Impact Of Tax Hikes On Stock Market

The economic data from March and April is going to be very good. One preview of this was Redbook same store sales growth in the week of March 20th. Growth rose from 8.5% to 9.4% due to the stimulus spending. The chart below shows the Evercore ISI company surveys index. It uses inputs from a variety of sectors. It’s already higher than at any point in the last expansion. That’s in line with current expectations for 7% GDP growth. The U.S. economy should contribute more to global growth in 2021 than China. This is potentially a once in a century-type event. Growth is expected to be 6.7%, 11.5%, 7.9%, and 2.8% in each quarter.

The entire rally in the Russell 2000 from early November to its March peak was based on anticipation of this growth. Now that it’s happening, it wouldn’t be a surprise to see stocks fall back down to earth or plateau. Some investors are already looking past this growth spike. It will be interesting to see if the travel stocks rally on great news in the next few months or if they shrug it off. Similarly, we wonder if the decline in software stocks fully prices in the coming sales growth weakness or if they have more room to fall. They still have extremely high valuations even after their recent correction.

Amazing Small Business Sales

This spring/summer should be the exact opposite of 2020 for small businesses. Restaurant sales are about to explode. They are already above their pre-pandemic level in Miami and at their pre-pandemic level in Las Vegas. As you can see from the chart below, in the first week of March, total small business sales growth accelerated to the highest level since the pandemic started.

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Disclaimer: The content in this article is for general informational and entertainment purposes only and should not be construed as financial advice. You agree that any decision you make will be ...

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