One month ago, we pointed to the September 13 Consumer Price Index (CPI) release as the key upcoming catalyst for the market. Would it be a market calming event showing a solid disinflationary trend or a repeat of the June 10 CPI release that sent the market to new lows? Unfortunately, we got the latter, with inflation still running way too hot across a broad array of categories. This will force global central banks to respond with even more interest…
The S&P 500 Total Return Index is currently down roughly 12% for the year, well above its low of down 23% on June 16, but still a long ways from a full recovery. For bonds, the U.S. 10-Year Treasury Yield remains volatile, swinging between 2.5%-3.5% since early April. Its current 3.1% level is roughly double the 1.5% from December 31, 2021. Will stocks and bonds go on to set new lows or record highs before year-end? While neither we at…
The S&P 500 Total Return Index is now down roughly 15% year-to-date, with the Bloomberg US Aggregate Bond Index not far behind, down roughly 10%. The main causes of the dual equity and bond downturns have been the same all year: Inflation: The March Consumer Price Index (CPI) of +8.5% was the highest since 1981.1 Monetary policy tightening: The Federal Reserve is expected to raise the Fed Funds Rate from its current 0.8% to over 3.0% by March 2023.2…
Shortly after we sent out our market update yesterday, Russia invaded Ukraine with military strikes throughout the nation, clearly going well beyond the disputed Donbas region. While not yet a worst-case scenario as civilians/major cities do not appear to have been targeted, these events represent a dramatic escalation and go far beyond the fighting that occurred in Ukraine in 2014. Russia’s end goal remains unclear. At the very least, they appear to be looking to expand and strengthen control of…
The S&P 500 is now down over 10% year-to-date, with the NASDAQ and Russell 1000 Growth down over 15%. We wanted to update you on what we believe to be the primary drivers of the downturn and our thoughts, as the majority of the decline has come since our last communication on January 14. What has changed since January 14? The main update has been corporate earnings, with more large firms echoing JPMorgan (who reported January 14) and citing rising expenses due…
The global economy has bounced back from the pandemic faster and more robust than almost anyone expected, thanks in large part to tremendous fiscal and monetary stimulus from governments around the world. This year will test how economies can endure that assistance being dialed down or removed altogether, though plans vary dramatically for different countries around the world. As we look into 2022, these are a few key topics and events that are top of mind: Inflation continues to be a…
Inflation is the word of the year so far in financial markets. There seems to be a major news item daily on the subject, including this morning’s data showing the highest yearly consumer prices increase since 2008. While it is still unclear if inflation will be higher than current market expectations over the coming years, today we want to cover how we at GGS are thinking about inflation and positioning client portfolios for this possibility. First, let’s look at current…
We want to cover two things in this writing based on client questions we have been receiving: (1) Recent news flow related to short-term traders; (2) Our current market outlook. There have been nonstop headlines the past few weeks regarding the battle between the Reddit/Robinhood/millennial/day-traders vs. the short-sellers/hedge funds/Wall Streeters. What are our thoughts on this? This has not yet affected any company that GGS owns in the vast majority of client accounts. This is primarily happening in smaller companies…
On August 18, the S&P 500 Index officially closed at a new all-time high, surpassing its pre-pandemic high set February 19, 2020. The impact of the COVID-19 pandemic has been dramatic and ongoing, and the world has been subsequently divided between the winners and losers. It is a fair argument that, thanks primarily to global central banks and governments flooding the world with liquidity and vaccine-related optimism, financial asset prices (stocks in particular but also bonds) have been the winners,…
Unprecedented is the word of the day. US Q2 2020 GDP estimated to be -25% from Q1 (seasonally adjusted). The worst prior since quarterly data started in 1947 was -10% in Q1 1958.1 Trailing 4-week US unemployment claims is 22.0 million. The worst prior since data started in 1967 was 2.7 million in October 1982.2 If we’d had knowledge of these two datapoints on 1/1/20, there is no way that we would have expected the S&P 500 Total Return Index…
