If you took snapshots January 1 and this week, it would look like a boring “modestly up” year for the stock market, so far.  Certainly a lot of bouncing and dancing around, but the bottom line is that it has been a reasonably healthy 2021 to-date.  The “healthy” aspect is that instead of a handful of stocks carrying the index like in 2020, we have seen much more broad participation from many stocks and sectors.  The energy sector has led the way after so poorly performing last year, while technology has been more tepid.  Both value and growth have had decent runs. Earnings have been strong overall, not to miss the fact that their year-to-year comparison is based upon the numbers from this time a year ago.

We read (and see) inflationary pressures that have begun to show up, but the majority of strategists seem to be of the mindset that this is more temporary and not the great inflation beast taking over.

So we have a nice coming-out from Covid, very strong economic data in conjunction with still low interest rates and fairly solid corporate balance sheets.  That’s a pretty good formula for the markets. 

In addition to questions about inflation, the other plain and simple question is whether the market has run too far for the environment we are in.  It’s possible the wonderful good 13 months of “up” sets us up for some more lackluster times temporarily.  But every idea is a guess until time tells us.

I still look back and see an amazing last 13-14 months of market behavior, given the events of last year.  We have all been through a lot…with humble acknowledgement that some folks have endured significant pain.  In some ways it is behind us, but in some ways, there remains an overhang. Time will tell whether Covid is truly in the past. 

I remain optimistic.

Wishing you well this mid-summer.

Key