Transcript:
Hello, everybody, welcome to Thursday, a fantastic day for the stock market today the S&P 500 was up 1.1%. The Nasdaq led the way which was great. You know, after yesterday’s downturn, we had a couple of big reports that seemed to be great catalysts. Number one, we saw a situation where unemployment claims were lower than expected. So that’s spectacular employment starting to pick back up and go the right direction. And then retail sales in March were up 9.8%, higher than they were in February. Matter of fact, they said that clothing, retail sales are higher than they were in February of 2020, before the pandemic really hit here in the US. So that’s pretty much what we expect. We’re expecting to see over performance positive surprises, people going out and spending stimulus money coming in pent up demand, lots of shopping is going to happen, people are going to try to make up for lost time, you know, things that they couldn’t do, you know, last year, for example, so very much.
So now, normally, in that situation, you would have had inflationary pressure, because that’s exactly what that is, things are going faster than they expect. And that inflationary pressure would have driven the yield of bonds up, which would have made value stocks be the big winner today, but the NASDAQ one today, the growth stocks one, and actually the yield on the treasuries a 10. Year trade dropped more than it has since last November. One of our biggest one day drops in a little while here. And so what happens, it’s really fascinating how this all works together. So yesterday, we saw the yields come up because of inflationary pressure. And what that did is it stimulated international buying, because I’ve given an example. So in Japan, the 10 year treasuries, actually at less than .1%. And so there was a lot of Japanese buying of our treasury bonds, because they’d rather have 1.6%. And of course, when you have lots of demand for buy, that brings the price of the Treasury up, and it brings the yield down, which is exactly what happens when the yield comes down. growth stocks do better.
And so another example, like in Germany, their Treasury right now is -.27% for a 10 year Treasury actually have to pay them to hold your money. So again, what would you rather have a -.27%, or a positive 1.6%, you know, from the US Treasury. So, in order for us to see, you know, that yield to really continue to grow, you’re gonna have to see some of these other countries continue to increase their yields, which is going to mean recovery happening there. And some of that, you know, inflationary pressure are just getting back to normal from this some of this virus. So, Europe is a great example because they’re way behind in the vaccine, you know, deployment. And so and they’ve had some lockdowns, because they’ve had some of the UK variants, you know, coming out and creating some problems.
So, you know, it’s not a straight line. It’s, everything’s kind of connected together. But really fascinating to see how this plays out in whole, and looking forward to seeing what’s going to happen tomorrow. And tomorrow. Actually, we have go live with Tom again. Again, just ask any questions, market related financial planning and tax planning, those types of things. You can send those questions to asktom@golivewithtom.com. And then you just type in your browser. golivewithtom.com, hit enter at 12:15 Pacific Time, and I’ll be there with Katie, and we’ll go through the questions that come in. So I look forward to seeing you then and hope you have a great day and we’ll talk to you tomorrow. Thank you.