Weekly Summary

“Gimme Shelter”

“Gimme Shelter”

We believe that the inflationary pressures on goods pricing will continue as supply chains remain constrained. It is too early to assume that we have seen the peak in supply constraints and disruptions.

Help Wanted: Outstanding Global Weather Forecaster

Help Wanted: Outstanding Global Weather Forecaster

We believe that the upcoming winter temperatures will be determinative in regard to economic growth rates, as well as the levels and persistence of inflation for at least the intermediate term. We expect interest rates to continue their ascent as inflation proves to be more persistent and higher than generally assumed.

Will Energy be the New Delta?

Will Energy be the New Delta?

Global government policies that encourage the development of “renewable” sources of energy will continue to be very uncertain as to when tangible results that would help solve many of our energy issues will be forthcoming. We expect that China’s increasing regulations and scrutiny over its economy could become more unpredictable in terms of their content and timing.

‘Fed Speak’ Confirms Rotation

‘Fed Speak’ Confirms Rotation

We believe that the Fed is now “all in” regarding looking through the negative effects of the Delta variant. We surmise that the Fed anticipates, as we do, that this variant will become more manageable in the near future.

Downturn is Transitory

Downturn is Transitory

So far, consumer inflation expectations seem to be rising in a very consistent pattern for many months. Consumers seem able to look past the more variable monthly statistics on inflation, employment and economic growth rates.

Positioning

Positioning

When investor “positioning” has become extreme, market sentiment can shift very quickly. Given the extreme dispersion of investor opinions about inflation, economic growth rates, employment, etc., sometimes a lack of positioning ahead of a significant data point can also lead to surprising market reactions.

Beyond Peak Growth

Beyond Peak Growth

Weekly Summary: August 23 – 27, 2021   Key Observations: Post peak economic growth can still be very favorable for Value and Cyclical stocks, as well as for equities overall. Given the great dispersion of economic growth and inflation expectations, shifts in...

Uneven But Not Broken

Uneven But Not Broken

The Delta variant experience of India, which has a very low vaccination rate and the U.K., which has a relatively high vaccination rate, both show that Delta variant infections tend to rise quickly but also seem to dissipate rather quickly. Higher vaccination countries like the U.S. should see only a relatively slight delay in its economy more fully reopening.