3 Things 3-15

03/15/2021

Although MAS is a financial services company, not everything published herein will be about numbers or investing. But no matter the topic, we hope for three things: 1) That you find the time you spend engaged worthwhile. 2) That you’ll reach out to us for help in any of our areas of expertise if something we discuss creates an urging in you to do so. 3) That you’ll share this with somebody new each time you read it.

Thing One

The Third Tim Is A Charm

As you are probably aware, President Biden signed the $1.9 trillion Covid relief bill into law on Thursday, March 12th. Part of that bill provides for a third round of stimulus checks to be sent to out to eligible Americans. For this third round, any individual making $75,000 or less is eligible for $1,400 and any jointly filing couple making $150,000 or less is eligible for $2,800. In addition to claiming their own checks, individuals and married couples within the income limits may claim $1,400 for each dependent.

In round two’s stimulus offering, many eligible people never got their checks. Those people were instructed by the IRS to claim a credit on their 2020 tax return. According to the IRS website, the round three checks, which started going out this weekend, will be processed throughout 2021, so you shouldn’t panic if yours doesn’t show up immediately. But if you’re looking for more information about the status of your check, you can visit the IRS’ getmypayment website to get the details.

I’ve helped some people try to determine the status of their payment so I can tell you that the answer you get on the website will either be precisely informative or very vague. In the second case it’ll be up to you to make sure you get your check or in the very least claim the credit if you haven’t gotten it by the next tax filing season.

Thing Two

A Rising Bond Yields Q & A

The benchmark 10-year Treasury yield has almost doubled since December of 2020. Here are a three questions and answers related to that topic:

Q: Why is the 10-year yield significant?

A: Per Investopedia.com:

“The 10-year is used as a proxy for many other important financial matters, such as mortgage rates, and auto loans. This bond also tends to signal investor confidence. When confidence is high, prices for the 10-year drop and yields rise. This is because investors feel they can find higher returning investments elsewhere and do not feel they need to play it safe. When confidence is low, bond prices rise and yields fall, as there is more demand for this safe investment.”

Q: Since interest rates are rising, should we be worried about inflation?

A: Per CNBC.com:

“It depends on who you ask, and what you are looking at.

Do we see inflation in the real world? We do in commodities: Oil is approaching the highest since 2018, for example, and copper is at an almost 10-year high.

But signs of consumer inflation, for example, have been muted, with inflation at or below 2% for many years.”

Q: What do rising yields mean for the stock market?

A: Per USA Today:

“In the past three months, the 10-year Treasury yield has risen by over half a percentage point, a rapid move that is larger than 90% of all the three-month periods since 1990, according to UBS Financial Services.

Still, stocks typically perform quite well during these periods. On average, the S&P 500 registers a 3.9% gain (16.5% annualized) when interest rates rise by more than half a percentage point, data from UBS Financial Services shows. While returns tend to be a bit lower in the three months after a big move in rates – 2.5% on average – they are no worse than a typical three-month period.

The rise in yields does have implications for the stock market and could make shares of companies with high valuations less attractive. Those types of stocks tend to be technology companies, who are priced typically for growth and not for a steady return of dividends like consumer staples, utilities, and real estate companies.

Rising rates tend to be favorable for more cyclical sectors, or companies whose businesses and stock prices tend to follow the business cycle. Those include sectors like consumer discretionary, energy, financials, industrials, and health care."

Thing Three

Just A Thought

"Beware of no man more than of yourself; we carry our worst enemies within us." - Charles Spurgeon