Daily Commentary

MarketMinder’s View: While this piece aims at GenX folks with aging parents in need of help, we find the broader lessons applicable for everyone who needs to plan for their own or family members’ advanced age. They all hinge on society’s widespread tendency to underestimate life expectancy, which can raise the risk of not being able to fund late-life expenses. This piece profiles people dealing with this, including folks who have had to help shoulder their parents’ late-life financial burdens, including in-home care, assisted living facilities and the high cost of clearing out the family home and preparing it for sale (which may entail renovations, mold mitigation and other unpleasant items on top of the emotional toll). If you have family who may need help in their golden years, start planning now, and don’t be afraid to have direct conversations about finances so that you can know in advance what your contributions may be and incorporate those needs into your own investment plans. And for everyone, when mapping out your retirement investment strategy, make sure you are correctly estimating and accounting for your actual life expectancy and that of your heirs, if your time horizon extends beyond your lifetime. Don’t get caught up with buzzwords like “conservative” or simplistic conventions about how much someone at a given age should hold in bonds. The right strategy for you should be based on your goals and needs over your entire time horizon, targeting the returns you need to meet them. Late-life healthcare costs for you or a loved one may be a big part of that.

MarketMinder’s View: Set aside a couple tangents and minor quibbles, and this piece shows why a repeat of 2022’s hot inflation is unlikely now despite high energy costs’ return. While conventional wisdom says oil’s spike then ignited an inflation fire, “There is another view, however, that places just about all of the blame for the surge in inflation on the rapid growth of the broad money supply, known as M4. It is certainly true that monetary growth was exceedingly high before the Russian invasion. It peaked at 15.5pc. If this monetarist explanation is accepted then it suggests a clear way forward for the Bank of England in the months ahead. The recent history of monetary growth is very different now. In the past year, M4 has grown only by 4.5pc. This suggests that any short-term surge in inflation reflecting the recent rise in energy prices will not be sustained and that inflation will fall back pretty smartly without the need for any increases in interest rates.” The article then notes double-digit money supply growth during COVID lockdowns coincided with supply shortages, which we think is salient and also downplays that all goods and services production was curtailed as money supply boomed. This created the classic inflationary cocktail of too much money chasing too few goods and services. So yes, we agree there are questions to ask about central banks’ reasoning back then, including why they downplayed money supply growth. But we also think this piece is wrong to downplay how high energy costs affect prices elsewhere. While it is fine to note high energy shows up in headline CPI (especially in the UK, where the price cap adds distortions), that doesn’t negate the substitution effects that help pressure other goods and service prices. That doesn’t mean society gets no inflation, but without red-hot money supply growth, you don’t get broad, lasting inflation outside energy.

MarketMinder’s View: Today, US President Donald Trump announced on social media that the US Navy would “guide” stranded ships through the Strait of Hormuz, which could be a big step toward easing the bottleneck and freeing all of the oil and natural gas idling in the Persian Gulf. However, it is unclear exactly what that meant in practice. As the article notes, Iran claims it struck and turned back a US warship. The US denies this and claims it successfully got two merchant ships through. Meanwhile, the industry is taking a cautious view: “Sascha Meijer, the general secretary of the seafarers’ union Nautilus, said: ‘Seafarers stuck in the strait would really appreciate protection to get ships sailing out. But is this protection sure? How about mines? Are the ships insured? Is this offer enough? It is really too soon to conclude if this is good news or creates more danger.’ Her comments were echoed by an oil tanker captain stuck in the strait, Raman Kapoor, who told BBC Radio 4’s World at One programme that he ‘would not take this risk’ of attempting to leave.” As always, we recommend assessing these developments from markets’ standpoint. For stocks, day-to-day developments don’t make or break returns. They can affect sentiment but tend not to meaningfully affect results over the next 3 – 30 months, which is what markets weigh. We think markets have been looking further out for a while, pricing in the high likelihood that the war doesn’t have a lasting effect on energy supply and costs. US efforts to reopen the Strait fit with this even if they take some time to iron out. Lastly, note the evidence here that the industry continues adapting. Trump’s post noted shipping companies don’t plan to send tankers back to the Strait once they are out, which meshes with what the other industry folks said. It also fits with suppliers’ directing more oil to alternate points via pipelines, which are attracting more investment and expansion plans.