Current Market Conditions, 60/40

The 60/40 portfolio strategy, the long time investment benchmark, has historically returned strong and stable growth. This year has been all but normal. Year-to-date, the strategy is down 15.9% reflecting the abysmal state of both of its composing markets and leaving investors searching for alternative investments.


Semiconductors

Since 2008, China has dominated the global market for semiconductors. Recent efforts by U.S. based firms to boost semiconductor production have yet to produce a significant impact on exports.


Foe and Friend

Plenty of ink has been spilled over the consequences of the invasion of Ukraine. Food and energy have (rightly) garnered the vast majority of the attention, and that is unlikely to change any time soon. The reasoning is fairly straightforward. It takes time to pivot and reshuffle the global energy, metals, and food markets. The temporal element to the necessity realign global markets from “foe to friend”. 


U.S. Economic Releases Signal Weakness

US economic strength has struggled in recent weeks according to our Economic Strength Indices (ESIs) which are generated using economic data releases. By far the worst area has been consumer confidence. This is not especially surprising given that the most widely consumed metric on confidence, the University of Michigan Survey, has continued to plummet month after month. 


Stat of the Day – Inflation Outpacing Wage Growth

Wage growth adjusted for inflation has fallen off a cliff as inflation continues to eat away at income. For many Americans, the rapid wage growth experienced in 2020 has all been washed away over the last year of negative real wage growth.