Welcome to my video presentation for Monday, May 17. For a deeper dive with more details, read my article below.

Stock market volatility has increased as conflicting economic data come to the fore, but after a brief selloff last week, investors are bullish again. To quote the British World War II slogan, investors have decided to “keep calm and carry on.”

Volatility is likely to stick around in the coming weeks until a few unknowns are resolved, such as the fate of President Biden’s proposed infrastructure plan. I wouldn’t be surprised to witness occasional selloffs that are triggered by unexpectedly adverse news. But overall, I expect stocks to maintain an upward trajectory this year. The bears right now constitute the “dumb money.”

To be sure, bitter fighting between Republicans and Democrats in Washington (as well as internecine warfare within the GOP itself) is keeping investors on edge. During my long career, which included a stint as a staffer in Congress, I’ve never witnessed such intense partisan animosity.

That said, despite rather high valuations, I don’t think a full-blown correction is in the cards this year. Corporate earnings and economic growth continue to come in strong.

Meanwhile, I hope you’ve been heeding my warnings about cryptocurrency.

As of this writing on Monday, the price of leading crypto Bitcoin (BTC) is down about 30% from its peak in mid-April. Tesla (NSDQ: TSLA) CEO Elon Musk has posted contradictory statements in recent days on Twitter (NSDQ: TWTR) that seem to indicate his support for Bitcoin is wavering.

Read This Story: Elon Musk and The Bitcoin Buzz, Explained

As I’ve made clear in previous Mind Over Markets columns, an investment that’s at the mercy of an eccentric billionaire’s tweets is not where you want to put your hard-earned money.

Stocks slip but regain their footing…

Last week’s brief stock market panic started on May 12, when the government released data that showed inflation was hotter in April than expected (see chart).

After swooning Wednesday on the news, stocks jumped Thursday and Friday, as optimistic investors shrugged off the hotter inflation data to focus on the benefits of economic reopening. The two-day rebound helped the markets claw back much of their weekly losses.

Crude oil prices finished last week higher as the cyberattacked Colonial Pipeline got back online. The pipeline operators reportedly paid $5 million in ransomware…in (yep) cryptocurrency.

I’m reminded of the comments of Charlie Munger, vice chairman of Berkshire Hathaway (NYSE: BRK-A, BRK-B), at Berkshire’s 2021 Annual Shareholders Meeting on May 1. Munger expressed disdain for Bitcoin and said cryptocurrencies in general are “useful to kidnappers and extortionists.” Mr. Munger was uncannily prescient.

The Colonial Pipeline incident also serves as a reminder that cybercrime is an omnipresent threat. It stands to reason, headlines about cyberattacks tend to trigger turmoil in financial markets.

After a few days of roller-coaster action, stocks ended last week lower but still in positive territory for the year.

There are plenty of encouraging economic trends to offset the negative news. Keep your eye on the long-term macroeconomic picture.

Tailwinds for global growth in 2021 include greater vaccination rates, declining COVID infections, fiscal and monetary stimulus, high household savings rates (combined with pent-up consumer demand), low interest rates, and easing lockdowns.

The global economy contracted by 4.4% in 2020. According to the International Monetary Fund’s latest World Economic Outlook (April edition), global growth as a whole will come in at about 6% in 2021. Here’s the breakdown for the Group of Seven (G7) economies. The U.S. leads the way:

I’ve beaten the infrastructure drum pretty loudly over the past few months, arguing that the entire world is gearing up for gargantuan spending on public works. This investment theme will provide a multi-year tailwind for global economies and equities. Construction-related stocks are appealing, especially U.S.-based giants with international clients.

This week, quarterly earnings from bellwether retailers as well as data from the housing sector will test the strength of the stock market rally. The consensus is that the numbers will be positive. Housing prices have soared during the pandemic and should continue their ascent as lockdowns are lifted and the home-buying season gets underway in earnest. Home improvement retailers have benefited over the past year and demand for do-it-yourself projects is likely to remain robust in the coming months.

You should increase your portfolio’s exposure to economically sensitive equities, in cyclical sectors such as construction, energy and financials, and pare your holdings in momentum stocks that have enjoyed a sharp and prolonged rise. Be selective and don’t overpay; the market’s current rotation from growth to value should continue this year.

Keeping inflation in check…

The quickening economic recovery is stoking inflation, but I’m not too worried because the economy is coming off a low year-over-year baseline. The U.S. economy shed 22 million jobs in March and April 2020, and it’s still 8 million jobs short of where it was pre-pandemic.

Read This Story: Investors, Stay Calm: The Sky Isn’t Falling

U.S. retail sales unexpectedly plateaued in April (on a year-over-year basis), reaching $619.9 billion, as the boost from government stimulus checks waned. The Commerce Department reported Friday a virtually unchanged reading in retail sales for April, following a 10.7% surge in March. The consensus of economists had called for an increase of 1.0%. The following chart depicts the numbers by segment:

Nonetheless, a resurgence in retail sales is likely in the summer months, as the pandemic fades and consumers dip into their substantial household savings.

In a separate report from the Federal Reserve on Friday, manufacturing production rose a modest 0.4% in April (on a year-over-year basis), in line with expectations, after jumping 3.1% in March. Total industrial production increased 0.7%. The indices for mining and utilities rose 0.7% and 2.6%, respectively.

The upshot: Despite a few negative undercurrents, the economic situation is generally bullish. But maybe you’re looking for a way to make money, regardless of fickle economic indicators. That’s where my colleague Amber Hestla comes in.

A seasoned Wall Street pro, Amber Hestla is chief investment strategist of the premium advisories Income Trader, Profit Amplifier, Maximum Income, and Precision Pot Trader.

Amber is telling her readers how a 16-digit “pin code” can unlock instant payouts for investors week after week. It’s an income-generating machine that doesn’t care about the latest government data. Once you see how her system works, you’ll be shocked that more investors aren’t using it to make extra cash. To get the details, click here now.

John Persinos is the editorial director of Investing Daily. You can reach him at: mailbag@investingdaily.com. To subscribe to his video channel, follow this link.