Stock markets closed the month slightly lower with the average of the three major indices dropping -0.38%. Bonds, particularly municipal bonds, rose slightly in May. In stock sectors, energy, health care and small cap value stocks offered upside. Materials sector led upside, with 4.2% return in May. The big turnarounds last month were steel up 67% and BTC (bitcoin) -34.5%.
The housing market and digital currencies are poised to affect the economy. Nationwide the housing market is hot with many buyers looking for second homes. The demand for building materials, with limited supply in the pandemic, could overheat the economy. So far so good. Cryptocurrency is coming of age with big banks and big tech. It is good to remember that big institutions can support cryptocurrency and be bailed out if they fail. Small investors have no such backup.
All clients will receive a notice from TD Ameritrade about a change in the FDIC cash position. This is the cash position in each account that is used when trades are placed. Currently it is a TD Bank account and is going to a comparable Schwab bank account with the same FDIC insurance. There is nothing you need to do as this will happen automatically. As you know, bank interest rates are pitifully low and brokerages make revenue on these cash positions, so Schwab is making this easy change first. It may still be many months before more complex changes, like moving client accounts, take place.
This spring really feels like we are opening up from a long, long winter. Widespread vaccinations reduce pandemic threats and allow us to safely meet and greet and touch again. There is no picking up where we left off. We return with renewed values to a world changed from the one we left. People, the casual and committed relationships in our lives source joy. We find our worth in what we do for others.