* Biden today will outline $1.8 trillion proposal in new spending and tax credits
* India’s coronavirus crisis worsens as pandemic breaks health system
* Profits for Google and Microsoft surge as the firms thrive during the pandemic
* Fed expected to maintain aggressive monetary stimulus despite faster growth
* US Consumer Confidence Index rises to 14-month high in April
* Manufacturing growth in Richmond Fed district is steady in April vs. March
* US 1-year housing price increase continued to accelerate in February:

Whatever your view of the higher inflation expectations of late, particularly if firmer pricing pressure persists, it would be a distinct change from what’s prevailed over the past 40 years. Disinflation/deflation (DD) has been a dominant macro factor since Paul Volcker broke the back of inflation in a run of uber-hawkish monetary policy in the early 1980s. Since then, DD reigns supreme, arguably to the point that the policy of promoting this outcome has become a problem in its own right.

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* US population rose at slowest rate since 1930s in previous decade
* California’s governor will likely a recall vote this fall
* UK to send naval flotilla through tense waters in Asia next month
* Tesla reports strong earnings gain, in part boosted by trading bitcoin
* Are ESG market-beating results an illusion?
* Texas manufacturing activity continues expanding at strong pace in April
* US durable goods orders rebounded in March after loss in previous month
* Texas, Florida gains seats via new census data; NY and Calif. each lose a seat:

Commodities rallied last week, posting a fourth straight weekly gain. The rise led mostly positive returns for the major asset classes for the trading week through Apr. 23, based on a set of exchange traded funds.

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* Key swing vote in Senate says he’ll back targeted version of infrastructure bill
* Fully vaccinated Americans can visit Europe Union this summer
* India’s Covid surge is ‘spreading like wildfire’
* Space junk: ticking time-bomb for vital satellites orbiting earth
* Options market prices in rising odds of 3%-plus US consumer inflation
* Wide-ranging increases in prices spur worry that global markets are in a bubble
* New US home sales rebounded sharply in March
* US economy ‘firing on all cylinders’ via Apr PMI survey data:

Proprietary Strategies

A rally across most global markets last week lifted all three of our proprietary strategies, which use the same 16-fund opportunity set that defines their benchmark.

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● The Power of Creative Destruction: Economic Upheaval and the Wealth of Nations
Philippe Aghion, et al.
Review via The Economist
Joseph schumpeter thought capitalism was doomed. Incumbent firms would grow too powerful, leading to corruption and, eventually, socialism. His mid-20th-century pessimism has become fashionable today, as societies grapple with inequality, climate change and tech giants. Yet some of Schumpeter’s professional heirs are optimists. In “The Power of Creative Destruction” Philippe Aghion, Céline Antonin and Simon Bunel, three economists, apply his most powerful idea to contemporary debates in their discipline. The result is sweeping, authoritative and—for the times—strikingly upbeat.

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In this issue:

• Commodities rally to six-year high
• US stocks are flat, breaking a four-week winning streak
• US Treasuries continue to recover
• Broad, global diversification continues to lead portfolio strategy benchmarks

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In recent posts I looked at the power of asset allocation to capture average returns (or slightly better) and manage risk in portfolio design. Several tests show that this tool is robust for a variety of standard portfolio mixes. Let’s take the analysis up a notch by creating an ill-advised portfolio as a stress test.

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* Biden seeks higher taxes on wealthy to pay for child care, education
* Russia orders troops to pullback from Ukraine border after buildup
* Eurozone economic growth picked up speed in April, survey data shows
* PMI survey data points to strong economic revival in Apr for UK
* Japan’s economy is growing again–first time in over a year via survey data
* US Leading Economic Index rose in March, signaling stronger momentum
* Existing US home sales fell for second straight month in March
* US jobless claims fell to new pandemic low last week: