Macro in a Minute
The proposal came less than three weeks after Biden signed the $1.9 trillion pandemic relief plan earlier in March. The infrastructure plan is expected to be paired with an additional $1 trillion in spending focused on social programs, which is expected to be unveiled in April.
Time will tell how much spending will be passed by Congress; however, overall fiscal spending is unprecedented and clearly larger than what markets were pricing at the start of 2021. Coupled with a faster than anticipated vaccine rollout here in the U.S., which is providing a tailwind to the reopening theme, it is no wonder GDP estimates are trending higher for 2021 and 2022.
Improving economic data is helping to fuel the resurgence in equities, which recently have experienced increased volatility. The Conference Board Consumer Confidence Index rose from 90.4 (Feb) to a 12-month high of 109.7 (March), versus estimates of 96.9. The S&P CoreLogic Case-Shiller 20-City Composite Index rose 11.1% YoY, its highest annual gain since 2014. The FHFA data reported housing rose 12% YoY. The third estimate of Q4 GDP was revised to 4.3% from 4.1%. Friday’s NFP data is forecasting 650k new jobs with some projections above one million and an unemployment rate dropping to 6% from 6.2% (Feb.).
Over the prior five sessions, small and mid-caps have led the way with gains between 4% and 5%. Value and Growth returned an equal 2%. At the sector level, Industrials (+3.4%) and Materials (+2.8%) outperformed but followed closely with nine of eleven groups gaining 2% or more. For all of March, the Dow Jones (+6.8%) and Value (+5.9%) led the way on the back of Utilities (+11%), Industrials (+9%), Staples (+8%) and Materials (+8%).
