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Happy Memorial Day!  The major U.S. stock indexes posted modest gains in a quiet week of trading, with the S&P 500 and the Dow both rising around 1% and the NASDAQ adding more than 2%. The results left the S&P 500 and the Dow within less than a percentage point of record highs set three weeks earlier. For the second week in a row, growth stocks chipped away at the year-to-date dominance of value-oriented stocks, as a U.S. large-cap growth index outperformed its value counterpart by a wide margin. That weekly trend helped lift the growth- and tech-oriented NASDAQ, which outperformed the S&P 500 and the Dow. May was the sixth positive month out of the past seven for the S&P 500, which rose nearly 1%. The Dow added about 2% while the NASDAQ lagged, falling more than 1% and snapping a six-month string of gains.  In honor of the holiday, I have broken down this week’s news using quotes from General George S. Patton Jr.

“The test of success is not what you do when you are on top. Success is how high you bounce when you hit bottom.”

Oil has bounced tremendously. It was just April of last year when oil prices sank to their lowest level in history, dropping into negative pricing as oil supplies overwhelmed the globe’s storage capacity. Oil hit $0.01 a barrel before falling to as low as negative $40 and eventually settling at negative $37.63, the lowest level recorded since the New York Mercantile Exchange began trading oil futures in 1983.  It has been a meteoric rebound for oil prices. This week, U.S. crude oil prices climbed another 4%  to nearly $67 per barrel, the highest level since October 2018. Strong U.S. demand heading into the summer bolstered prices ahead of a key meeting of leaders from top oil-producing countries.

You need to overcome the tug of people against you as you reach for high goals.”

President Joe Biden released his fiscal year 2022 budget request to Congress on Friday, the first formal budget of his presidency. The proposed budget which requests $6 trillion in spending is focused on helping reach some of the administration’s lofty goals and will likely have to overcome the tug of stiff opposition from Congress.  The budget requests an increase of 41% for the Department of Education over last year, plus 23% more for the Department of Health and Human Services, and 22% more for the Environmental Protection Agency.

“No good decision was ever made in a swivel chair.”

General Patton, who was never a fan of politicians, would likely not approve of the proposed decrease in funding for the Department of Homeland Security and light increase for the Department of Defense (just 2%). As with most presidential budgets, and swivel chair created proposals, the budget relies on optimistic (perhaps unrealistic) projections of unemployment rates and GDP growth.   Just like when planning for retirement when budgeting if you use overly optimistic assumptions, you run a higher risk of running short.  The economy needs to hit these growth projections to cover their spending plans.   The proposal does include an increase in the corporate tax rate from 21% to 28%, as well as increased IRS enforcement and higher taxes on the wealthiest taxpayers but that alone will not cover all the spending.


Thank you to all who have served.  Enjoy your holiday.  I will close in the words of General Patton as to me they strike the essence of what we celebrate this weekend. “It is foolish and wrong to mourn the men who died. Rather we should thank God that such men lived.”


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