Tracking The Recovery; Fritz Meyer Economic Update, May 2021

Tracking The Recovery; Fritz Meyer Economic Update, May 2021 

President Biden is proposing spending another $2 trillion in the American Jobs Plan and $1.8 trillion in the American Families Plan, partly paid for by the Made in America Tax Plan. We’ll go through the details.

Corporations and the 1% should “begin to pay their fair share.” What does that mean? What are they paying now? We’ll go through the details. And, we’ll talk about the federal deficit and debt.

Stocks are trading near record highs driven by strong economic data. The V-shaped recovery has come on faster and stronger than expected.

Jobs surged, income and spending surged, and ISM purchasing managers indexes are at record highs. Construction and car sales surged and cash the hoard in consumers’ accounts waiting to be spent is astounding.

In this month’s class, we’ll update the economic data and rising earnings forecasts and relate both to the market’s current valuation, reviewing:

• federal legislation breakdown
• M2 explosion
• full recovery suddenly in sight
• S&P 500 expected earnings versus current valuation
• p/e ratios
• the Fed’s stock valuation model
• current valuations versus the last stock bubble
• Janet Yellen’s rate rise walk back
• evolving views of U.S. debt
• debt cost to the next generation
• Jerome Powell’s latest pronouncements
• April 2021 jobs report
• ISM purchasing managers survey for April 2021
• DPI and savings surged data in April 2021
• latest LEI
• housing starts
• household balance sheets

DPI Surged 29% in Past 12 Months; Government Transfers Skyrocketed 259%!

Amid the worst public health crisis in a century, consumer income soared like never before in the last 12 months. Why? Because of the stimulus, of course! Fritz Meyer in this 6 ½ minute update reports that government transfer payments increased an astonishing 259% from a year ago! The third round of government checks is happening now. The unprecedented level of government support is history-making; whether it was worth the cost of adding trillions to the national debt we leave to the next generation will be debated for years, as will the role of the U.S. government in fighting the pandemic.   

Can You Identify Differences Between The Video Above For Advisors And This One For Advisor Clients?

Fritz Meyer’s 6½ minute update above is brilliant but it’s not for sharing with clients. Here’s the same topic as is covered in by Fritz turned into a video for clients. Can you name the differences?  

1.      Shorter. The version on the right for clients and social sharing is less than a third the length, at two minutes.  Videos about financial planning should only be long enough to say something important.

2.      Branded. Videos you send to clients and share on social networks must be branded with your logo and contact information. This video

3.      Graphical. Advisor videos about economics are “edutaining” – educational but entertaining. Government news videos, iconography, callouts optimize using the medium. The “Good News” graphic (12 seconds) illustrates the different graphical approach. The graphics are not sensational or eye-candy they’re sober.  Stock videos are added that make the message easier to consumer, is shown at 40 seconds.    

4.      Voiceover. The professional voiceover earns his pay by slowing the cadence of the good news. (You can record your own voiceover on top of our client videos.)

5.      Simpler But Not Dumbed Down. Sixty seconds into the client video delivers news of the 259% increase in government transfer payments. And the video ends with a bold summary of Fritz Meyer’s outlook.

6.      FINRA Reviewed. Economic content is not technically subject to FINRA-review, and RIAs with no broke/dealer affiliation do not need advertising FINRA-reviewed. However, it is nice for RIAs to have FINRA reviewed content. This video will be FINRA reviewed.

Answers To Questions From Fritz Meyer’s April CE Class

Here are the answers to questions from advisors at Fritz Meyer’s CE April class last Tuesday. Below are the questions asked by A4A members and Fritz answers them in this 30-minute video.

(Edward Fulbright) What are the Fed Reserve's goals?

(Daniel Hawley) How much is lumber impacting overall commodity pricing?

(Christopher Holcombe) Doesn't that (market turn you cited) ignore timing of the vaccine approval, which was immediately after election results were confirmed!?

(Christopher Holcombe What does Fritz think of the future of deflationary themes that have offset inflation (in lumber, etc.) to-date? Does he anticipate any change in those trends that could allow for more net inflation?

(Karin McKerahan)Is it even a valid comparison to weigh US tax burden against nations that are NOT constitutional republics?

(Mark Miller) If corporate tax rates go to 28% from 21%, a 33% increase, how can that not impact earnings on the downside, and therefore stock market valuations?

(Rich Stockheimer) A discussion broke out today with clients regarding this point: Is it possible for a country to print currency on an endless basis? If it is the strongest economy in the world, why couldn’t that be the case? It doesn’t make sense, for sure, but is it possible?

(Rich Stockheimer) Regarding the inflated home prices: It looks great now at 3% 30 yr loans, but, if the rates go back to 6% in the next 4-5 years, how is anyone going to sell their homes for what they have invested in it? Aren't we lining up for another real estate crash?

Weekly Wealth Management Roundup For Clients Of Wealth Managers

Legislation introduced by Democrats in the Senate would hike the estate tax on the top half of the 1% of wealthiest Americans, and Secretary of the Treasury, Janet Yellen, told the Senate Banking Committee on Thursday that her views on the size of the national debt have evolved since 2017. Here’s a roundup of content from A4A’s thought leaders in a consumer-friendly format advisors distribute to educate their clients.

Unprecedented Spikes & Plunges In DPI, Spending, & Savings In Perspective

Personal income and the savings rate dropped sharply in February but remained strong nonetheless due to government stimulus. Expect another spike to show up in government reports in April. F ritz Meyer goes over the latest releases and puts the extraordinary times in perspective.

Consensus Forecast: Expect A Full Recovery In 15 Months

In this 10-minute video update, Fritz Meyer says the consensus forecast is for a boom.

As reported two weeks ago, the Fed says it is not going to act preemptively in anticipation of higher inflation. Fed chief Jerome Powell said two weeks ago that he makes the same mistake he did in December 2018, when he acted on a whiff of inflation and nearly caused a recession.

Details about that policy shift are evidenced in the newly released Fed’s survey of the FOMC and the 12 presidents Fed Bank presidents.

When the December WSJ consensus forecast was published, the 60 economists polled monthly were forecasting the nation would remain far from full-recovery. At that point, it looked like it might take many years for US GDP to return to the same size as before the pandemic. Now the full recovery is 15 months away, based on the latest consensus forecast.