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?[wce_code id=192]
1. Overall, it was determined that the recession lasted only two months, the shortest in history. I guess it depends who you ask …
2. Normalization is still ongoing, but so far the recovery is comparable to post-war:
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?
4. Inflation rate in the world:
5. ~ 7 million Americans are still unemployed due to the Covid recession, yet:
6. Is another big blow for crypto on the way?
7. Most investors look for downside protection when it is too late (see peaks). We offer more permanent alternatives:
8. Market leadership has been on a rollercoaster ride this year. This chart shows a value ETF / a growth ETF:
9. Falling bond yields have generally been a global phenomenon. Are bond markets telling us that growth will moderate sooner / more than expected?
10. Interesting, but yield declines seem to be more than seasonal, especially in the face of mounting inflation fears:
11. But Covid has never happened before …
12. If collective immunity requires 70% or more (numbers vary), then the planet is still terribly exposed to the delta variant:
This article was written by the investment team at Beaumont Capital Management, an ETF Strategist Channel participant.
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