Non-US markets had a decent year minus China
This commentary was posted recently by fund managers, research firms and market newsletter writers and was edited by Barron’s.
December 22: Global stocks as measured by the MSCI ACWI Global Large and Mid-Cap Equity Index are up 16.3% year-to-date, as of December 17. However, when US stocks are excluded, while the S&P 500 index advanced 23%, international equity markets gained a modest 6.2%, according to the MSCI ACWI-ex USA index.
This number hides a great variation between the markets. Advanced economy markets, with the MSCI EAFE Index up 9.5%, continued to outperform emerging markets, where the MSCI Emerging Markets Index lost 3.3%. An unexpected slowdown in China in the second half of the year, resulting from the Covid outbreaks, restrictive government measures affecting the tech and internet sectors, and financial problems in the important real estate sector, earlier hit Chinese stocks of high flight, with the MSCI China index down 21.3% per year to date (as of December 17).
Aside from Chinese equities, emerging markets as a group performed almost as well as advanced markets, with the MSCI Emerging Markets-ex China Index gaining 8.4%. There were big differences in the performance of different national markets, with a number of Asian markets outperforming and Latin American markets generally underperforming. Likewise, the performance of advanced economy markets varied, with France, Sweden, Switzerland and Canada outperforming and Japan underperforming. While there are many factors behind these differences, this year’s experiences with government Covid and pandemic policies, particularly with regards to vaccination progress, have been significant ….
At Cumberland Advisors, we continue to expect positive growth in corporate earnings and stock prices through 2022. Our international and global equity ETF portfolios are almost fully invested, with a focus on markets advanced economies in Europe, Asia and Canada. .
—William H. Witherell
Galloping inflation and …
Commentary & Analysis
Maria Fiorini Ramirez inc.
December 23: Most important from a monetary policy perspective is the sequential inflation path. The recent acceleration in core inflation has been centered on the lower-weighted goods segment, with supply chain issues causing shortages and pushing up prices. Although the prices of basic services have also accelerated, they have not yet seen a real rebound. However, with rapidly rising labor costs, there is a significant risk that the much more heavily weighted services sector will join the goods sector in pushing the overall benchmark up to a low. faster rate than at present.
… the gold case
Ahead of the herd
December 21: Interest rates remain at zero for now, and we have a series of very modest increases next year that will do next to nothing to bring inflation down. How a [one percentage point] Can the high end of the range do anything to stop the 9% rise in goods prices and the 7% inflation in services?
Is it any wonder that spot gold soared immediately after the Federal Reserve’s announcement, hitting $ 1,812 two days later?
We only see positive for gold, given the Fed’s inadequate response to rising inflation, which is no longer seen as temporary or transient, but a more “sticky” feature of the economy. . The longer the prices of energy, food and transport, three main components of the CPI, stay high, the better for gold, the oldest and arguably the most effective protection against gold. inflation.
Inflation erodes the purchasing power of fiat currencies, and they eventually become worthless. The dollar has lost 90% of its purchasing power since 1950. Since 1972, gold has fallen from $ 35 per ounce to $ 1,800.
—Richard (Rick) Mills
ESG trends in real estate
Green Street Blog
December 21: The growth of E in ESG (environment, social and governance) becomes more and more important for real estate investors. This will translate into a lot more action (among landlords and tenants).
In the United States, developments accelerated during the Covid era. Now, investors are very aware of the “green risk” in the real estate market. As a result, you see many sophisticated homeowners taking action. Many of them have plans for net zero goals or a large reduction in greenhouse gas emissions, and those plans will become more concrete in the years to come. This is true for public and private companies.
This will translate into more investments (for building owners), and those investments could be costly, in the sense of reducing the value of certain areas in order to reach net zero of 2% to 5% over time. time. That said, owners of quality, green, or LEED-certified office buildings are expected to far outperform owners of office buildings who won’t go the green lane.
Look for sustainability to be an increasingly important part of the real estate industry in 2022 and beyond, and for investors who know how to assess the cost of going green to gain an edge over others.
Will the Fed go too far, too fast?
The Sovereign Advisor
December 20: The two biggest concerns in the market right now are the government’s response to this [coronavirus] variant and the Fed’s response to what is now runaway inflation, which is proving to be stronger and more sustainable than expected. So far, the Fed has announced that it will be cutting at a faster rate than expected the amount of stimulus it has injected into the system, which is negative for the market. Once it stops adding money, it will eventually raise interest rates to combat the higher levels of inflation that the Fed itself helped create.
The real test of this policy change will be whether the Fed is embracing its new way of thinking or if it falters and is not as aggressive as it should be in fighting inflation. As we deepen this new policy, another important thing to watch out for will be whether it goes too far and drains too much liquidity from the system and raises interest rates too far, too fast. This is something the Fed has done far too often, and it ultimately halted any breakthrough in the market.
—Donald L. Sazdanoff
The dollar is about to rally
Weekly technical review
December 20: On December 15, the dollar jumped to 96.91, barely below the previous high of 96.94 on November 24, after the FOMC doubled the decline. The dollar quickly reversed lower after the Bank of England raised its policy rate and the ECB indicated a less accommodative stance at the end of the first quarter. The pound and euro weakened on Friday, December 17, as Covid cases skyrocketed in England and the Netherlands shut their economy down for a month. Although the dollar did not correct to 94.50-95.00 as expected, it made no progress higher.
The dollar is still expected to fall, but its relative strength index fell from 75.1 on November 24 to 57.8 on December 20, so the dollar is working on its overbought condition without too much erosion of prices. It is a sign of strength. This reinforces the longer-term view that the dollar will rise towards 100 in the first half of 2022.
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