Additional Market Commentary
Submitted by Allen B. Lang, Senior Portfolio Manager
February is over
Yes, historically February has not been a strong month, and so it happened. After the markets hit new highs early in the month, the averages fell off over 3%. I firmly believe this is not an omen of things to come. The economy grew at about 4% in December and I think the numbers for January and February will still show some growth.
I am not an economist. I have listened to several on the news that say our economy could have a 5-7& growth this year. I think they are wrong. Just what I have seen in the past six months I believe our economic numbers can increase by upwards of 10%. As I said back in March or April, the US is “too good to fail”.
This doesn’t mean we will not have volatility in the markets, that will continue until the SEC can curtail
ridiculous activities by day traders and hedge funds. I won’t go into a market teaching session here, but one rule that was taken out of the market was the “up-tick” rule. Please look it up in Google. This was a very important deterrent to those who wish to “control” the markets and scare REAL investors into not investing. This rule was taken off the books in the early 1970’s when the Exchange Traded Options began. With the advent of Puts and Calls, it gave investors, and speculators, a way of trading securities whether they go up or down. Options can also be used to hedge against losses as well as for additional income.
Recently there has been a significant spike in oil prices and regular gasoline is almost $4 a gallon, up 60c from three weeks ago. Not to try and get political here, but the shutting of the Keystone Pipeline, enabling us to get oil to refineries quickly and more safely that trucking and rail, has caused fears that the US will not be self-sufficient fuel wise, and have to buy from overseas. Limitations on new drilling for oil and natural gas has caused a rise in oil futures, hence, higher gas prices. So much for looking out for the “small guys and women”. Whatever stimulus is given will be quickly used up in essential goods and products we need every day. I am all for capitalism and people making higher wages and having a road to promotion and a better standard of living. However, I fear that Congress may be acting too quickly to raise the minimum wage. As an example, most wait-staffs in restaurants make the minimum $7.25 an hour. That’s because they can earn considerably more by earning gratuities (tips). Raising their minimum wage to $15 an hour may cause employers to cut employee hours Hence, some may lose benefits like health care, because they would not be considered “full time”. It’s just simple economics, costs go up, so does the cost of service, and employers have to adjust to make profits.
Ok enough of that. Congress sometime in the second quarter, I believe, will follow most states and make cannabis a legal “drug”. This will mean a wind-fall for the US in tax collection, and manufacturers will be finally able to deposit their monies into federally insured banks. I believe that with the large group of cannabis growers, there will be a good deal of consolidation in the industry. Many broker/dealers will not allow clients to purchase cannabis securities, mainly because it is a Schedule 1 drug. But this too shall pass.
My wife and I have received our 2 COVID inoculations. No pain and no subsequent issues. I encourage you to get your shots. Be safe. And good health to you all.
Allen B. Lang, Senior Portfolio Manager
Atlas Wealth Management, LLC