The Independent Market Observer

Kindness, Work, and the Worker Shortfall

October 15, 2021

I’ve gotten a lot of positive feedback on yesterday’s post (thank you!) on how we should be kind, to others and ourselves, given the unprecedented and long-lasting conditions we have been fighting. As I thought more about it, I realized it also resonated with one of the key economic issues we are seeing today: the decision by millions of people to simply drop out of the labor force. The headlines today have multiple references to how people are simply choosing not to work and wondering when, and if, that will change.

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Better Together

October 14, 2021

This will be a short update as I am in the airport headed home from Commonwealth's Founder’s Club conference. As usual, it was a wonderful experience—good company, great activities, and a spectacular setting. But what struck me at this conference, in particular, was the value of personal contact.

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Monthly Market Risk Update: October 2021

October 13, 2021

My colleague Sam Millette, manager, fixed income 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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Economic Risk Factor Update: October 2021

October 12, 2021

My colleague Sam Millette, manager, fixed income 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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Monday Update: Hiring Slows in September

October 11, 2021

Last week saw the release of a number of important economic updates, with a focus on international trade, service sector confidence, and the September employment report. Although the employment report showed that hiring continued to slow in September, reports from previous months saw upward revisions that partially offset the slowdown. This will be another busy week for updates, with reports to come on September’s inflation and retail sales, as well as a first look at consumer confidence in October.

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Global Central Banks Join the Fed Bandwagon

October 8, 2021

Given the overarching role of the U.S. in the world economy, it is no surprise that when the Fed sneezes, central banks around the world catch a cold. During the so-called taper tantrum of 2013, the Fed’s unexpected talk of plans to slow down its bond purchase program resulted in higher interest rates and a stronger dollar, which caused the capital pipelines of emerging markets to freeze. Today, with a tenuous global recovery underway and the threat of the pandemic hanging on, central banks around the world are watching the actions of an increasingly hawkish Fed with hawk eyes (no pun intended). At the same time, we’re seeing global policy divergences as economies emerge from the pandemic environment at different speeds and face different challenges. For investors, this environment could present country-specific opportunities in fixed income, equities, and currencies.

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Do Investors Need to Keep an Eye on Climate Change?

October 7, 2021

I got a question last week that I thought was excellent: how does climate change do when we apply the same set of crisis tests we did to Evergrande and the great financial crisis (GFC)? It may seem to be a political question—and quite possibly it was intended as such. But in my mind, applying this set of nonpolitical tests is a great way to take it out of the realm of politics, where I have no special expertise, and into the realm of economics and data analysis, where I do. Today, let’s take a nonpolitical look, based on the data, at whether climate change is something that we, as investors, should be keeping an eye on.

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The Most Important Jobs Report?

October 6, 2021

I watch sports only occasionally, but in the past year or two, I have gotten increasingly into watching pro football—probably as a result of being bored at home during the pandemic and the drama around the turn of the Patriots dynasty. I have to admit, there are some terrific athletes out there. There’s Brady, of course, but many others as well. It has been great to come back to something I enjoyed as a kid.

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Monday Update (on Tuesday): Personal Spending Beats Expectations in August

October 5, 2021

Last week saw a number of important economic updates, with a focus on durable goods orders, consumer and manufacturer confidence, and August personal income and spending. Durable goods orders and personal spending were highlights, as both increased by more than expected in August. This will be another busy week for updates, with news on international trade, service sector confidence, and September employment to come.

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Market Thoughts for October 2021 [Video]

October 4, 2021

September was a bad month for the markets. In the U.S., all three major indices were down. Developed markets dropped, and emerging markets did worst of all. These declines resulted from the weakening of the economic data, driven by the spread of the Delta wave of the virus. Job growth was down, layoffs trended up, and consumer confidence dropped.

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Looking Back at the Markets in Q3 and Ahead to Q4 2021

October 1, 2021

After a great start to the quarter in July and August, September was when the storms hit. Here in the U.S., markets pulled back significantly. The Dow declined by 4.2 percent for the month and 1.46 percent for the quarter. The S&P went down by even more for the month, at a 4.65 percent decline, although it gained 0.58 percent for the quarter. Finally, the Nasdaq trailed by even more, at a 5.27 percent monthly drop and a 0.23 percent loss for the quarter. Abroad, international markets were also hit, with developed markets down for both the month and quarter, at 2.9 percent and 0.45 percent, respectively. Emerging markets dropped 3.94 percent for the month and 7.97 percent for the quarter.

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