Commentary for week ending 03/13/2021

The 1.9 Trillion Dollar “COVID Relief” Bill has passed.  If only “COVID relief” was actually true about this abomination.  Here are some highlights (or “lowlights” depending on your point of view):

  • The income limit for households is $150k (2.2 times the national average)
  • Additional childcare credits for that family of four making $150k and “struggling” – they will get an additional $2600 in tax credits.
  • Prisoners are eligible for a check!
  • $86 billion bailout to multi-employer pension plans – nothing to do with COVID!
  • Payouts are going to states that are running a surplus – like California which has $19 billion surplus but is getting $26.2 billion from the feds. Does that make any sense?
  • Tax credits for Obamacare insurance purchases for households making up to $500,000 a year.

So, I think that the economy will be on a “sugar high” from excess government largesse but I think the Fed will be forced to raise rates by 1Q22 and the economy will start to tank.  If I had any influence on this bill, I would have reduced the income limits and removed the pork barrel gifts to special interests, but added needed infrastructure improvements for roads, bridges, airports, railroads, etc.  These improvements will help the economy in the long-term rather than a short-term high bill written for political reasons.  It drives me to distraction when the pundits say 70% of the American public approve of this bill – of course they do!  Who doesn’t want free money?  Those happy to receive it will regret it later when taxes increase and/or inflation forces their employer to lay them off! 


As for my two “funds”, I am not making any changes.  The Growth fund may struggle this year, but as I said last week, I think it will still outperform the S&P in the long term.  On the “Income Fund”, the financials and the cyclicals (like MMM) will help this fund outperform Growth.  But late next year the reverse could be true as the “risk free” rates start to rival income funds with dividends.  We shall how my predictions come true.  Stay tuned.





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