In May, the long-term total return expectation for the Global Market Index (GMI) reached a historic high. The annualized performance forecast has risen to a mid-7% outlook; however, this remains considerably lower than GMI’s realized return over the past decade.
May witnessed a continued rise in most markets, building upon the rebound observed in April following the broad selloff in March, as indicated by various ETFs. The primary exception among major asset classes was commodities, which experienced a sharp decline, marking the first monthly downturn this year.
The Capital Spectator will be on an extended Memorial Day holiday, exchanging New Jersey for Italy in the coming week. Content updates will be limited, if not absent, during this time. Regular US-based postings will resume on June 2. Ciao!
● Yuppies: The Bankers, Lawyers, Joggers, and Gourmands Who Conquered New York
Dylan Gottlieb
Review via The Wall Street Journal
The term “violent gentrification” is a provocative phrase, reminiscent of expressions like “Canadian depravity” or “Luxembourgish aggression.” Its existence isn’t readily apparent. In “Yuppies: The Bankers, Lawyers, Joggers, and Gourmands Who Conquered New York,” Dylan Gottlieb aims to alert readers regarding this group’s actions and their contentious shifts in urban landscapes, transforming once risky neighborhoods into thriving locales featuring charming bakeries and cafés.
The label “yuppie” is inseparable from the 1980s, just as “hippie” is from the ’60s. Typically, young urban professionals have been depicted with a blend of humor and mockery by writers such as Tom Wolfe and P.J. O’Rourke. However, Gottlieb, a history professor at Bentley University, narrates a nearly 300-page examination of this phenomenon with minimal levity, other than in the quotations included.
Inflation rates have surged due to an energy crisis originating from the Middle East, and economists predict that this upward trend will continue in the upcoming months. The Federal Reserve is closely monitoring these developments; however, it opted to keep interest rates unchanged during its most recent policy meeting. The Fed funds futures market indicates a significant likelihood that rates will remain steady in the near future. The critical question now is how high inflation might rise before the central bank feels it necessary to initiate rate hikes once more.
The US economy is projected to show modestly stronger growth in the second quarter compared to the first quarter, according to the median nowcast derived from various estimates by CapitalSpectator.com. Despite rising inflation risks associated with the energy shock from the Middle East, economic activity appears to be holding firm so far in this quarter’s GDP.
The 10-year real US Treasury yield is currently nearing a 20-year peak, with the 5-year yield closely behind. The decision to lock in inflation-indexed yields might depend on the developments in the Gulf region over the coming months.
The economic challenges arising from the Middle East conflict continue to resonate, yet the US economy has displayed remarkable resilience. However, the duration of this resilience is uncertain as mounting pressures persist, a concerning prospect given the ongoing stalemate between the US and Iran, along with the ongoing blockage of energy exports from the Gulf.
This week, investors will keenly observe the bond market, assessing the potential inflation risks present. Recent reports indicate escalating pricing pressures, attributed to the unrest in the Middle East that has elevated energy costs and sparked inflationary concerns. The ongoing debate revolves around whether this inflation surge is temporary or if it signifies a longer-term shift. This uncertainty is closely linked to the Federal Reserve’s potential response.
● The New Money Strategy: The Modern Guide to Rational, Long-Term Investing
Brandon van der Kolk
Summary via publisher (Wiley)
In “The New Money Strategy: The Modern Guide to Rational, Long-Term Investing,” Brandon van der Kolk offers the ultimate strategy guide for a new generation of investors, equipping them to leverage the principles of value investing and navigate the stock market effectively. As the creator of the popular New Money YouTube channel with over a million subscribers, van der Kolk highlights common errors in today’s market and proposes time-tested strategies for building lasting wealth.
In summary, May marked a significant period for various economic trends, particularly with rising inflation and changes in market dynamics. It prompts continued scrutiny of the bond market and anticipated Federal Reserve actions. Investors must remain alert to evolving conditions as these factors will influence future financial landscapes.
