Economy

Why Has the Chinese Yuan Been So Strong, Will it Last, and What Does it Mean for the US? January 24, 2022

Posted by Steven Vannelli, CFA in Economy, Markets, News

Since May 2020, the Chinese Yuan has defied the path of other emerging market currencies, strengthening by almost 12%. This has left it overvalued compared to other emerging market countries. While Yuan strength made sense in 2020 when the USD was weakening. It is curious…

Powell Successfully Walks the Tightrope January 11, 2022

Posted by Austin Mann in Economy, Markets, News

Below we highlight a few takeaways from Fed Chair Jerome Powell’s confirmation hearing today before the Senate Banking Committee, broken down by topic. -Focus on “less accommodative” moves -Powell made numerous statements indicating that COVID, though prevalent, will not be as pressing in policy decisions…

Forward Thinking: 2022 January 06, 2022

Posted by Steven Vannelli, CFA in Economy, Knowledge Leaders, Markets, Portfolio Management

In this quarter’s strategy report, Forward Thinking 2022, we discuss the following: -US economic growth is expected to be quite robust in 2022, despite the disruptions from the Omicron variant. Capital spending is expected to lead economic growth, which makes sense as companies invest in…

Does the Fed Have a Brewing Velocity Problem? November 17, 2021

Posted by Steven Vannelli, CFA in Economy

A basic tautology that economists consider when thinking about monetary policy is the velocity of money. MV=PQ translates into Money*Velocity=Price*Quantity. Of course, price*quantity is nominal GDP while “M” is the money supply (for example, M2) while “V” is velocity, or the number of times the…

Here’s One (More) Reason Inflation Could Accelerate Through Mid-2022 November 12, 2021

Posted by Bryce Coward, CFA in Economy

It’s no secret that pandemic-related government policy is driving at least some of the inflation currently being experienced in the United States. Indeed, real disposable income per capita has deviated from a linear trend in a meaningful way since 2020. The recent “breakout” in real…

Here’s Why the Fed Could Stay Easy for a LOOONG Time November 05, 2021

Posted by Bryce Coward, CFA in Economy, Markets

This week Jerome Powell tossed the market a bone by hinting that the Fed would be patient in raising short-term interest rates due to the continued slack in the US labor market and inflation that would likely be “transitory”. Yet, today, the unemployment rate dropped…

Japan’s Reopening Trade October 18, 2021

Posted by Steven Vannelli, CFA in Economy, Markets

In this quarter’s strategy package, we share our analysis on Japan’s Reopening Trade. In the full slide presentation, we cover the following: -Japan seems to have crushed the COVID-19 virus (for now at least) with daily new cases under 400/day. Lockdowns are over and the…

For The First Time Since the 70s, Demographics Support Higher Rates October 15, 2021

Posted by Bryce Coward, CFA in Economy

New projections of the labor force growth rate by the US Bureau of Labor Statistics show the US labor force growth accelerating in the 2020s for the first time since the 1970s. How could this be? There are two reasons. More people are working past…

Is Inflation Starting to Impact Equity Returns? October 12, 2021

Posted by Steven Vannelli, CFA in Economy, Markets

Fed funds futures for 2022 and 2023 have broken out to new highs, likely on the back of rising inflation expectations. As things stand now, the market is looking for three hikes by the end of 2023, with the effective fed funds moving from 8bps…

Mid-Quarter Update: What Does Transitory Mean? September 02, 2021

Posted by Steven Vannelli, CFA in Economy, Markets, Portfolio Management

In this Mid-Quarter Update, we discuss our analysis on the following topics: -Recent readings on consumer confidence have rolled over. The surveys are validated by the stagnation in real consumer spending in the last few months. -In conjunction with the slowdown in house sales and…

EVs Could Mean Full Cycle Outperformance of Copper Producers August 06, 2021

Posted by Bryce Coward, CFA in Economy, Markets, Portfolio Management

President Biden recently set a target for 50% of all vehicle sales in the US to be fully electric, plugin hybrid, or fuel cell by 2030. Assuming a modest 1% annual growth in new car sales, total new car sales in the US would be…

Here’s Why the US May Have a Housing Boom for the Next 5 Years July 30, 2021

Posted by Bryce Coward, CFA in Economy, Markets

The United States is just at the beginning of a housing boom that could last for the next five years. Of course, most folks who are either homeowners or are in the market to buy a home understand that prices have gone up quite substantially…

The US Energy Sector is in Chronic Atrophy, And That Could be a Good Thing for Energy Investors July 23, 2021

Posted by Bryce Coward, CFA in Economy, Markets, Portfolio Management

Public attitudes toward energy companies are changing, and with it capital investment in energy companies is shrinking. Perhaps nothing speaks louder than actions. In the first quarter of 2021 investment in environmental, social and governance (ESG) focused funds hit a record high by a wide…

Breakdown July 23, 2021

Posted by Steven Vannelli, CFA in Economy, Knowledge Leaders, Markets

We believe the technology sector is broadly breaking down. That’s the bad news. The good news is that the correlation between pure growth stocks and pure value stocks has plunged. This means that growth only explains about 5% of the movement in value stocks right…

Inflation Is Starting to Weigh on Consumer Confidence and Spending July 16, 2021

Posted by Bryce Coward, CFA in Economy

This week US CPI inflation for June rose at a stunning 0.9% MoM, or 11% annualized, placing it among the highest sequential inflation readings in the past 40 years. Sure, much of the reading can be chalked up to used car prices and airline tickets,…

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