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📑 Research Notes for 2021-02-08
This week, we look at the fiscal stimulus package, small cap outperformance, S&P 500 component correlations, and insights into the January employment report.
We are a California-based registered investment advisor and investment thought leader, updating you on this week’s top investment observations and market performance.
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Democrats clear path for approval of Biden's $1.9 trillion COVID package.
President Joe Biden and his Democratic allies in Congress forged ahead with their $1.9 trillion COVID-19 relief package on Friday as lawmakers approved a budget outline that will allow them to muscle Biden’s plan through in the coming weeks without Republican support.
When the pandemic hit, large stocks fell less than small stocks and recovered much quicker as well.
If you pull up a long-term chart of the Russell 2000 and the S&P 500, it looks something like this.
S&P 500 component correlations are pretty low.
It's a truism of markets, lasting decades if not centuries, that when investors panic, they sell everything together. When they're comfortable, they buy and sell securities on their individual merits. That's why we see correlations among stocks and other assets rise during times of anxiety and fall during periods of complacency. This is notable now because the correlation among stocks in the S&P 500 has plunged to the lowest level in over a year..
Comments on the January Employment Report.
The headline monthly jobs number was below expectations, and the previous two months were revised down 159,000 combined. The headline unemployment rate was declined to 6.3%.
Curated by Joseph Lu, CFA®
Joseph has over a decade of experience as an investment professional, primarily in quantitative analysis and portfolio management roles. He is the founder and managing director of Conscious Capital Advisors and a CFA® Charterholder. The CFA charter is a globally respected, graduate-level investment credential by the CFA Institute, a global association of more than 90,000 investment professionals working in over 133 countries.
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