Apparently a basketball tournament wasn’t the only notable event from March this year.
Stock indices were mostly higher in March as another $1.9 trillion in COVID-19 relief was passed (cha-ching). The added stimulus, combined with an improving economic backdrop and an increasing vaccination rate, helped propel markets higher.
However, rather than the same old (new?) tech companies leading the way higher, the aforementioned factors provided a tailwind for cyclical stocks (companies who are more sensitive to the economic environment). As a result, value stocks outperformed growth stocks on the whole for the month as investors began to anticipate a reopened economy later this year.
While stocks continued to move broadly higher, March was another relatively negative month for bonds. This was the third consecutive negative month for traditional US bonds as yields continued to climb higher (bond prices tend to fall when yields go up). The 10-year Treasury bond yield jumped from 1.44% to 1.73% – its highest level since January 2020.
Just like that, the first quarter of 2021 is in the books. Time really does fly when you’re having fun waiting for the economy to fully reopen…
The story that keeps on Ever Giving?
Ever Given, the massive 1,312 foot container ship, ran aground in the Suez Canal on March 23.
The blockage resulted in a massive disruption as approximately 12% of all global trade flow through the canal.
Six long days after being wedged sideways, the ship was freed, with a backlog of more than 300 ships waiting to enter the canal.
While the economic implications were negative (an approximate $54 billion in trade loss and delays), the bizarre event did bring a silver lining.
Many individuals begging for excitement after a year full of lockdowns were able to have some fun at Ever Given’s expense – creating websites where you could move the ship anywhere in the world, and posting daily “traffic reports” for the Suez Canal.
If you feel like you had a bad month, at least you can rest assured you didn’t have a $20 billion fire sale bad month (like the private investment firm Archegos).
Archegos was using total return swap contracts to take large positions in various stocks while committing minimal funds up front. (The firm had $10 billion of assets, but its exposure to markets was estimated at $50 billion through leverage).
When the stock prices of some of the holdings in the portfolio began to fall, the lenders on the swap contracts began asking to be repaid (margin calls).
Since Archegos was unable to repay, some of the lenders began selling their stocks to eliminate exposure, resulting in further downward pressure for these stocks.
The result? Major losses for Archegos as well as for the major banks it worked with.
Broad Market Returns
| Index | 1 Month | 3 Month | YTD | 1 Year |
| S&P 500 (VOO) | 4.58% | 6.37% | 6.37% | 56.47% |
| NASDAQ (QQQ) | 1.72% | 1.85% | 1.85% | 68.66% |
| Large Cap Growth (VUG) | 1.80% | 1.61% | 1.61% | 65.25% |
| Large Cap Value (VTV) | 6.67% | 11.11% | 11.11% | 51.66% |
| Small Cap Growth (VBK) | -2.42% | 2.69% | 2.69% | 83.59% |
| Small Cap Value (VBR) | 5.32% | 16.92% | 16.92% | 90.39% |
| Developed International (VEA) | 2.77% | 4.51% | 4.51% | 50.85% |
| Emerging Markets (VWO) | -0.71% | 4.01% | 4.01% | 58.48% |
| REITs (VNQ) | 5.15% | 8.79% | 8.79% | 36.79% |
| Aggregate Bonds (BND) | -1.27% | -3.64% | -3.64% | 1.56% |
| Corporate Bonds (VCIT) | -1.47% | -3.89% | -3.89% | 9.81% |
| High Yield Bonds (JNK) | 0.97% | 0.62% | 0.62% | 21.01% |
| Long Term Treasuries (VGLT) | -4.91% | -13.38% | -13.38% | -16.33% |
| International Bonds (BNDX) | -0.01% | -2.29% | -2.29% | 2.67% |
Fun Facts – April Edition
- Remember to get your umbrella’s out. The old adage “April showers bring May flowers” reaches back to approximately 1610 (if it’s survived that long, you know it has to be right).
- Get your dustpans and trash bins ready. April is the most common month for spring cleaning.
- Though it is usually held in April, the 125th Boston Marathon has been postponed until October this year due to COVID-19.
- After a 1,500 year break, the first Olympics of the modern era took place on April 6, 1896, in Athens.
- Historically speaking, April has been one of the better performing months for stocks (though stocks are obviously not guaranteed to always do well in April due to the randomness of returns in markets during any given year).
Derek Prusa, CFA, CFP® and Ben Webster, CFP®
Co-Founders and Owners of Aspire Wealth
Qualified Charitable Distributions (QCDs)
