Brad here. This post follows up on last week’s excellent post on the United Nations Climate Change Summit by Sarah Hargreaves. I would like to call your attention to the generational tilt of today’s guest author, Sara Bray. As one of Commonwealth’s youngest employees, she is attuned to what her generation (Generation Z) is thinking—which is not necessarily what old people like me are thinking. She offers valuable information about what is happening with climate change policy, insights into how future investors may see these issues, and some thoughts about what all this means for today. Thanks, Sara!

It has been proven that being grateful is one of the best ways to make your life better—to be both happier and more successful. Here on the blog, I try to focus on gratitude a couple of times a year, although I notice that I have not done so through 2020 or really 2021. Perhaps that’s understandable, with the pandemic, but still misguided. Despite the real problems and concerns, I have much to be grateful for, and I hope you do as well. So let’s take Thanksgiving as the perfect opportunity to remember that.

Once upon a time, a turkey hatched in the dead of winter. He lived in a nice warm coop, had plentiful corn and seeds to eat, and spent much of his poult-hood playing with all of the other little turkeys.

Last week saw a number of important economic data releases, including October’s retail sales and industrial production reports, and a look into the housing sector. Both retail sales and industrial production beat expectations, which is a positive sign for overall economic growth to start off the fourth quarter. This will be a busy week for updates, with reports on October’s existing home sales, durable goods orders, and personal income and spending set to be released. We'll also get the minutes of the most recent Fed meeting.

I have always rather disliked the saying, “What gets measured gets managed.” On one hand, it is a truism. On the other hand, it is misleading in many ways. Today’s issue, inflation, is a great example. How we manage it depends very closely on how we measure it, which is quite true. But it begs the question as to how we should measure it. I might rephrase the saying, in this case, as, “What gets appropriately measured gets effectively managed.” This phrasing still has issues but is much closer to what we actually need to do. Beyond this, we start to get into pedantry, if we are not already there.

Inflation and what it means for investing is one of the biggest issues I have been hearing about recently. The topic can generate quite a bit of anxiety. But before we start to worry, let’s take some time to understand what actually happens when inflation hits the economy. Then we can panic—or not.

Scarcity isn’t a concept that we, as a nation of consumers, are used to. When we want to buy goods, low-cost producers across the world fall over one another to produce and ship to us. But scarcity is exactly what we have been dealing with for nearly two years—from toilet paper and cans of beans to automobiles and now holiday items. First, the pandemic put a halt to economic activity across the globe. Factories, ports, and physical stores were all shut. Then, consumer demand returned with a vengeance, but supply chains were slow to ramp up.

Brad here. As a believer in environmental, social, and governmental (ESG) investing, Commonwealth naturally follows the news surrounding climate change. But even if we were not committed to making ESG available to our advisors, we would follow the news closely. As responsible investors, we need to be aware of what is happening in the governmental and regulatory worlds, and what that means for our portfolios—because the world is changing. Indeed, everyone should keep up-to-date on this topic. Sarah Hargreaves, an analyst with our Investment Management team, gives us an update below. Thanks, Sarah!

Last week saw a number of important economic updates, with a focus on October’s inflation reports and a first look at consumer confidence in November. Prices continued to rise in October, which negatively affected consumer confidence to start November. This will be another busy week for updates, with October’s retail sales and industrial production reports and a few updates on the housing sector scheduled for release.

My apologies . . .

Today I have to punt. I had planned to write about inflation and how to think about the most recent print. What should we be looking at? Where is the inflation coming from? What is likely to happen over the next year or so? It was going to be a great post—really!