Trends 2021 (so far)

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    Trends 2021 (so far)

    Will we finally see higher inflation in 2021?

    by Robert Stoll, Financial Design Studio

    There is increasing talk of inflation in the market. Government-reported inflation numbers have repeatedly failed to rise above the Federal Reserve’s 2.0% target. But with another round of economic activity and a boom in consumer spending, will we finally see higher inflation in 2021?

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    Bonds in a rising interest rate environment

    by Scott Monk, Charis Legacy Partners

    At historic lows, many investors are nervous about having bonds in their portfolio because bond prices are inversely related to interest rates: when interest rates rise again, bond values ​​fall, causing capital losses for bond portfolios. And while this reverse relationship is correct, I hope in today’s post to show why this fear is exaggerated.

    However, first let’s take a step back and about that Bonds play a role in a portfolio, and why bonds are ideally suited for this role because of their investment characteristics.

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    Cash out refis are making a comeback

    by Robert Stoll, Financial Design Studio

    Banks and consumers have long histories of short memories. Financial mistakes made by one generation of bankers and consumers are inevitably repeated in future generations. We are observing a trend on the real estate market that contributed to the real estate crisis 15 years ago: cash-out refis are making a comeback.

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    Will labor shortages drive inflation higher?

    by Robert Stoll, Financial Design Studio

    The government reported disappointing April employment numbers, leading many to question what was going on. Anyone who has been to restaurants and stores has likely seen many Help Wanted signs. Nevertheless, employment growth remains below expectations. This causes employers to raise wages, increasing costs for end users. Inflation is getting more and more on the news as we discovered last week in relation to the global scarcity of computer chips. The key question now is whether this looming labor shortage will drive inflation even higher.

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    Rising prices due to global scarcity of computer chips

    by Robert Stoll, Financial Design Studio

    Our dishwasher broke 2 weeks ago. In our search for a new one, we looked at every major home appliance retailer website you can think of. A topic quickly emerged: “Out of Stock”. If you’ve been in the market for a device or a car, you may have noticed that stocks are low and prices are much higher. These rising prices are due to a global shortage of computer chips. What’s going on and how is this chip scarcity affecting the economic outlook?

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    Prepare for more volatile markets

    by Robert Stoll, Financial Design Studio

    Volatility is the price investors pay to make money in stocks and bonds. While no one can predict when periods of volatility will occur, there are clues we can look for that could indicate an increase in volatility. We kept an eye on two dynamics that we believe will create an environment for higher volatility. The first is a divergence between the stock market and a popular indicator of stock market volatility. The second is the surge in investor margin debt. Both suggest that we should prepare for more volatile markets.

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