NBER marks 2-month recession, hiring difficulties continue despite millions of jobless people, Covid factor could affect 10-year yield recovery

By BCM investment team

The National Bureau of Economic Research’s decision to set the COVID recession at two months was surprising since more than a year and a half later, “normalization” is underway. And although longer-term inflation expectations have moderated (accepting the ‘transitional’ theme), 7 million Americans are still out of work despite many industries, especially the service and manufacturing industries. , continue to report hiring difficulties. Looking at emerging markets, inflation rates in Asian emerging markets appear to be subdued (well below their target midpoint) and should continue to decline. Meanwhile, investors are looking for downside protection as the Skew Index continues to climb and market leadership between growth and value continues to shift. Bond yields around the world have fallen, but that might just be the seasonal effect that we see each year as the 10-year Treasury yield has historically declined during the summer months. Will we see it increase in the next 6 months, after a 20% drop, or will the Covid factor force different results?

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1. Overall, it was determined that the recession lasted only two months, the shortest in history. I guess it depends who you ask …

Source: NBER, of 07/20/21

2. Normalization is still ongoing, but so far the recovery is comparable to post-war:

Source: Oxford Economics, Haver Analytics, 07/20/21

3. The US CPI does not always reflect “real” inflation. The most important component, housing, is determined by “equivalent rents” which are based on a survey asking landlords for how much they think they can rent their home. Is that the best we can do?

Source: Bloomberg, 07/21/21

4. Inflation rate in the world:

Source: National central banks, 07/21/21

5. ~ 7 million Americans are still unemployed due to the Covid recession, yet:

Source: The Daily Shot, 07/21/21

6. Is another big blow for crypto on the way?

Source: The Daily Shot, 07/21/21

7. Most investors look for downside protection when it is too late (see peaks). We offer more permanent alternatives:

Source: The Daily Shot, 07/21/21

8. Market leadership has been on a rollercoaster ride this year. This chart shows a value ETF / a growth ETF:

Source: The Daily Shot, 07/21/21

9. Falling bond yields have generally been a global phenomenon. Are bond markets telling us that growth will moderate sooner / more than expected?

Source: The Daily Shot, 07/20/21

10. Interesting, but yield declines seem to be more than seasonal, especially in the face of mounting inflation fears:

Source: The Daily Shot, 07/21/21

11. But Covid has never happened before …

Source: The Daily Shot, 07/21/21

12. If collective immunity requires 70% or more (numbers vary), then the planet is still terribly exposed to the delta variant:

Source: The Daily Shot, 07/21/21

This article was written by the investment team at Beaumont Capital Management, an ETF Strategist Channel participant.

For more information like these, visit the BCM blog at blog.investbcm.com.

Disclosure: The graphics and infographics contained in this blog are generally based on data obtained from third parties and are believed to be accurate. The comment included is the opinion of the author and is subject to change at any time. Any reference to specific securities or investments is for illustration purposes only and does not constitute investment advice or a recommendation to take action. The individual securities mentioned may be held in customer accounts. Past performance is no guarantee of future results.

Learn more at ETFtrends.com.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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