Wednesday of this week, President Biden will talk about his plans for infrastructure. The plan will include two parts and the first one has to do with roads and bridges. There are two reasons why we are focusing on this topic. The first reason is that the overall infrastructure plan is estimated to cost over one trillion dollars. There must be a way for that to be funded so we are looking at this wondering if there will be a tax increase. We will be listening to his first plan to see if he mentions anything about a tax increase or how he is planning on paying for the infrastructure plans. Another reason we are on alert with this is that we want to see what companies will potentially benefit the most from this infrastructure plan from an investment opportunity standpoint and also to see how the market will react to his news.
Today, two days before the expiration date, the CDC came out and extended the COVID eviction moratorium to June 30, 2021. This stops individuals from being evicted by their landlords for not paying their rent during the pandemic. Due to this being a health event, the CDC has limited the number of individuals being kicked out for not being able to pay their rent. It is estimated that as many as 20% of renters could not pay their rent last month, so this clearly impacts a large number of people. How will this impact the market? It affects the market because the rent that is due, is not forgiven and is just building up. In the short term, this is very helpful because it helps families to be able to pay for things like food and other essential items, but it is debt that is building up and will have to be paid eventually. There has been a lot of push on this topic. There have been several renter’s assistance bills passed but none have delivered the money to renters yet and this is one of the reasons why the eviction moratorium was extended. At some point, the rent will be due but in the short term, this is a way to help people focus on other things that are essential to their livelihood. This is an event that we are watching because it could be good for the markets since there will be a delay in the realization of how much of an impact the Coronavirus crisis has had on real estate. There is no way to tell how many people will have to be evicted in the future when the bill comes due, possibly on June 30th. This deadline has been extended before so there is no guarantee that this is a hard stop this time, but it is something we are watching closely.
Friday of last week, the market closed at 3,974 which gives us a new resistance level of 4,020 and a support level of 3,920. It is important to look at the 50-day moving average to see where we are in relation to that. Right now, the 50-day moving average is 3,873. We have a short market week this week due to the market being closed on Good Friday, but there is a lot of information coming out that could impact the markets heavily. We are going to keep an eye on the conversations about infrastructure to see if that will set up a bullish or bearish tone in the market for the future.
Bobby Norman, CFP®, AIF®
Email Bobby Norman here
Trey Booth, CFA®, AIF®
Senior Vice President
Email Trey Booth here
Adam Vansant, AIF®
Associate Vice President
Email Adam Vansant here
Fi Plan Partners is an independent investment firm in Birmingham, AL, serving clients across the nation through financial planning, wealth management and business consulting. Fi Plan Partners creates strategies in the best interest of their clients using both fee based investing and transactional investing.
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