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Economic

A Strange Pandemic for Asset Valuations: They’ve Gone Up!

Alex Carrick
A Strange Pandemic for Asset Valuations: They’ve Gone Up!

Housing & Share Price Wealth Advances

For the past year, the news has been filled with deeply distressing stories about the coronavirus contagion and sectors of the economy where jobs and earnings losses have been enormous.

February 2021 saw new all-time highs attained by the Dow Jones Industrials average, the S&P 500, NASDAQ and the Toronto Stock Exchange Text Graphic

Against most initial expectations, however, there’s been one underpinning of the lives of many of us (keeping our fingers crossed) that has gone mainly from strength to strength, the value of our assets. Prices for residential properties have made solid gains and stock markets have been soaring.

Several pandemic-related factors have boosted housing real estate values. (1) The Federal Reserve has kept interest rates inordinately low, stimulating demand. (2) Existing-home owners are staying put, reducing the inventory of properties offered for sale.

(3) Prospective buyers are looking for accommodations with adequate square footage to facilitate the new work-from-home trend. And (4), in some instances, government income relief checks have helped with the accumulation of down payment funding.

As for equity prices, February 2021 saw new all-time highs attained by the Dow Jones Industrials average, the S&P 500, NASDAQ and the Toronto Stock Exchange. Year over year, as of the latest month’s closing, the DJI was +21.7%; the S&P 500, +29.0%; NASDAQ, an outstanding +54.0%; and the TSX, a modest +11.0%. But it should be added that with commodity prices beginning to revive, the TSX managed a better month-to-month gain in February (+4.2%) than the other four indices.

Also, worth noting (see Table 2), is that NASDAQ’s supremacy for valuation appreciation has been challenged at home by the Russell 2000 firms-with-smaller-capitalizations index (+49.1% y/y) and, internationally, by the iShares MSCI Emerging Markets Asia index (+41.7% y/y).

The Tokyo Nikkei 225 index has been no slouch, either, +37.0% y/y.

Table 1: Stock exchanges – performances of key indices – February 26, 2021
All 4 indices set new highs in Feb 2021. The TSX, thanks to commodity price hikes, recorded the best m/m jump, +4.2%.
Sources: New York Stock Exchange (NYSE), Standard and Poor’s (S & P), National Association of
Securities Dealers Automated Quotations (NASDAQ), Toronto Stock Exchange (TSE) and Reuters.
Table: ConstructConnect.
Graph 1: Performances of key stock market indices during latest year
NASDAQ has performed best over the past 12 months, +54.0 y/y.
Data sources: New York Stock Exchange (NYSE), Standard and Poor’s (S & P), National Association of
Securities Dealers Automated Quotations (NASDAQ), Toronto Stock Exchange (TSE) and Reuters.
Chart: ConstructConnect.
Table 2: Key Domestic & International Stock Market Indices – February 26, 2021
NASDAQ led all world markets year over year with a gain of 54.0%.
‘"Ticker symbols" are in brackets. MSCI (formerly Morgan Stanley Capital International) is a leading provider of investment decision support tools, with indices as one specialty. "iShares" is a web site that specializes in "exchange traded funds", or ETFs, managed by BlackRock Investments LLC.
Data Source: ‘finance.yahoo.com’
Table: ConstructConnect.
Graph 2: Stock Market Performances: U.S. & Canada vs Rest of World
Year over Year as of Month-end Closings, February 26, 2021
For best gain y/y, NASDAQ finally has some competition, from the Russell 2000 & from iShares Emerging Markets Asia. Only 1 of the indices is recoring a y/y decline, London's FTSE.
iShares is a web site that specializes in “exchange traded funds”, or ETFs, managed by BlackRock Investments LLC.
Data Source: ‘finance.yahoo.com’
Chart: ConstructConnect.
Graph 3: U.S. Stock Markets − February, 2021
As of closing Feb 26 2021, NASDAQ   was +54.08% year over year and +98.9% compared with its 52-week low.
Latest data points are for Feb. 26, 2021.
Red vertical lines denote Feb 2009 major ‘troughs’ for the indices.
Data sources: New York Stock Exchange (NYSE), Standard and Poor’s (S & P), National Association of
Securities Dealers Automated Quotations (NASDAQ), Reuters & Yahoo.
Chart: ConstructConnect.

What has Asset Appreciation Meant for Related Jobs?

If anyone is in doubt as to how truly amazing U.S. stock market performances have been, they need only look at the results in Graph 4. Over the past dozen years, dating back to February 2009, which was the last major trough period for share prices, the DJI index has climbed +338%; the S&P 500, +419%; and NASDAQ, a stunning +857%.

Surely the improvement in asset valuations means that employment in related areas must be setting the pace among all jobs. No, not necessarily.  

