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The stock market closed off another successful week, with the big averages posting their best show since November.
NYSE
The stock market has been a path to wealth for generations of American families. That is even though only about half of them have shares; in fact, the richest 1% of U.S. households make up more than half of equity ownership, according to Federal Reserve data. In most cases, the path taken is to buy shares in companies. But for a few, the way is to sell out.
Take the Koss family, who control the anonymity
Koss Corp.
(ticker: KOSS), best known for the popularity of stereo headphones back when boomers were young. Since then, his sacrifices have been largely abandoned by the likes of Sennheiser and
Sony
Modules (SNE) preferred by audio professionals, and the ubiquitous AirPods from
Apple
(AAPL) and stop-sound models from Bose that appeal to those who value convenience over ultimate sound quality.
But the Koss clan, as well as other company spies, last week jumped into the jump in share price of their microcap company, which was caught in the frenzy led by the ones that are famous now
GameStop
(GME) is an increase that has moved all the way from financial news to Saturday Night Live.
Since that frenetic act raised Koss shares as high as $ 127.45 from around three buckets at the beginning of the year, various insiders took the money and ran. As reported by the Milwaukee Journal Sentinel, officials from Kosses and Koss Corp. more than $ 45 million selling shares – an amount that exceeded the company ‘s stock market value at the end of 2020.
Securities and Exchange Commission films show they missed the top ticks, selling mostly at $ 20 to $ 60 a share. But that was still better than Friday ‘s close of $ 19.98 – more than two – thirds below where the stock had ended a week earlier.
This is not to be construed as a criticism of these favorable sellers. Nothing could be more rational than striking a subtle claim. The irony is that much of the frenzied purchase of stocks with apparent value went through the bankruptcy of Robinhood. Who would have thought that clothing with that moniker could be a party to give to rich people, who would sell wisely and well, and take away from the poor buyers who did not?
Income in stocks moved to false heights was entirely unexpected. As I wrote here a week ago, inflated quotas always attract sellers. An old saying in the commodity markets is that the cure for high prices is high prices. His wisdom was pushed home after a brief spike in silver last week, based on the (abruptly gone) misconception that short-term pressure could be invented in the metal.
Anyway, the stock market closed off another winning week, with the big averages posting their best show since November. The S&P 500, the Nasdaq Composite, and the Russell 2000 index of smaller stocks ended at charts. As some “meme stocks” were pushed back to earth, the Cboe Volatility Index, aka the VIX, returned from above the 30 level reflecting the increase in risk, to the realm. low-20 that had existed before the market and the rest of the world paid attention to the likes of GameStop.
But the financial development that was much more important, as usual, was in the bond market. The yield curve – the graph of finances from short-term or long-term maturities – is the highest slope built in years. That’s due to a long-term yield climb, with the benchmark 10-year note ending the week at 1.17%, near the recent high end of the trading range, and the 30- link. year at 1.98%, close to 2% for the first time in about a year.
This is a classic sign that the bond market expects stronger economic growth and higher inflation. Those expectations received a boost Friday after both Houses of Congress voted to begin the process of approving President Joe Biden’s $ 1.9 trillion fiscal relief plan without votes from Congress Republicans.
Friday’s earnings report was disappointing, however, with a 49,000 smaller-than-expected rise in nonfarm payrolls in January, and revised job losses in December to 227,000 from the 140,000 originally reported. The unemployment rate fell to 6.3% last month from 6.7%, but largely due to lower workforce participation. The inconclusive data may support the argument for fiscal action.
Some economists are expected to push growth forecasts, with Nancy Lazar of Cornerstone Macro now looking to see the economy expand at a rate of 7% by the fourth quarter, up from its previous estimate of 6%. That’s what both the bond and stock markets seem to be priced into, and that means any shortfall in recovery would be a surprise. So far, 2021 has been full of them.
Read the rest of Up And Down Wall Street: Rising home prices say inflation is real. The food keeps deceiving No.
Write to Randall W. Forsyth at [email protected]