Market Review: Q3 2021

Market Update: Q3 2021

Even though the delta variant has many areas reconsidering reopening & masking protocol, the world’s economic rebound is in full force.  The U.S. economy added 943,000 jobs in July, unemployment fell to 5.4% from 5.9%, and global earnings estimates continue being revised upward.  These are all positive themes.

The underlying theme giving some investors pause is inflation.  Monthly inflation numbers have continued to lurch upward, despite the Federal Reserve’s insistency that it’s “transitory”.

Will prices continue higher?  They could.  We just passed a $3.5 trillion bill immediately after a $1 trillion infrastructure bill.  This type of fiscal policy injects a whole lot of dollars into and through the banking system that we’ll have to borrow to finance.  With more dollars chasing the same amount of goods and services available, prices tend to get pushed up.

But then again, many of the price increases we’ve seen recently are supply chain oriented.  Computer chip shortages have driven up used car prices.  Lumber costs are still high as there’s simply not enough available to supply the glut of home improvement projects.  The common thread here is that factories and manufacturing facilities are still crawling back to full capacity.  Many workers used the pandemic as an opportunity to change careers or jobs.  Some decided not to go back to work at all.  So while prices of the goods & services we all enjoy do continue to march higher, the real question will be what happens once capacity is truly back at full strength.

Here’s this quarter’s market review.

 

Market Review: Q3 2021
Market Review: Q3 2021

Market Review: Q3 2021

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GMB Ep #77: Investing in an Inflationary Environment

Last week, The Bureau of Labor Statistics released some metrics that indicate we might be experiencing a higher rate of inflation than the federal reserve and other stakeholders have been expecting. We dedicated today’s episode to exploring what inflation is and why we should be concerned about it. Throughout the episode, Grant dives into how inflation occurs, how it influences the economy, how to measure inflation, the role of the federal reserve in keeping the economy stable, and what investors should keep in mind about maintaining a healthy portfolio in an inflationary environment.

 

 

Show Notes

[04:45] Understanding Inflation – What inflation is, why it happens and why we should be concerned about it.  

[07:25] Measuring Inflation – Grant reviews some of the methodologies and indices that are used for measuring inflation and how these measurements indicate recent changes in the prices of consumer goods and services. 

[13:25] Inflation and Deflation – Grant shares his take on why the two extremes of the spectrum can cause adverse effects on the economy and why maintaining a stable rate of inflation is better for the economy. 

[16:58] The Federal Reserve – How the federal reserve maintains its policies in order to keep the economy stable. 

[22:25] Inflation and Investments – How inflation affects investments and how different asset classes perform in inflationary environments. 

[25:14] Pricing Power – Why companies that offer products and services with higher pricing power can adapt better to inflation.  

[28:00] Diversification – Grant reviews some of the ways you can diversify your portfolio by taking advantage of assets that are less affected by inflation in the United States. 

[35:48] Real Assets – Grant shares his take on how real assets, including real estate, perform in an inflationary environment and what investors should keep in mind about investing in hard assets. 

 

Resources

Consumer Price IndexU.S. Bureau of Labor Statistics: 
www.bls.gov/news.release/cpi.toc.htm