Hello, this is James Mayer, Branch Manager, from the Huffman Mayer Paolo Wealth Management group of Wells Fargo Advisors. Hard to believe that it is already July.
Excessive evaluations of companies have led to an increase in their stock prices over the past three months, but now their stock prices are slowly flattening out in return. Following what will probably be known as the covid collapse, the S&P 500 made tremendous leaps on its way back to its previous price yielding a 51.2% price/earnings multiple. This has marked the highest expansion in 31 years according to Factset.
As we have made the transition from the first quarter earning period to the second quarter, the attention is now focused on the Federal reserve’s point of view on interest rates, inflation, and asset purchases. A big question in the investment world is if we are going to have a period of higher inflation, close to 3%, which generally leads to maintained higher commodity prices which in turn is could lead to less consumer spending. Or if we are going to see inflation gradually move back to around 2%, which has been the trend the past decade.
At the end of April 2021, the U.S. job opening stood at a record breaking 9.3 million which has continuously increased since March, according to the Bureau of Labor Services. With certain unemployment benefits ending we expect this number to begin to decline over the coming month. This will more than likely lead to declines in commodity prices which is already been shown by the decrease in benchmark lumber prices by 40% according to Factset.
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