While inflation and supply chain disruptions remain a problem, most economic indicators are looking good as seen with the latest jobs report coming in much better than expected at 850k new jobs and an unemployment rate of 5.9%. The Dow responded to this news by closing with a gain of 152 points on light trading volume at 34,786. For the week the Dow gained about 1% or 359 points and is up 13.2% for the year while the S&P 500 is up 15% for the year. All market indicators remain positive.
The Economy and Earnings
Car sales continue their hot streak. Dealers report plenty of willing buyers but inventory is lacking due to parts shortages. Tesla said it hit the 200,000 quarterly vehicle delivery mark for the first time ever. The company delivered 201,250 cars for the period ending June 30. Meanwhile Ford posted a solid increase in auto sales of 9.6% or 475,327 units. The company however announced it was suspending operations at 8 plants due to chip shortages. The plants will be down for a few weeks in July and August. Ford also said orders at dealerships are up 16 fold over this time last year.
Banks began announcing dividend increases this week. Morgan Stanley said it would double its dividend to 70 cents per share and increase its share buyback program. Bank of America will increase its dividend by 17% and JP Morgan upped its shareholder payout by 11%. Goldman Sachs is increasing its dividend by 60% to two bucks per share from $1.25. Bank guru Mike “Miracle Whip” Mayo is estimating that in aggregate, banks will pay investors an additional $2 billion of dividends next quarter and could deliver up to $127 billion in capital this year compared to $63 billion last year.
United Airlines said it was purchasing 100 Boeing 737 Max jets and 75 Airbus 321neo aircraft in the largest order placed by any carrier in the past decade. UAL is expecting delivery of the new planes starting in 2023.
Items of Interest
The Washington State Long Term Care Trust Act is sparking more businesses and organizations based in the Washington to notify employees of the pending tax which takes effect January 1, 2022. If you have a private long term care plan in place by the end of October 2021 you can opt out of the tax but the rush of people trying to get a policy ahead of the deadline is causing delays in medical exams and several carriers are pulling policy offerings or putting restrictions on new business in an effort to prevent people from buying a policy only to cancel it once they are exempt from the tax. Please call us if you have questions regarding long term care insurance and the Washington State LTC Trust Act.
The 4th of July weekend means that markets will be closed Monday and we will be back at it on Tuesday the 6th.
Have a wonderful weekend as we celebrate our nation’s birth and gratitude for the freedoms we enjoy. Someone once said that when we are grateful for what we have, then we are “fitted to receive more”.