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