Daily Commentary

MarketMinder’s View: Please note that MarketMinder is nonpartisan, preferring no party or politician over others anywhere. Our commentary on political happenings serves only to assess their economic and market implications. In this case, we think Argentina’s President-elect Javier Milei is a shining example of how politicians often espouse extreme rhetoric and policies on the campaign trail—to draw attention (and funding)—only to moderate in office, as appears likely here. To wit: “Days ahead of his inauguration Sunday, Milei is backpedaling, surprising supporters and opponents. He has jettisoned some top economic advisers who were enlisted to help him kill the central bank and adopt the U.S. dollar as the national currency. He has aligned instead with officials from a previous center-right government that he previously derided. ‘No one said eliminating the central bank was going to be instantaneous,’ he said Sunday. After promising to cut ties with China—he had referred to the communist regime as assassins—he has since exchanged cordial words with Beijing. China is Argentina’s top buyer of soy, and Argentina is Latin America’s third-largest recipient of Chinese state-bank loans in South America. Even his tone has shifted from talk-show personality to stoic voice of reason. He acknowledged the transition from nearly two decades of leftist Peronist governments to his vision of unfettered capitalism could take longer than expected. His moderation comes as powerful labor unions and social movements are lining up against him.” (Not to mention Argentina’s congress, where Milei’s party is in the minority.) Argentina’s share of the global economy and markets is tiny, but this saga shows how elections frequently underwhelm what many initially fear (or hope) heading into them. Something to keep in mind as 2024 campaigns heat up in the US.

MarketMinder’s View: News some readers may be able to use! “Millions of people move money from a workplace 401(k) plan to an individual retirement account each year. Such ‘rollovers’ are common when workers retire or take new jobs at different employers. More than 5.6 million people rolled a combined $618 billion into IRAs in 2020, according to the latest available IRS data.” As this article enumerates, there are several factors to consider when facing such a situation. For one, “Investment funds held in 401(k) plans are generally less costly than their IRA counterparts. ... Compare annual 401(k) fees — like investment ‘expense ratios’ and administrative costs — to those of an IRA.” Indeed, this is important, but it presumes the investor will jump from one managed mutual fund to another. Maybe, but maybe not, because the investment choices are prolific. “401(k) options are limited to those selected by your employer. With an IRA, the menu is often much broader.” That is, it likely extends to individual securities, broad index funds, ETFs, you name it. Then, too, “Having multiple 401(k) accounts scattered among multiple employers may be a challenge to manage ... Aggregating assets in one IRA may simplify management of your nest egg ... .” Read on for more details and things to consider with this potentially large transaction.

MarketMinder’s View: This article could use a lesson in how markets work, in our view. It expresses befuddlement at German stocks’ (as measured by the DAX) making new highs despite the titular “faltering economy.” The explanation expressed here: “growing confidence that interest rates will soon be cut.” Other analysts cited point to less worse economic data perhaps indicating an eventual upturn, falling energy prices “supporting profitability” and German stocks’ exposure to a stronger global economy. Here we note that MarketMinder doesn’t make individual security recommendations, as a couple companies are mentioned at this point. But these are incidental and miss the big reason why stocks seemingly shrug off the weak data: They are old news to markets. In our view, stocks—which move most on the gap between reality and expectations over the next 3 – 30 months—already reflect Germany’s economic struggles. German markets have been contending with recession fears for close to two years—recent signs of weakness aren’t catching them by surprise. If there is a recession, it wouldn’t shock. Meanwhile, stocks are looking beyond the next quarter. We find markets are exceedingly good at separating wheat and chaff, and they are fathoming better days ahead than most appreciate.