April 13, 2021

As anticipated, March economic data is showing evidence of a sharp post-winter storm rebound.  The strong March jobs report indicated that the labor market recovery is re-accelerating as more of the economy re-opens.  Consumer confidence is improving supported by stimulus checks and good progress on vaccines.  Massive monetary and fiscal stimulus, along with ramping vaccinations, are creating conditions for an economic boom.  We continue to monitor mounting inflationary pressures emanating from supply constraints, which could manifest in rising input costs either getting passed onto the consumer or eating into corporate profit margins.  The disappointing temporary halt of the Johnson & Johnson vaccine illustrates a potential risk of a snafu on the pathway to normalcy.  In addition, the potential for higher taxes or a disorderly rise in bond yields could cause some near-term market volatility, especially at a time when stocks are fully priced and investor complacency is high.  Our base case, however, remains positive supported by a massive fiscal stimulus, highly accommodative monetary policy, vaccinations, and rising S&P estimates.