Building Economic Momentum – Navigating The Widening Recovery April 12, 2021
Our outlook for the U.S. economy has improved. We now expect real GDP growth over the course of 2021 to be close to 7%, which would be the fastest annual growth rate since 1984.
Monetary conditions in the U.S. continue to look strong as do measures of fundamental economic health, such as purchasing manager indices (PMIs). The following graph shows the three-month moving average PMI minus the 12-month moving average PMI. When the 12-month is higher than the three-month, the pace of economic growth is expected to be slowing. Conversely, when the three-month is higher than the 12-month, as is the case today, we expect the pace of economic growth to be accelerating.
April 12, 2021
When peeling back the layers of U.S. president Biden’s infrastructure plan, one of the key components is shoring up internet access to all Americans. This facet can help bolster cloud computing services and the
The obvious benefactor of Biden’s plan is infrastructure that will help modernize highways. However, one key component is providing internet access to those in hard-to-reach pockets of the country.
One of CLOU’s holdings, Amazon, stands to benefit from the Biden proposal. As such, it got the backing of founder Jeff Bezos in a statement that supported the president’s initiatives.
“Expanding broadband infrastructure is also a key focus of the plan, which says that by one definition there are 30 million Americans living in areas where broadband isn’t available to provide internet access at minimally acceptable speeds,” a Motley Fool article explained. “Those are all potential Amazon customers, not just for e-commerce, but also video streaming
Investors considering SGDM over the near-term don’t need to look far for an ally because they’ve got one in the Federal Reserve. The Fed’s bond buying is seen as a catalyst for bullion, which could turn into a spark for SGDM.
“In the process, the Fed’s Treasury bondholdings zoomed past those of foreign nations parked at the U.S. central bank, which have remained flat around $3 trillion. And overall foreign holdings of Treasuries fell by $591 billion in the latest 12 months,” reports Randall Forsyth for
. “The Fed’s massive securities purchases fueled a $4.2 trillion explosion in the broad M2 money supply in the year through February. That, in turn, helped send the U.S. Dollar Index tumbling 13% from its peak last March to the turn of the year. Since then, it’s recovered by about 3%.”
Active Management and Resurgent Emerging Markets April 12, 2021
Emerging markets have long held promise and potential, but the returns offered by equities don’t always match economic growth, frustrating investors along the way.
However, analysts have been upwardly revising earnings estimates on emerging-market companies faster than for those in developed countries. These factors could be signs that investors may want to deploy active management when allocating to developing economies.
“American investors are intrigued by emerging-markets stocks,” writes John Rekenthaler for Morningstar. “The reason for it is their economic prospects. The Asian Tigers of Hong Kong, Singapore, South Korea, and Taiwan have enjoyed remarkable development, to the point where many no longer consider those nations to be emerging. Attention has now turned to their successors: Brazil, Russia, India, China, and South Africa.”