MarketMinder Daily Commentary

Providing succinct, entertaining and savvy thinking on global capital markets. Our goal is to provide discerning investors the most essential information and commentary to stay in tune with what's happening in the markets, while providing unique perspectives on essential financial issues. And just as important, Fisher Investments MarketMinder aims to help investors discern between useful information and potentially misleading hype.

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Grocers Are Finally Lowering Prices as Consumers Pull Back

By Jaclyn Peiser, Washington Post, 5/23/2024

MarketMinder’s View: Please note, MarketMinder doesn’t make individual security recommendations. The specific companies mentioned here are coincident to a broader theme we wish to highlight. Furthermore, this piece touches on politics, so we remind you that we favor no party nor any politician. It seems grocery prices have started to come down and, beyond the heavy political themes here, the reason why is simple: Prices are a signal. When markets operate unimpeded (read: without government intervention), high prices usually self-correct because they encourage production and dampen demand—bringing those two economic forces back into balance via competition. That appears to be happening here based on some major grocers and retailers’ lowering prices on many household goods. See one shopper interviewed here: “Wyatt Williams of Iowa City says higher prices forced him to make changes starting in 2022, the year inflation reached a four-decade high of 9.1 percent. The 39-year-old writer and professor could no longer afford to make his weekly shopping trip to Whole Foods. Instead, he found a creative alternative: driving 30 minutes away to a Mennonite-owned bulk goods grocery store in rural Iowa. ‘My finances were wrecked, and I was cutting into my savings,’ he said. ‘Something that’s interesting that happens with food is when you have to regard it with scarcity, it changes the way you cook.’” Businesses aren’t deaf—they tend to raise prices only as high as customers will allow them. Too high will drive shoppers away and loss of market share. Moreover, lower grocery prices are in line with the broader, global disinflationary trend. To be clear, many prices remain well above prepandemic levels, which is frustrating—and has forced many households to make tough decisions, which we sympathize with. But markets, not loud-mouthed politicians, are providing the solution to that issue. And one other thing: For all the stuff here about big mergers, technology and other fears that corporations are using their power to jack prices up across the board, we have a question: Why didn’t this happen during most of the period from 2000 until 2022, when inflation was running low? All those factors existed during that timeframe.


Most of Us Have Too Much in Bonds

By Charley Ellis, Financial Times, 5/23/2024

MarketMinder’s View: This piece discusses some basic but critical points on long-term investing: namely, many underestimate how long “long-term” can be. “Most individual investors incorrectly define ‘long term’ as a typical ‘market cycle’ of a few years. … The reality of investment horizons stand in stark contrast to these conventions. Indeed, most individuals begin investing at about age 30 and continue to invest until their late 80s—suggesting that their real investment horizon spans half a century. … These longer-time horizons should be used to frame their critical investment policy decisions, including their allocation to bonds.” The article then highlights how many investors hold more bonds and fixed income than they realize, hindering their portfolio’s long-term growth prospects, by citing things like their home (if they own one) and/or Social Security and pension benefits. We agree with the general thrust here—owning too much fixed income for the long run presents quiet risks from earning too little in return, and people misunderstand or underestimate their time horizon. But we have several quibbles here. One, the idea you should use bonds for a near-term earmarked expense is wrongheaded. This is cash, where no volatility can be tolerated. Two, we aren’t anti-bond. For those who can’t stomach the volatility of an all-equity portfolio, a blended allocation may decrease the temptation to exit the market entirely—missing out on some growth may be a worthwhile tradeoff. Three, the withdrawal rates at the end of this piece are overly simplified generalizations that could present a lot of depletion risk. You need to do more analysis than this. As always, the “ideal” allocation depends on an individual. For more, see last year’s commentary, “Our Quibbles With a Recent Asset Allocation Study on Bonds.”


We’re in a ‘Vibecession,’ Experts Say. Here’s How to Invest Accordingly

By Jessica Dickler, CNBC, 5/23/2024

MarketMinder’s View: What, pray tell, is a “vibecession?” According to the experts interviewed here, it is when the economy isn’t in recession—at least according to conventional metrics, e.g., unemployment rate or GDP growth—but some segments of the population are still struggling financially and most people seem to feel down. But is any of this actually new? We think the theme is a basic truism about all of human history. Remember Occupy Wall Street? Because this seems like pretty much exactly what they griped about … in 2011 or 2012. And what people cite when they talk about “wealth inequality.” And what people scream about when they want “good jobs.” The lack of full and total participation in a growing economy is far from unique historically. But positively, in a capitalist, profit-driven economy like America’s, workers have the opportunity to better their lot—their current financial standing isn’t destiny. As for concerns about poor consumer sentiment weighing on future activity, moods aren’t predictive—especially since people often compartmentalize and separate their feelings about the broader economy (which may be dour) from their personal situation (which may be solid). And for investors, consider: All this speaks to sentiment that is still disconnected from a brighter-than-appreciated reality. Take your mind back to 2009 – 2020’s global bull market. It was probably history’s least-loved—amid the aforementioned Occupy protests and widespread fears from the political right and left about income inequality and limited opportunity. Yet it was also history’s longest, which isn’t a coincidence: Lack of love means wall of worry to climb.


