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Advisors - July 29, 2021

Charlie Bilello’s 15 Charts for the First Half of 2021

Welcome to the first installment of YCharts’ newest series, “5 Charts to Show Your Clients” with Charlie Bilello, Founder and CEO of Compound Capital Advisors. Each month, we’ll sit down with Charlie to discuss approximately five visuals that illustrate current market trends, are great to share with clients, and were all created using YCharts. (Next month’s “5 Charts to Show Your Clients” will take place on August 19th. Click here to register for the webinar.)

For YCharts clients and trial users, all of Charlie’s charts from this webinar series will be available as pre-built templates in Fundamental Charts. Not a client? Reach out to start a 7-day free trial.

Twice a year, we will break down a few more visuals to highlight the most pressing topics from the first half of the year and again for year end—so to commemorate the launch of this series, we recapped 15 charts covering the first half of 2021. You can watch the full discussion here, or read on for highlights from the July 27th webinar:


The Great Reopening of America

Going back to 2000, there have never been more job openings in the U.S. than there are today, which Charlie says is a great sign for the economy. In fact, he thinks there’s a good chance you would have been called “crazy” a year ago if you thought job openings would be where they are right now.

US Job Openings 2021

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However, Charlie notes many industries have been unable to find employees in light of continuing unemployment benefits, which is one explanation for the abnormally high number of job openings. Though as the summer progresses and assuming federal benefits roll off in September as scheduled—about half of US states have ended their extra payments already— Charlie believes there’ll be “bigger job numbers in the fall” as employers receive more applicants to fill these openings, ultimately ramping up the recovery.


The Free Money Effect

As with job openings, Charlie says it’s likely nobody would have guessed the level of US retail and food services sales would be where it is today. At the same time, he speculates few probably anticipated the amount of stimulus poured into the US over the last 16 months. Charlies says the two large spikes in retail and food services sales—seen in late 2020 and early 2021—are mostly attributed to each stimulus package.

US Retail Food and Services Sales 2021

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Though Americans saved a healthy portion of stimulus payments, the backdrop of declining COVID-19 risk—including lower cases, hospitalizations, and deaths—led people to spend money on travel, their homes, and in other discretionary areas. Retail and food services sales are currently 18% above their pre COVID-19 levels, but Charlie says “it’s a consequence of handing out money, and is not sustainable without another round of stimulus.”

Manufacturers are loving “The Free Money Effect” as well, given the ISM Manufacturing PMI is at its highest reading since 1983. (A PMI survey above 50 indicates manufacturing expansion)

ISM Manufacturing PSI from 1980 through 2021

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It seems nearly every industry is ramping up output as fast as possible to meet demand, according to Charlie. The PMI is also a leading indicator for the economy, but Charlie notes the index’s relationship with the stock market (also a leading economic indicator) tends to be the opposite. He says a depressed PMI reading can actually lead to better future returns for equities, since a recession is likely taking place and stocks are made cheaper in the near-term. For now, Charlie is taking a “we’ll see what happens” approach, citing the PMI’s historic volatility.


Triumph of the Optimists and the Price of Admission

With the S&P 500 seemingly setting a new record high each day in 2021, it can be easy to assume that all equities are going up. Unfortunately, that has not been the case for some hotly-trending securities, such as Cathie Wood’s ARK Innovation ETF (ARKK) and the Defiance Next Gen SPAC Derived ETF (SPAK), which were down 16.5% and 24.3% through the end of Q2, respectively.

S&P 500, ARKK, and SPAC returns 2021 YTD

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That said, those invested in any U.S. equity sector have seen positive returns this year. Equity holders in the Energy, Financial, and Real Estate sectors—the bottom three performers in 2020—have been especially rewarded in 2021, as they are the three leaders YTD.

2020 SPDR S&P Sector Returns vs 2021 YTD

Download Table

Join us for next month’s “5 Charts to Show Your Clients” with Charlie Bilello on August 19th. Click here to register for the webinar

For YCharts clients: all 15 charts discussed in the webinar are available as templates in Fundamental Charts for further analysis. Not a current client? Start your free trial.


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