In the monthly Employment Situation Report published by the Bureau of Labor Statistics (BLS), there are four broad job categories with close ties to asset management: (1) finance and insurance; (2) real estate and rental and leasing; (3) legal services; and (4) accounting and bookkeeping services.

As of February 2021, the year-over-year number-of-jobs levels have been -5.5% in (2) and -3.1% in both (3) and (4), while staying flat, +0.4%, in (1). There’s a subset of (1) termed ‘securities, commodity contracts, investments, and funds and trusts’, where employment is +1.1% year over year. But the level of such employment, which does relate specifically to stock market activity, is relatively small, just under one million individuals. By way of comparison, its ‘umbrella category, ‘finance and insurance’, employs 6.5 million people.

There would seem to be two factors at play in these disappointing employment results. First, potential customers seeking these services have been able to increasingly access ‘pre-packaged’ help online. Second, the acceleration in the tendency to work from home has taken a toll on the need for in-office support staff.

Graph 4: Performances of key stock market indices since 2008-09 downturn
As of Feb 26 2021 closing values, percentage increases of key stock market indices since their Feb 2009 major troughs:  NASDAQ +857%; S&P 500 +419%; DJI +338%; and TSX +122%.
Data sources: New York Stock Exchange (NYSE), Standard and Poor’s (S & P), National Association of
Securities Dealers Automated Quotations (NASDAQ), Toronto Stock Exchange (TSE) and Reuters.
Chart: ConstructConnect.
Graph 5: New York Stock Exchange: Dow-Jones Industrials (30)
Upon closing, Feb 26 2021, the DJI was +3.2% m/m and +21.7% y/y. Compared with its all-time high of 32,010 just recently reached on Feb 24 2021, the DJI ended the month -3.4%.
Areas of gray shading denote century’s 2 prior recessions (‘dot.com’ collapse in 2001 & Great Recession Q1 08 to Q2 09). The chart shows month-end closing figures. The latest data point is for February 26, 2021.
Data sources: New York Stock Exchange (NYSE), Standard and Poor’s (S & P), National Association of
Securities Dealers Automated Quotations (NASDAQ), Toronto Stock Exchange (TSE) and Reuters.
Chart: ConstructConnect.
Graph 6: New York Stock Exchange: Standard and Poor’s (500)
Upon closing, Feb 26 2021, the S&P 500 was +2.6% m/m and +29.0% y/y. Compared with its all-time high of 3,950 just recently reached on Feb 16 2021, the S&P 500 ended the month -3.5%.
Areas of gray shading denote century’s 2 prior recessions (‘dot.com’ collapse in 2001 & Great Recession Q1 08 to Q2 09). The chart shows month-end closing figures. The latest data point is for February 26, 2021.
Data sources: New York Stock Exchange (NYSE), Standard and Poor’s (S & P), National Association of
Securities Dealers Automated Quotations (NASDAQ), Toronto Stock Exchange (TSE) and Reuters.
Chart: ConstructConnect.
Graph 7: NASDAQ Composite Index
Upon closing, Feb 26 2021, NASDAQ was +0.9% m/m and +54.0% y/y. Compared with its all-time high of 14,175 just recently reached on Feb 16 2021, NASDAQ ended the month -6.9%.
Areas of gray shading denote century’s 2 prior recessions (‘dot.com’ collapse in 2001 & Great Recession Q1 08 to Q2 09). The chart shows month-end closing figures. The latest data point is for February 26, 2021.
Data sources: New York Stock Exchange (NYSE), Standard and Poor’s (S & P), National Association of
Securities Dealers Automated Quotations (NASDAQ), Toronto Stock Exchange (TSE) and Reuters.
Chart: ConstructConnect.
Graph 8: S&P/TSX Composite Index: Toronto Stock Exchange
Upon closing, Feb 26 2021, the TSX was +4.2% m/m and +11.0% y/y. Compared with its all-time high of 18,580 just recently reached on Feb 16 2021, the TSX ended the month -2.8%.
Area of gray shading denotes Canada’s earlier recession in current century (Q4 2008 to Q2 2009; no ‘dot.com’ collapse). The chart shows month-end closing figures. The latest data point is for February 26, 2021.
Data sources: New York Stock Exchange (NYSE), Standard and Poor’s (S & P), National Association of
Securities Dealers Automated Quotations (NASDAQ), Toronto Stock Exchange (TSE) and Reuters.
Chart: ConstructConnect.

Please click on the following link to download the PDF version of this article:
Economy at a Glance Vol. 17, Issues 43 and 44 – A Strange Pandemic for Asset Valuations: They’ve Gone Up! – PDF


Alex Carrick is Chief Economist for ConstructConnect. He has delivered presentations throughout North America on the U.S., Canadian and world construction outlooks. Mr. Carrick has been with the company since 1985. Links to his numerous articles are featured on Twitter @ConstructConnx, which has 50,000 followers.

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