March 4, 2021
By Steve Blumenthal
A short helicopter ride from Golden, British Columbia (an hour and a half northeast of Banff) to a tiny resort called Chatter Creek began four days of deep snow powder skiing. The vastness of the mountain range was like nothing I’d ever seen. Day one was a blue sky day. On days two, three, and four, the snow kept falling. Equipped with a beacon, specialty backpack with a shovel, probe, and airbag four days of powder skiing in the middle of paradise was exhilarating. I’m checking in happy.
After breakfast on day four, I approached our guide, Brian. I was worried about the avalanche risk. He said, “The risk is high but the snow is light and we’ll be careful to avoid the dangerous areas. Backcountry skiing can be dangerous. I’ve been doing this for 25 years and have never gotten anyone into trouble. We’ll be smart.” The snow was waist-high deep. I was nervous.
Every run, every day was untouched. Meaning, no tracks to have to ski over. It’s hard to explain the feeling if you haven’t experienced powder skiing. The best description I can give you is it is like softly floating down the mountain. A quiet rhythmic up-and-down dance with earth. The trip ended with smiles on our faces and beer in our hands, we ended the trip exhausted and happy.
You will find a few more photos below in the personal section. I’ve been able to check off another item on my bucket list.
A quick two-hour flight landed me in Salt Lake City on Tuesday to attend the annual WallachBeth Symposium in Park City, Utah. The conference room was packed with a 130 industry leaders: fund managers, economists, pension fund managers, ETF strategists, hedge fund managers, trade execution specialists, product sponsors, investment advisors, and experts from CBOE, Invesco, S&P Dow Jones Indices, State Street, and more. Topics ranged from crypto technologies, private equity, Ukraine/Russia, the investment markets, and the economy.
Afternoon activities included skiing, of course, shopping on Main Street, and fly fishing. The highlight of the event for me was the dinner at High West Distilleries for the annual light-hearted roasting of the team from WallachBeth. Great fun.
J.P. Morgan Asset Management’s Global Market Strategist, Meera Pandit, CFA, shared JPM’s views on inflation. In the following section, with permission, you’ll find my high-level summary notes. Much more to share in the coming weeks, but need to keep it short as I’m racing to catch a late morning plane home to Philadelphia. Many thanks to JPM’s Max Cann, Meera, and the team for sharing their insightful presentation.
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J.P. Morgan Asset Management’s View on Inflation
A summary followed by charts:
- Today’s inflation is different than in the 1970s and 80s.
- Two-thirds is supply chain-related, one-third stickier housing, wages and services.
- Higher wages will stay with us.
- JPM expects 4% inflation by the end of 2022 and 3-4% ongoing.
- The supply chain is expected to improve later this year. Expects moderating consumer spending.
- Companies are able to pass on inflated prices to customers.
- JPM expects a 25 bps rate hike in March.
- Investors need to learn how to invest with rising interest rates and inflation.
Chart 1: Inflation is at a 40-year high, but this isn’t the 1970s.
Chart 2: Consumer demand has been strong, with money pouring into goods…
Chart 3: …stretching global supply chains.
Chart 4: Geopolitical conflict puts upward pressure on energy prices in the near term.
Chart 5: Labor is in short supply…
Chart 6: …pushing up wage growth.
Chart 7: High inflation forces the Fed to tighten monetary policy.
Chart 8: Rates are on the rise, but the yield curve should remain relatively flat.
Chart 9: Fixed income may require a barbell approach, and real assets may help hedge.
Some concluding thoughts:
- Value tends to benefit when inflation, growth, and rates are high.
- Higher prices pose headwinds for corporate profit margins, but earnings are nominal.
- Commodities may be a helpful hedge and are supported by long-term structural trends.
Trade Signals – Russia-Ukraine Conflict Roils Global Markets; Inflation Will Continue to Rise
March 2, 2022
Posted each Wednesday, Trade Signals looks at several of my favorite equity markets, investor sentiment, fixed income, economic, recession, and gold market indicators.
For new readers – Trade Signals is organized into three sections:
- Market Commentary
- Trade Signals — Dashboard of Indicators
- Charts with Explanations
Market Commentary
Notable this week:
No material changes to the trade signals this week. Naturally, investors are concerned about the humanitarian and financial impacts of the continuing conflict in Ukraine. Clearly, at least in the short term, the conflict is causing energy prices to spike, which will result in consumer price increases across the globe, including the United States.
Federal Reserve Chair Jerome Powell begins two days of testimony today on Capitol Hill. The hot seat will be quite a bit “toastier” today and tomorrow, as Chair Powell tries to balance the Fed’s responses to inflation, interest rates, and labor markets. Russia’s incursion into Ukraine has thrown the Fed’s plan of interest rate increases into question. Axios writes, “Powell faces a high-wire act. He’ll seek to signal that the Fed is resolute in its plans to try to rein in inflation, yet flexible enough to respond if the Ukraine crisis damages the economy.” Keep in mind that Powell has yet to be confirmed by the Senate for a second term on the Federal Reserve Board.
Click HERE to see the Dashboard of Indicators in Wednesday’s Trade Signals post.
Not a recommendation for you to buy or sell any security. For information purposes only. Please talk with your advisor about needs, goals, time horizon, and risk tolerances.
Personal Note – Photos from British Columbia
A few years ago, my daughter Brianna was invited by her three London friends to Chatter Creek. There was no trip last year due to COVID-19 and she was again invited this year. A few cancellations opened another seat and I got lucky. The cost of that luck is I’m no longer a Liverpool fan. Scott, Ryan, and Matt are rabid Everton fans, and I’ve been successfully converted. Actually, at heart, I’ve always been a Man United fan but that has waned over the years. So, Everton, it is… and they are going to need more support as they are facing relegation to the second division.
Here are a few more photos and a short video from BC. What an adventure.
Thanks for reading and have a great week!
With kind regards,
Steve
Stephen B. Blumenthal
Executive Chairman & CIO
CMG Capital Management Group, Inc.
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