Neanderthal DNA may make people more – or less – susceptible to COVID-19, reported The Economist. It all depends on whether you have the genes and, if you do, which DNA string you inherited.

No matter what your gene sequence looks like, vaccines can help fight the virus. So far, all of the vaccines available in the United States have proven to be effective in preventing hospitalization and death from coronavirus, according to the Centers for Disease Control (CDC).

We saw the economic effect of accelerating vaccinations last week when the number of new jobs created in February exceeded expectations. The Bureau of Labor Statistics reported there were 379,000 new jobs, primarily in the leisure and hospitality sector, which was hard hit by the virus and lockdowns.

The Economist reported, “…there is a strong case for optimism. The experience of places such as New Zealand and Australia is that once the threat of coronavirus has passed, people are keener than ever on being out and about. Meanwhile, the vaccine roll-out continues to accelerate…The Senate is considering another $1.9trn in stimulus, including [checks] of $1,400 to most Americans. The job market has been deeply wounded. But there are growing reasons to hope that it might heal rapidly.”

Positive U.S. labor market news inspired a rally on Friday; however, earlier in the week, concerns about rising Treasury rates pushed U.S. stock markets lower. The yield on 10-year Treasury notes rose as high as 1.6 percent on Friday, following the jobs report, before retreating to 1.5 percent, reported Yun Li of CNBC.

Last week, investors disdained companies they have previously favored, according to a source cited by Ben Levisohn of Barron’s. The source analyzed the market by screening “…for stocks that had supersized 12-month returns at the end of 2020, faster relative growth, price/earnings ratios that were more than double that of the Russell 1000, and a minimum market capitalization of $10 billion…all of which fell at least 9 percent this past week.”

Central banks are introducing digital currencies. In January, The Bureau of International Settlements (BIS) surveyed central banks and found most (86 percent) were considering central bank digital currencies (CBDC):

“CBDC is different from cash, as it comes in a digital form unlike physical coins and banknotes. CBDC is also different from existing forms of cashless payment instruments for consumers such as credit transfers, direct debits, card payments and e-money, as it represents a direct claim on a central bank, rather than a liability of a private financial institution. This type of riskless claim also makes CBDC different from cryptocurrencies…or other private digital tokens…”

The BIS defined cryptocurrencies as “decentralized digital tokens without an issuer that are not representative of any underlying asset or liability,” and private digital tokens as “…have an identifiable issuer or represent a claim and/or underlying assets.”

There are many potential benefits of CBDC. The Economist reported:

“Cashless transactions make for faster, more reliable payments and are less susceptible to counterfeiting. Issuing digital cash is cheaper than minting coins, so long as it is protected against hacking. Officials also have an easier time monitoring how digital money is used, making it harder to fund criminal activities. In poorer countries, central banks hope that digital currencies will bring unbanked citizens into the financial system, boosting economic development.”

Central banks in developed countries have been slower to pursue CBDC than those in emerging nations. According to BIS, seven of the eight banks engaged in advanced CBDC planning are in emerging countries. China’s central bank is leading the CBDC charge among developed nations. It recently introduced the electronic Chinese yuan, or eCNY.

When evaluating CBDCs, it’s important to understand how the currency operates. For example, Felix Salmon of Axios reported China’s eCNY:

“…doesn’t use blockchain technology. Instead, the ledger of who owns what is closely held at the Chinese central bank – and nowhere else…eCNY requires full trust of the Chinese monetary authorities. If it goes global, then China will at all times know exactly how much of its currency you possess – and could zero you out for any or no reason.”

CBDCs may become part of the new normal that emerges as the coronavirus threat passes.

Weekly Focus – Think About It
“If this country is ever demoralized, it will come from trying to live without work.”
–Abraham Lincoln, 16^th U.S. President

Investment advice offered through Research Financial Strategies, a registered investment advisor.
* This newsletter and commentary expressed should not be construed as investment advice.
* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value.  However, the value of fund shares is not guaranteed and will fluctuate.
* Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.
* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.
* All indexes referenced are unmanaged. The volatility of indexes could be materially different from that of a client’s portfolio. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. You cannot invest directly in an index.
* The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index.
* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
* Gold represents the afternoon gold price as reported by the London Bullion Market Association. The gold price is set twice daily by the London Gold Fixing Company at 10:30 and 15:00 and is expressed in U.S. dollars per fine troy ounce.
* The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
* The DJ Equity All REIT Total Return Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.
* The Dow Jones Industrial Average (DJIA), commonly known as “The Dow,” is an index representing 30 stock of companies maintained and reviewed by the editors of The Wall Street Journal.
* The NASDAQ Composite is an unmanaged index of securities traded on the NASDAQ system.
* International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.
* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
* Past performance does not guarantee future results. Investing involves risk, including loss of principal.
* The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee it is accurate or complete.
* There is no guarantee a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
* Asset allocation does not ensure a profit or protect against a loss.
* Consult your financial professional before making any investment decision.
* To unsubscribe from the Weekly Market Commentary please reply to this e-mail with “Unsubscribe” in the subject.

