Investors were bolstered by the Fed’s message this week. Low interest rates and monetary stimulus will remain pillars of the nation’s economic recovery for as long as it takes. Investors were comforted, but not enough to materially move stocks higher. It was indicative that despite bullish news on a variety of fronts, investors ignored the good and focused on the negatives. First quarter earnings results, for example, have been better than good, but not enough to satisfy the bulls. Apple smashed earnings estimates, sending its stock price higher in after-hours trade, but the next day it finished down. It has…
Insights & Advice
Tag: pandemic
The Reflation Trade
Over the past six months, an increasing number of investors have come to believe that a rise in the inflation rate is inevitable. That appears to be a sound bet from where I sit, even though the present data doesn’t support that wager. The argument for increased inflation centers around money. The world is awash in the stuff. Central banks have been printing money for years to stimulate their economies. Last year’s pandemic only opened the monetary flood gates even further. And the trend is not over. During the next few months, here in the U.S., the Biden Administration is…
The same old stimulus song
Investors should know better by now. Stimulus talks have been going on since July 2020, but politicians in the capital appear to be stuck on the same old issues. Unfortunately, the deadline for a 2020 compromise bill is less than three weeks away. It is anyone’s guess whether the nation’s economic and pandemic plight will win over partisan politics. It hasn’t so far. The financial markets are not taking kindly to failure at this point. The all-time highs we have been enjoying for the last two weeks have been built on investors’ near certainty that at least $900 billion in…
An earnest farewell to 2020
Dear Friends, This year sucked. We yearn for the last page of the 2020 calendar to turn. Unfortunately, 2021 is going to suck, too. I remember being out for dinner in early March for my mom’s birthday, and everything was…normal. Days later, New York City shut down. Many more states followed suit. BMM closed its doors to visitors and went remote. Since then, nothing has felt normal. But you already know this. And the aim of BMM’s year-end letter isn’t to rehash the pandemic-nightmare we’re still living through. The objective is to catch you up on what we did over…
Medicine Monday
Dalton, Mass. — On Monday, Nov. 9, Pfizer announced results regarding its COVID-19 vaccine. The Monday after that, Moderna reported good news regarding its own vaccine. Then AstraZeneca came out with more coronavirus vaccine news on Monday, Nov. 23. This column will be published Monday, Nov. 30. Who knows what new medical news we might receive that day? We will get past the shutdowns and the social distancing that crushed the global economy earlier this year. I’ve said all along that the pandemic is driving the timeline of the economic recovery. That remains true. Is this good news already priced into…
Short-term detour to new highs
Dalton — The U.S. stock market’s rapid advance has paused for the first half of September. Investors are taking a moment to consider what’s next for COVID-19, fiscal stimulus, economic shutdowns, and how these might affect the stock market. Also, an old concern has resurfaced: stock prices have likely been discounted due to the upcoming presidential and congressional elections. The stock market appears worried that one party may win control of both the White House and Congress; stock prices tend to perform better during political gridlock. Despite equity market volatility, systemic liquidity remains ample. Unlike the Great Recession, references to a…
Market’s correct imbalances
It always happens. Sometimes it takes longer than one would like, but sanity returns to the stock market when you least expect it. The only word that accurately described the stock market at the beginning of this week was “parabolic.” On Tuesday, believe or not, the total worth of just one stock, Apple, was larger than the entire value of the Russell 2000 small cap index. It was also much greater than the entire value of the U.K. stock exchange. Story stocks like Tesla were rising along with the technology-heavy NASDAQ index. Stay-at-home stocks were logging daily gains that in…
How much are your children worth?
In the weeks ahead, the Center for Disease Control (CDC) wants your children to go back to school. They say it is necessary because children need schooling from a social, emotional, and behavioral health perspective. No one disputes that, so why are American parents balking at the idea? The short answer is that they are afraid for their kids. It doesn’t take a rocket scientist to understand that kids in a classroom are “super spreaders” of virus. Just think of what happens during the Flu season each fall and winter Despite assurances from the CDC that death rates among school-age…
The weakening dollar
Sometimes, investors are so focused on the trees that they miss the forest entirely. Take the U.S. dollar, for example. It has been declining at an alarming rate, yet no one seems to care. Today, investors are so occupied by a number of trees—earnings, stock prices, dividends, earnings results—that a weakening currency is almost an afterthought. Unfortunately, if the dollar continues to weaken, it could radically change your investment choices. Most readers, in general, believe a strong dollar reflects a strong economy. The fact that it makes our exports more expensive, and imports cheaper, is also true. A strong dollar,…
And the winner is…
Dalton — At my firm, Berkshire Money Management, we get together to discuss all things that may, or may not, affect the capital markets. Whoever sits in the White House gets more credit (or blame) than they deserve for economic growth and stock market return, but there is certainly some connection. Up until recently, my official position on who will win the November 2020 presidential election was that incumbent President Donald Trump would pull off a victory despite every single poll pointing to a win for former Vice President Joe Biden. I have changed my mind and now I believe Biden…