CPI and PCE: Two Measures of Inflation and Fed Policy
The BEA's Core Personal Consumption Expenditures Chain-type Price Index for October, released last week, shows that core inflation is below the Federal Reserve's 2% long-term target at 1.41%. The October Core Consumer Price Index release is higher at 1.61%. The Fed is on record as using Core PCE data as its primary inflation gauge.
Absolute Return Letter - December 2020
Zombies are firms that are neither dead or alive. They are in so much debt that virtually all their free cash is used to service their debt, and that is very damaging to GDP growth. This month, we explain why there are more and more zombies all over the world, and why they do immense damage to the global economy.
How Much Debt Is Too Much?
The new conventional wisdom in these unconventional times is that advanced-economy governments can take advantage of today's ultra-low interest rates to borrow and spend without limit in order to support the economy. But the fact is that there is always a limit, and it may come into view sooner than many realize.
Making Sense of Sky-High Stock Prices
Many have been puzzled that the world’s stock markets haven’t collapsed in the face of the COVID-19 pandemic and the economic downturn it has wrought. But with interest rates low and likely to stay there, equities will continue to look attractive, particularly when compared to bonds.
Moving Averages Update: November Up 10.75%
Valid until the market close on December 31, 2020.
The S&P 500 closed November with a monthly gain of 10.75% after a loss of 2.77% in October. At this point, after close on the last day of the month, four of five S&P 500 strategies are signaling "invested" — Vanguard Total Stock Market ETF (VTI), Vanguard FTSE All-World ex-US ETF (VEU), Vanguard REIT Index ETF (VNQ), and Invesco DB Commodity Index Tracking (DBC) — an increase from last month's triple"invested" signal.
Has the Size Premium Disappeared?
Small-cap stocks have underperformed the broader markets since the “discovery” of the size premium in 1981. But research shows that a segment of those small-cap stocks have performed well and that now is a compelling time to invest in them.
Will 2021 Mark the Launch of a Durable Global Recovery?
After a difficult winter, we expect the global economy to rebound strongly next year. But structural headwinds remain. Will the post-pandemic bounce trigger a durable and broad-based global reflation?
Technically Speaking: Investors Go “All-In” Without A Net
We have recently written a couple of posts about the “exuberance” that has invaded the market since the election. Such is often seen near short- to intermediate-term peaks in markets as investors go “all-in” without a net.