Investment advice offered through Research Financial Strategies, a registered investment advisor.

Sources:
https://www.economist.com/science-and-technology/2021/02/24/dna-from-neanderthals-affects-vulnerability-to-covid-19 (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2021/03-08-21_TheEconomist-DNA_from_Neanderthals_Affects_Vulnerability_to_COVID-19-Footnote_1.pdf)
https://www.cdc.gov/coronavirus/2019-ncov/vaccines/vaccine-benefits.html
https://www.bls.gov/news.release/empsit.nr0.htm
https://www.economist.com/united-states/2021/03/05/americas-payrolls-smash-through-expectations (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2021/03-08-21_TheEconomist-Americas_Payrolls_Smash_through_Expectations-Footnote_4.pdf)
https://www.cnbc.com/2021/03/04/stock-market-open-to-close-news.html
https://www.barrons.com/articles/the-reflation-trade-is-stirring-growing-pains-in-growth-stocks-heres-why-51614988775?refsec=the-trader (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2021/03-08-21_Barrons-The_Reflation_Trade_is_Stirring_Growing_Pains_in_Growth_Stocks-Heres_Why-Footnote_6.pdf)
https://www.bis.org/publ/bppdf/bispap114.pdf (Pages 3, 4, 5, 9)
https://www.economist.com/the-economist-explains/2021/02/16/what-is-the-fuss-over-central-bank-digital-currencies (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2021/03-08-21_TheEconomist-What_is_the_Fuss_Ove_Central-Bank_Digital_Currencies-Footnote_8.pdf)
https://www.axios.com/crypto-central-bank-digital-currency-b433d28f-da30-48f9-a9ff-df3ca66e14c6.html
https://www.goodreads.com/quotes/tag/nation

Students of financial markets may have noted a historically unusual event last week.

On Thursday, the yield on 10-year U.S. Treasury notes briefly matched the dividend yield for the Standard & Poor’s (S&P) 500 Index. This type of convergence is uncommon. In normal times, the yield on 10-year Treasuries tends to be higher than the dividend yield of the S&P 500. Felix Salmon of Axios explained:

“The 10-year Treasury note is a risk-free asset: If you hold it for 10 years, you know exactly how much it’s going to return…The S&P 500 dividend yield is normally lower than the risk-free rate. Investors earn less in dividends than [they] would holding the same amount of money in Treasury bonds, but they hope that rising stock prices will make up the difference.”

These, however, are not normal times.

Throughout much of 2020, the S&P 500 Index offered investors a return comparable to, or higher than, 10-year Treasuries. Low Treasury yields reflected the Federal Reserve’s highly accommodative monetary policy, which kept the fed funds rate near zero to support the economy through the pandemic. Since August 2020, however, the yield on 10-year T-notes has been creeping higher despite the Fed’s actions. Last week, it closed at 1.46 percent.

Rising yields appeared to concern investors last week. Ben Levisohn of Barron’s reported:

“Usually, we can point to a big event or a piece of economic data that shook up the market, but that wasn’t the case this time. The data were solid, with weekly jobless claims dropping more than expected, durable-goods orders rising more than forecast, and personal income getting a big boost from stimulus checks sent out in January…But there was the 10-year Treasury yield.”

Rising Treasury yields suggest bond investors think the economy is likely to strengthen and pent-up consumer demand could spark spending on shopping, dining, and social events. A spending spree could lead to higher inflation, reported Elliot Smith of CNBC. Rising yields also could signal weak demand for U.S. Treasuries, according to Levisohn.

Last week, major U.S. stock indices finished lower.

And the most expensive cities in the world are… Every year, The Economist Intelligence Unit (EIU) reports on the worldwide cost of living by surveying the cost of 138 goods and services in major cities around the world.

As of September 2020, prices were up just 0.3 percent, year-to-year. The cost of consumer staples remained fairly steady, overall. However, the prices for recreation (which includes personal electronics), personal care, tobacco, alcohol, and domestic help, increased. The report stated:

“Amid the pandemic, price-conscious consumers have also opted for cheaper products in many countries, increasing price competition for less-expensive goods…On the other hand, high-earning consumers have been comparatively unaffected by the pandemic. While they are likely to shop less, prices of premium products have remained resilient. Supply-chain problems have also had differing impacts on different goods, pushing up the price of high-demand products such as computers in some cities.”

