The Independent Market Observer

What Riots in South Africa Mean for Emerging Markets

July 30, 2021

The celebrated “rainbow nation” of South Africa was recently rocked by the worst violence since the nation achieved democracy and ended apartheid in 1994. Many lost their lives, the economy was hit at a time when it was already reeling under the effects of the pandemic, and its capital markets grew nervous.

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The Regulatory Crackdown in China Continues

July 29, 2021

Today’s post is from Peter Roberto, investment research analyst on our Investment Management and Research team.

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How Green Are Your Sustainable Strategies?

July 28, 2021

Today’s post is from Sarah Hargreaves, an investment management analyst on our Investment Management and Research team.

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Is Climate Change a Risk to Your Portfolio?

July 27, 2021

As stewards of more than $12 billion in client capital (as of July 25, 2021), our job on the Investment Management team at Commonwealth requires a great deal of risk assessment—and there are many risks that require evaluation. But too often in our industry, the talking heads focus on the short-term ones like interest rate moves and market pullbacks. Most investors, however, have long time horizons. So, what we should be considering as an industry are the longer-term risks that match up with our clients’ goal horizons. One of those risks? Climate change.

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Monday Update: Housing Starts Hit 3-Month High

July 26, 2021

Last week saw a number of important economic data releases, with a focus on the housing market. Housing starts increased by more than expected in June, hitting a three-month high despite rising costs for home builders. This will be another busy week of economic updates, with reports scheduled that will touch on business spending, consumer confidence, the Fed’s July meeting, and second-quarter GDP growth.

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This Is the End (Again)

July 23, 2021

For some reason, I have been getting another round of questions about the end of the world. The dollar is collapsing, the IMF is devaluing the U.S. currency, the deficit and debt are blowing up, inflation is rising, and so forth. These end-of-the-world worries usually happen every couple of years, driven by some outside anxiety, which is, at the moment, COVID.

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Jobs and the Labor Force: The Long View

July 22, 2021

Yesterday, we talked about whether the labor market would balance in the short term. We also discussed whether there were enough people outside the labor force who might move back in, with higher wages and other inducements, to provide enough bodies to not only fill the current vacancies but also provide enough of a cushion to prevent further dislocations in the future. Although it is close, so far the numbers suggest there are enough people out there to do that. In the next year or so, jobs and employees should move back into a rough equilibrium.

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Can the Labor Market Normalize?

July 21, 2021

A couple of weeks ago, we left off our discussion on the labor market with the conclusion that the labor market shifts were real and reflected underlying changes in both the demographics and demand for jobs. Knowing that, however, doesn’t tell us what is likely to happen in the future. So, let’s think through the factors that will determine just that.

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Is the COVID Recession Over?

July 20, 2021

Yesterday was an interesting day. Yes, the headline declines in the stock market made it interesting, and that news is certainly part of it. Still, that kind of volatility is normal. We haven’t seen it for a while, but if you look back, it’s no big deal. In fact, markets are ticking back up again.

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Monday Update: June Retail Sales Beat Expectations

July 19, 2021

Last week saw a number of important economic updates, with a focus on June’s inflation and retail sales reports. Retail sales were a highlight, as the pace of sales increased by more than expected during the month. This will be another busy week for updates, which will address the housing market, weekly initial jobless claims, and more.

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Australia’s Love-Hate Relationship with China

July 16, 2021

Australia has been one of the biggest beneficiaries of China’s growth in the past several decades. China’s infrastructure spending after the last two crises—the great financial crisis and the more recent COVID-19 pandemic—created a demand for resources that was largely fulfilled by Australia. Indeed, this demand helped alleviate some of the pain for the Australian economy.

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What Do Rising Medical Risks Mean for the Economic Outlook?

July 15, 2021

It was about three weeks ago that I ended the regular coronavirus updates as the medical news had improved sufficiently that the country had largely reopened and the virus was under control. Since then, unfortunately, we have seen infections tick back up, and it is clear that—from a medical perspective—the virus is still with us. Thus, this update discusses where we are now and what it might mean going forward.

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What About Climate Change?

July 14, 2021

As regular readers know, I largely steer clear of politics. Political beliefs are largely beyond argument (on both sides), so it’s not a good use of time to put out arguments that go against someone’s convictions. Yet, in economics and markets, we do have to deal with the facts, as we saw recently with the pandemic. Regardless of where you stand on the vaccine, for example, the facts are what they are. And that is where we now find ourselves with climate change.

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Monthly Market Risk Update: July 2021

July 13, 2021

My colleague Sam Millette, senior investment research analyst on Commonwealth’s Investment Management and Research team, has helped me put together this month’s Market Risk Update. Thanks for the assist, Sam!

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Monday Update: Service Sector Expands in June

July 12, 2021

Last week was relatively quiet in terms of economic updates, with only three major data releases. In June, service sector confidence remained in healthy expansionary territory despite a slightly larger-than-expected pullback for the ISM Services index during the month. This week will be packed with updates, with June’s inflation and industrial production reports and the first look at consumer sentiment in July serving as highlights.

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Economic Risk Factor Update: July 2021

July 9, 2021

My colleague Sam Millette, senior investment research analyst on Commonwealth’s Investment Management and Research team, has helped me put together this month’s Economic Risk Factor Update. Thanks for the assist, Sam!

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Looking Back at the Markets in June and Ahead to July 2021

July 8, 2021

As we close out the first half of the year, we know a couple of things. First, the U.S. economy is almost entirely reopened following the pandemic shutdown. Although we are not yet fully back, the healing process continues. The story for the rest of the year in the U.S. will be about managing the risks, staying open, and growing our economy. As we are largely past the pandemic, the challenge ahead will be keeping the progress going.

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2021 Midyear Outlook [Video]

July 7, 2021

As we head into the second half of 2021, the virus appears to be contained at the national level. The declining medical risks have been good for the economy, with consumer and business activity back to pre-pandemic levels. Markets have celebrated the good news by hitting all-time highs. We're on the road back to normal—but will risks like labor shortages, supply-chain gaps, and inflation derail the recovery? Watch my 2021 Midyear Outlook video to find out.

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Monday Update (on Tuesday): Hiring Accelerates in June

July 6, 2021

There were a number of important economic data releases last week, with better-than-expected results for consumer confidence and hiring in June serving as highlights. The June jobs report showed that hiring accelerated during the month, demonstrating the positive impact from eased restrictions at the state and local levels. This week will be relatively quiet, with only three major economic updates scheduled.

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Market Thoughts for July 2021 [Video]

July 2, 2021

June was a mixed month for the markets. In the U.S., the Nasdaq and the S&P 500 were up, but the Dow ticked down. We saw the same trend internationally, with developed markets falling even as emerging markets moved ahead. On the economic front, business confidence remains at or close to all-time highs. Still, the problems of success (labor shortages and supply chain issues) loom large.

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Euro Area Hits Its Stride

July 1, 2021

As with the rest of the world, the COVID-19 pandemic had a devastating effect on the European economy, not to mention the continued uncertainty regarding Brexit. The U.S. and China were among the first countries on the path to economic recovery, while Europe struggled to emerge from the lockdowns and had a rough start to its vaccination program.

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