calling 312-580-0900.

This is an audio recording of our weekly blog. If you are interested in subscribing to our blog, please visit nsinvest.com or email us at [email protected].

Securities are offered through Mid Atlantic Capital Corporation (MACC), a registered Broker Dealer, Member FINRA/SIPC. Advisory services offered through North Star Investment Management Corp. (NSIMC). a Registered Investment Adviser. North Star Investment Management Corp. is not a subsidiary or control affiliate of MACC.

The information provided in this commentary is not an offer to sell or the solicitation of an offer to purchase any security, product, or brokerage service. The information is not intended to be used as the basis for investment decisions, nor should the information be construed as advice designed to meet the particular needs of any investor. This commentary is presented to illustrate examples of the securities that North Star Investment Management Corporation and/or its affiliates ("North Star") may have bought for client accounts and the diversity of markets in which North Star Investments may invest, and may not be representative of current or future investments. You should not assume that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this commentary will be profitable or will be equal to any corresponding performance levels that might be indicated. Past performance is no guarantee of future results. Investments in securities involve risks including the possible loss of the principal invested. North Star and others associated with it, including employees, may have positions in and effect transactions in securities of companies mentioned or indirectly referenced in this commentary. North Star may buy, sell or hold these securities in proprietary or client accounts. North Star will not be providing regular updates or advising you of any changes in the views expressed herein. Investors should consider their investment objectives, risk tolerance, and financial situation and needs before investing in any security. Tax considerations, commissions, fees and other costs should be carefully evaluated with one's investment and/or tax advisors. Information provided is obtained from sources deemed to be reliable, but North Star cannot guarantee the accuracy or completeness of the information. This material may not be reproduced, distributed or transmitted to any other person in whole or in part without the prior written consent of North Star. A copy of North Star Investment Management Corporation's Form ADV Brochure, Privacy Notice and Business Continuity Plan summary can be obtained by calling 312-580-0900.

This is an audio recording of our weekly blog. If you are interested in subscribing to our blog, please visit nsinvest.com or email us at [email protected].

Securities are offered through Mid Atlantic Capital Corporation (MACC), a registered Broker Dealer, Member FINRA/SIPC. Advisory services offered through North Star Investment Management Corp. (NSIMC). a Registered Investment Adviser. North Star Investment Management Corp. is not a subsidiary or control affiliate of MACC.

The information provided in this commentary is not an offer to sell or the solicitation of an offer to purchase any security, product, or brokerage service. The information is not intended to be used as the basis for investment decisions, nor should the information be construed as advice designed to meet the particular needs of any investor. This commentary is presented to illustrate examples of the securities that North Star Investment Management Corporation and/or its affiliates ("North Star") may have bought for client accounts and the diversity of markets in which North Star Investments may invest, and may not be representative of current or future investments. You should not assume that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this commentary will be profitable or will be equal to any corresponding performance levels that might be indicated. Past performance is no guarantee of future results. Investments in securities involve risks including the possible loss of the principal invested. North Star and others associated with it, including employees, may have positions in and effect transactions in securities of companies mentioned or indirectly referenced in this commentary. North Star may buy, sell or hold these securities in proprietary or client accounts. North Star will not be providing regular updates or advising you of any changes in the views expressed herein. Investors should consider their investment objectives, risk tolerance, and financial situation and needs before investing in any security. Tax considerations, commissions, fees and other costs should be carefully evaluated with one's investment and/or tax advisors. Information provided is obtained from sources deemed to be reliable, but North Star cannot guarantee the accuracy or completeness of the information. This material may not be reproduced, distributed or transmitted to any other person in whole or in part without the prior written consent of North Star. A copy of North Star Investment Management Corporation's Form ADV Brochure, Privacy Notice and Business Continuity Plan summary can be obtained by calling 312-580-0900.