Regionally, prices fell in Latin America, North America, Eastern Europe, and Africa. They increased in the Middle East, Asia, and Western Europe. The EIU’s World Cost of Living Index found, during 2020, the most expensive cities in the world were:

·         Paris, France

·         Hong Kong, China

·         Zurich, Switzerland

·         Singapore, Malaysia

·         Osaka, Japan

·         Tel Aviv, Israel

·         New York, United States

·         Geneva, Switzerland

·         Los Angeles, United States

·         Copenhagen, Denmark

The least expensive were:

·         Damascus, Syria

·         Tashkent, Uzbekistan

·         Almaty, Kazakhstan

·         Buenos Aires, Argentina

·         Karachi, Pakistan

·         Caracas, Venezuela

·         Lusaka, Zambia

·         Chennai, India

·         Bangalore, India

·         New Delhi, India

Weekly Focus – Think About It
“The wish to travel seems to me characteristically human: the desire to move, to satisfy your curiosity or ease your fears, to change the circumstances of your life, to be a stranger, to make a friend, to experience an exotic landscape, to risk the unknown.”
–Paul Theroux, Travel writer and novelist

Investment advice offered through Research Financial Strategies, a registered investment advisor.
* This newsletter and commentary expressed should not be construed as investment advice.
* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value.  However, the value of fund shares is not guaranteed and will fluctuate.
* Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.
* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.
* All indexes referenced are unmanaged. The volatility of indexes could be materially different from that of a client’s portfolio. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. You cannot invest directly in an index.
* The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index.
* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
* Gold represents the afternoon gold price as reported by the London Bullion Market Association. The gold price is set twice daily by the London Gold Fixing Company at 10:30 and 15:00 and is expressed in U.S. dollars per fine troy ounce.
* The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
* The DJ Equity All REIT Total Return Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.
* The Dow Jones Industrial Average (DJIA), commonly known as “The Dow,” is an index representing 30 stock of companies maintained and reviewed by the editors of The Wall Street Journal.
* The NASDAQ Composite is an unmanaged index of securities traded on the NASDAQ system.
* International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.
* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
* Past performance does not guarantee future results. Investing involves risk, including loss of principal.
* The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee it is accurate or complete.
* There is no guarantee a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
* Asset allocation does not ensure a profit or protect against a loss.
* Consult your financial professional before making any investment decision.
* To unsubscribe from the Weekly Market Commentary please reply to this e-mail with “Unsubscribe” in the subject.

Investment advice offered through Research Financial Strategies, a registered investment advisor.

Sources:
https://finance.yahoo.com/quote/%5ETNX/history?p=%5ETNX
https://www.axios.com/treasury-yield-sp-convergence-efc3ee98-279a-4713-960d-7e52216deed1.html
https://www.wsj.com/articles/jerome-powell-sees-easy-money-policies-staying-in-place-11614092400?mod=searchresults_pos1&page=1&mod=article_inline (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2021/03-01-21_WSJ-Jerome_Powell_Sees_Easy-Money_Policies_Staying_in_Place-Footnote-3.pdf)
https://www.multpl.com/s-p-500-dividend-yield/table/by-month (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2021/03-01-21_Multpl-S_and_P_500_Dividend_Yield_by_Month-Footnote_4.pdf)
https://www.treasury.gov/resource-center/data-chart-center/interest-rates/pages/TextView.aspx?data=yieldYear&year=2020
https://www.barrons.com/articles/the-stock-markets-rally-could-be-nearing-an-end-how-we-know-51614386520?refsec=the-trader (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2021/03-01-21_Barrons-This_Data_Point_Signals_the_Rally_Could_be_Nearing_an_End-Footnote_6.pdf)
https://www.cnbc.com/2021/02/26/bank-of-englands-haldane-warns-on-inflation-bond-yields-move-higher.html
https://www.eiu.com/n/campaigns/worldwide-cost-of-living-2020 (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2021/03-01-21_TheEconomist-How_is_COVID-19_Affecting_the_Prices_of_Consumer_Goods-Footnote_8.pdf)
https://www.economist.com/graphic-detail/2020/11/18/where-are-the-worlds-most-expensive-cities (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2021/03-01-21_TheEconomist-Where_are_the_Worlds_Most_Expensive_Cities-Footnote_9.pdf)
https://en.wikipedia.org/wiki/List_of_cheapest_cities
https://www.goodreads.com/author/quotes/9599.Paul_Theroux