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Latest Weekly Summary

“Leaving Normal… Heading for Who Knows Where”

Although recent increases in COVID-19 infections – most recently notable in Europe – are of great concern, we suppose that vaccination rates will prove to be high enough to lessen dramatically the probability of lockdowns and substantially lower mobility. Hospitalization rates also have been increasing, but at much lower rates than those experienced pre-vaccines. The expected approval of “COVID-19 pills” developed by Merck and Pfizer could reduce even further the negative effects of increased infection rates. We expect that these worrisome trends will not be able to derail significantly projected robust economic growth.

Previous Week’s Issues

“Stay”

“Stay”

We believe that a more “rational” bond market prevailed mid-week. Inflation data in the form of CPI was just too compelling to ignore. We anticipate that rising consumer inflation expectations will lead to more-persistent and higher inflation. To what extent will the Fed risk higher inflation expectations becoming more entrenched in the hope of lowering the unemployment rate?

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“Chill Out… Things Gonna Change”

“Chill Out… Things Gonna Change”

Like many other central banks, the Fed appears to be indicating that a “forward guidance” policy approach, often used by central bankers over the past few years, will be increasingly replaced by “data dependency.” To paraphrase Powell, policy will have to adapt to “reality.” The Fed accepts that “things gonna change.” The Fed is just uncertain with respect to identifying the upcoming changes, as well as their timing. By his own admission, Powell acknowledged that it was “very difficult to do economic forecasting now.”

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Never Said it Would be “Smooth Sailin’”

Never Said it Would be “Smooth Sailin’”

The rather abrupt changes in interest rates and the shape of the yield curve show that quick sentiment changes often lead to quick changes in financial markets. The great dispersion of investors’ views on economic growth rates, supply chain disruptions and inflation make the financial markets more susceptible to sudden shifts in sentiment.

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Fearless Women: Luxury Edition

Fearless Women: Luxury Edition

Both fearless women in their own right, Lindsey Boyd, Founder of Rondel Jewelry, and Sarah Flint, Founder of Sarah Flint shoes join our host, Susan Kim, CFA®, to share their visions, successes and challenges, and how they are building incredible luxury brands.

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Details of Build Back America Act Have Begun to Leak Out

Details of Build Back America Act Have Begun to Leak Out

House Democrats have circulated initial proposals around tax policy changes that they want to include within the Build Back America Act, the massive tax-and-spending budget reconciliation bill that party leaders hope to move through the chamber in the coming weeks. Many of the proposals within the bill are what was expected in one form or another, but there are a few new wrinkles.

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