Daily Commentary

MarketMinder’s View: Here is an interesting development in the world of equity market indexes: “Vietnam targets to meet MSCI’s emerging market upgrade criteria by 2030 as it pushes forward with efforts to appeal to more foreign investors, according to a statement on the government website. Under a newly approved plan, the Southeast Asian country seeks to simplify procedures for foreign investors, including in terms of registration and account opening, and to streamline current processes to open indirect investment capital accounts.” Now, index reclassifications tend to follow rather than lead returns, so they aren’t a path to outperformance—the article points out markets have already digested the news to an extent, as Vietnam’s “… benchmark VN Index has outperformed Southeast Asian peers this year, rising by more than 31%, on optimism over economic growth and the potential upgrade of its market classification, which would potentially bring in foreign funds.” (Note that this isn’t even assured—going from a Frontier Market heavyweight to a much smaller Emerging Market weight could mean less or a similar amount of investor interest.) Two, Vietnam’s 2030 goal doesn’t mean it will happen—South Korea, for instance, has been pushing to earn MSCI’s developed market status for years, but reforms have been slow-moving. Still, Vietnam’s plans highlight its progression as a global economic player, a sign of markets’ dynamism.

MarketMinder’s View: The introduction here is a dynamite description of what inflation is and isn’t, so we will quote it in full: “Inflation is not like a virus that spreads through a population. A rising price in one part of the economy cannot ‘infect’ a price in another part of the economy. A currency doesn't just ‘catch’ inflation because oil prices go up or a drought causes wheat prices to rise. Inflation is the result of an imbalance between the supply of money and the demand to hold it. It's a monetary phenomenon, as Milton Friedman taught us. And it generally results in a rising price for most goods and services.” Well said. The rest of the pithy post features charts of different price measures that reinforce a broader point: Inflation is back to normal, and absent a surge in money supply—which isn’t happening and doesn’t look likely right now—the hot price growth from a few years ago isn’t likely to return. Prices are still high, and we don’t dismiss how burdensome that is, especially for folks on low, fixed or no income. But they are unlikely to surge further still from here. For more, see last month’s commentary, “July US CPI: Tariffs Don’t Fuel Scorching Inflation.”

MarketMinder’s View: First, a disclaimer, as this article wades into some political developments: MarketMinder is nonpartisan and prefers no political party or politician over another. Our interest here is on the theme of economic data, which have been in some politicians’ crosshairs lately. Headlines worry the political challenges facing national agencies like the Bureau of Labor Statistics (BLS) will lead to poorer-quality data. But as this piece shares, the government isn’t the only economic observer out there. “Long-standing private reports have recently risen in prominence, including a labour market report collated by payrolls processor ADP. Google searches for the ADP Employment Report have recently trebled. New rivals have appeared on the market, such as Revelio Labs, which earlier this year launched its own monthly labour market statistics, marketed as a ‘more timely and granular’ complement to BLS’s jobs data. Wall Street research now also cites a variety of data sources, such as restaurant and hotel bookings and spending on credit and debit cards.” To be clear, we aren’t saying private sector-sourced data are inherently superior to the government’s. It all depends on methodology (including seasonal and inflation adjustment factors or a lack thereof) as well as the quality and completeness of information collected. That will naturally vary. Also worth noting: One of economic data’s primary investment uses is to compare the present to the past, a crucial way of assessing trends. Many BLS data series have longer historical records than newer reports (which can also get pretty niche), making the former more useful when analyzing past market cycles. For investors, remember no one indicator is sacrosanct or all-telling—instead, tracking multiple indicators can help provide a more comprehensive snapshot of the economy. For more, see our August commentary, “Looking Beyond the Data Debate.”