Market Recap Week Ending March 19
Monday – Dow +175 to 32,953 (14th closing record high of 2021), Nasdaq +140 to 13,459 and the S&P +25 to 3,968 (record high). The Dow rose for a seventh consecutive trading session, its longest streak since last August and the S&P was up for the fifth trading session in a row. The beaten-up growth stocks were the best performing, with the Nasdaq climbing 1.1% today. Air travel over the weekend was the busiest it has been in a year and as a result American (AAL) and United (UAL) traded up smartly (7.7% and 8.3% respectively). The 10-year U.S. Treasury yield fell back 2 bp to 1.60% on fears that the AstraZeneca (AZN) vaccine causes health issues. The vaccine has been suspended for use against the Covid-19 virus in 5 European countries. Nine of the eleven S&P sectors traded higher, led by Industrials, Utilities and Consumer Discretionary. Energy had a rare off day considering its run this year and was the worst sector today, down 1.25%.
- Monday – Existing Home Sales
- Tuesday – Adobe (ADBE) and GameStop (GME) report earnings, New Home Sales, $60 billion Treasury 2-year note auction.
- Wednesday – Durable goods, Manufacturing PMI, Services PMI, $61 billion Treasury 5-year note auction.
- Thursday – Darden Restaurants (DRI) reports earnings, Initial Jobless Claims, third reading of Q4 GDP, $62 billion Treasury 7-year note auction.
- Friday – Personal income and spending, Consumer Sentiment.
Strategy update…Marin Wealth Portfolios bond allocations have consistently been shorter in duration vs the benchmark U.S. Aggregate Bond Index. Duration measures the interest rate sensitivity of a particular bond or bond portfolio. The larger the number, the more sensitive it is to interest rate fluctuations. Historically the U.S. Aggregate has had a duration of six years but over time that number has been stretching longer. Due to the movement in the 10-year yield and the assumption that this trend will continue, we wanted to continue to shorten our duration in order to mitigate the effect of potential rising rates. As a result, we executed a trade yesterday to cut our exposure to the U.S. Aggregate (JAGG or EAGG in our portfolios) by selling roughly 44% of that position and replacing it with JSCP, which has on average a 2-year duration. This has the effect of cutting our interest rate risk if rates continue to rise, yet still provides our portfolios with a buffer should the equity markets falter. If you have any questions, please feel free to call me to discuss further.
Disclaimer: This is not a recommendation to buy or sell any of the securities listed above. I personally, or a family member whose account I control, have positions in the following securities…AAPL, Bitcoin (physical), Chainlink (physical), Ethereum (physical), ETHE, GBTC, GME April $20 Puts, LAZR, TSLA, VLDR and WKHS.