Jul 26, 2021
Chris and Brian discuss performance for the first half of 2021 and the factors driving the market.
The S&P average annual returns have been at 14% for the prior decade and the all-stock index has surpassed 14% over the last six months.
Covid continues to be a concern, with the Delta variant 3x more contagious. However, we are getting near herd immunity with fewer hospitalizations and death.
The Federal Reserve and AMR use Core PCE to measure long-term inflation. (News outlets often us CPI to measure inflation, which includes energy and food and is more volatile.) This measure has been running at 2.45% annualized rate of return over the last 2 years. Last quarter it ran at 3.39%, which is higher than targeted but not absurd. Inflation could be transient and settle at slightly higher than historic norms.
More savings and pent-up demand is now leading to spending. This with the demographic considerations bodes well for stocks.
Jeff Tomaneng discusses the CNBE article– 'Inflation is the Silent Killer ', where he was recently quoted. In the article, Jeff and others discuss how many retirees are feeling the sting of inflation.
Brian and Chris discuss if inflation protected securities make sense. if inflation is transient, as the Fed is indicating, demand for these investments will erode and price will decline.