Times of tumult, such as we’ve seen this year, warrant reflection. The pandemic and the government’s shifting focus to issues at home overshadowed the saber-rattling seen in 2019. Part of this shift included a flood of fiscal and monetary stimulus, which provided support to keep economies from succumbing to a microscopic agent, but eventually led asset prices to balloon and the economy to overheat.Continue reading . . .
During the second quarter of 2022, the Federal Reserve officially removed “transitory” from its dictionary, acknowledging that inflation remained higher and more persistent than expected. Fears of further acceleration pushed the Fed governors to break out their bazookas, hiking the fed funds rate to 1.58% compared to less than a tenth of a percent at the start of the year.Continue reading . . .
It’s spring 2022, after two years and 500 million COVID-19 cases, a vaccine miracle permitted most countries to break free of massive pestilence not seen since 1919. The war in Ukraine highlights unpreparedness, and Europe’s systems of finance, energy, and food totter. Fewer than half the world’s population was alive in 1981, when inflation was last at today’s increasing levels.Continue reading . . .
Whether it was inflation, supply chain disruptions, the removal of government stimulus, the prospect of central bank monetary policies — whatever spooked investors leading to the September sell-off evaporated at the start of October, and once again, markets rose. Investors shrugged off doubt and pushed the S&P 500 to new highs in the final week of the year.Continue reading . . .
Just over a year ago the World Health Organization declared the coronavirus a global pandemic. Few would have predicted the returns experienced in global equity markets over the following 12 months. With widespread economic disruption, any company demonstrating growth — regardless of profitability — became a rare commodity, and investors bid prices higher.Continue reading . . .
At Saturna, we entered 2020 with cautious optimism. Geopolitical uncertainties, rich corporate valuations, and stretched monetary policies kept us vigilant, while generally strong business and economic fundamentals supported optimism. What we didn’t foresee was the looming pandemic, widespread economic shutdowns, and rapid government intervention.Continue reading . . .