Perspectives

A Reminder on Charitable Gifting As the end of the year and the holiday season approaches, we will all see an uptick in the number of charitable solicitations arriving in our mailboxes and by email. Since some charities sell their contributor lists to other charities, and frequent contributors may find themselves besieged by requests from all sorts of charities with which they are not familiar. Watch Out for Charity Scams – You need to be careful, as scammers out there are pretending to be l… View More

Real interest rates appear too low for an economy growing solidly, with inflation accelerating. Numerous data series are supporting the idea that the U.S. is in the neighborhood of full employment, but with (still) emergency monetary policy. U.S. weekly jobless claims have likely been affected by seasonal adjustment issues in the past several weeks, but with the 4 week average trending significantly lower, the clear message is that the labor market continues to heal. With more than 11 million cu… View More

We continue to watch for updates on the global health situation, which will inform the policy response. “Initial data from a major hospital complex in South Africa’s omicron epicenter show that while Covid-19 case numbers have surged, patients need less medical intervention … Most originally sought treatment for ailments unrelated to the coronavirus and were discovered to have it in testing required for admission.” (Bloomberg) In the meantime, the U.S. economic data have shown momentum … View More

Late last week, President Biden announced he was going to release 55 million barrels of oil from our strategic oil reserve to combat high energy prices and inflation. Because we currently use 18mm Barrels of oil per day in the U.S. we are confident there will have to be further actions to solve the high price of oil (and its contributions to the inflation we have been seeing over the last few months). Although the announced policy attempts to bring down energy prices, we don't believe it will be… View More

There was a growth scare in 3Q (especially in the U.S. and China), but as we move through 4Q growth looks to be reaccelerating. Yet price gains are continuing. U.K. CPI inflation rose to 4.2% y/y in Oct. The stagflation scare has morphed into a “sticky” inflation concern in numerous locations. “A trio of policy makers – Vice Chairman Richard Clarida, Governor Christopher Waller and St. Louis Federal Reserve Bank President James Bullard – signaled … that the topic of a faster taper m… View More

We came across an interesting article from one of our research providers this week and thought we would share it with you. This piece makes an interesting argument for why commodities and materials may be among the better performing investments for the next few years. Although so much of the media’s coverage these days seems to focus on social unrest or geopolitical conflict, there are still nuggets of information that may help identify investment opportunities. Since the start of quantitativ… View More

We believe we are seeing the peak in the 2021 stagflation scare, with the 3Q data reports from the U.S. last week & the weak China manufacturing PMI in Oct. There’s still plenty to worry about, as growth has stalled & bottlenecks keep inflation elevated. Wage pressures are building. Energy prices remain elevated. Yet these stories are becoming well known. There are key positives for economic growth. European 3Q GDP data was solid q/q. The U.S. yield curve is not inverted & consume… View More

There’s plenty to worry about, as global growth has stalled but bottlenecks keep inflation elevated. Wage pressures are building on the back of recent inflation data (eg, U.S. strikes, German union negotiations). We continue to watch for “peak bottleneck”. The Atlanta Fed’s tracking estimate for U.S. real GDP in 3Q is down to 0.5% q/q A.R. The quarter appears to have been quite weak, both in the U.S. and abroad (eg, China GDP reported at 0.2% q/q in 3Q). U.S. industrial production plung… View More

We may be approaching “peak bottleneck”. The Atlanta Fed’s tracking estimate for U.S. real GDP in 3Q is down to 1.2% q/q A.R. Separately, U of Mich consumer sentiment remained depressed at 71.4 in October. Yet, we are seeing early signs that the global production & transportation situation, while not close to being solved, may finally be turning. U.S. initial jobless claims falling to 293,000 last week suggest an inflection. This doesn’t make the inflation we’re seeing now (eg, Sep… View More

Given bottlenecks and supply constraints, we are continuing to see a stagflation scare (weaker growth + sticky inflation) in the global economy. Concerns are likely to persist into 2022. But as firms change the way they do business to combat this issue, output-per-hour (productivity) gains are starting to occur. Productivity allows the opposite of stagflation: stronger growth and muted inflation since there are more goods & services produced. Put another way, straining the economy in ways it… View More