Grocers Are Finally Lowering Prices as Consumers Pull Back

By Jaclyn Peiser, Washington Post, 5/23/2024

MarketMinder’s View: Please note, MarketMinder doesn’t make individual security recommendations. The specific companies mentioned here are coincident to a broader theme we wish to highlight. Furthermore, this piece touches on politics, so we remind you that we favor no party nor any politician. It seems grocery prices have started to come down and, beyond the heavy political themes here, the reason why is simple: Prices are a signal. When markets operate unimpeded (read: without government intervention), high prices usually self-correct because they encourage production and dampen demand—bringing those two economic forces back into balance via competition. That appears to be happening here based on some major grocers and retailers’ lowering prices on many household goods. See one shopper interviewed here: “Wyatt Williams of Iowa City says higher prices forced him to make changes starting in 2022, the year inflation reached a four-decade high of 9.1 percent. The 39-year-old writer and professor could no longer afford to make his weekly shopping trip to Whole Foods. Instead, he found a creative alternative: driving 30 minutes away to a Mennonite-owned bulk goods grocery store in rural Iowa. ‘My finances were wrecked, and I was cutting into my savings,’ he said. ‘Something that’s interesting that happens with food is when you have to regard it with scarcity, it changes the way you cook.’” Businesses aren’t deaf—they tend to raise prices only as high as customers will allow them. Too high will drive shoppers away and loss of market share. Moreover, lower grocery prices are in line with the broader, global disinflationary trend. To be clear, many prices remain well above prepandemic levels, which is frustrating—and has forced many households to make tough decisions, which we sympathize with. But markets, not loud-mouthed politicians, are providing the solution to that issue. And one other thing: For all the stuff here about big mergers, technology and other fears that corporations are using their power to jack prices up across the board, we have a question: Why didn’t this happen during most of the period from 2000 until 2022, when inflation was running low? All those factors existed during that timeframe.


Most of Us Have Too Much in Bonds

By Charley Ellis, Financial Times, 5/23/2024

MarketMinder’s View: This piece discusses some basic but critical points on long-term investing: namely, many underestimate how long “long-term” can be. “Most individual investors incorrectly define ‘long term’ as a typical ‘market cycle’ of a few years. … The reality of investment horizons stand in stark contrast to these conventions. Indeed, most individuals begin investing at about age 30 and continue to invest until their late 80s—suggesting that their real investment horizon spans half a century. … These longer-time horizons should be used to frame their critical investment policy decisions, including their allocation to bonds.” The article then highlights how many investors hold more bonds and fixed income than they realize, hindering their portfolio’s long-term growth prospects, by citing things like their home (if they own one) and/or Social Security and pension benefits. We agree with the general thrust here—owning too much fixed income for the long run presents quiet risks from earning too little in return, and people misunderstand or underestimate their time horizon. But we have several quibbles here. One, the idea you should use bonds for a near-term earmarked expense is wrongheaded. This is cash, where no volatility can be tolerated. Two, we aren’t anti-bond. For those who can’t stomach the volatility of an all-equity portfolio, a blended allocation may decrease the temptation to exit the market entirely—missing out on some growth may be a worthwhile tradeoff. Three, the withdrawal rates at the end of this piece are overly simplified generalizations that could present a lot of depletion risk. You need to do more analysis than this. As always, the “ideal” allocation depends on an individual. For more, see last year’s commentary, “Our Quibbles With a Recent Asset Allocation Study on Bonds.”


We’re in a ‘Vibecession,’ Experts Say. Here’s How to Invest Accordingly

By Jessica Dickler, CNBC, 5/23/2024

MarketMinder’s View: What, pray tell, is a “vibecession?” According to the experts interviewed here, it is when the economy isn’t in recession—at least according to conventional metrics, e.g., unemployment rate or GDP growth—but some segments of the population are still struggling financially and most people seem to feel down. But is any of this actually new? We think the theme is a basic truism about all of human history. Remember Occupy Wall Street? Because this seems like pretty much exactly what they griped about … in 2011 or 2012. And what people cite when they talk about “wealth inequality.” And what people scream about when they want “good jobs.” The lack of full and total participation in a growing economy is far from unique historically. But positively, in a capitalist, profit-driven economy like America’s, workers have the opportunity to better their lot—their current financial standing isn’t destiny. As for concerns about poor consumer sentiment weighing on future activity, moods aren’t predictive—especially since people often compartmentalize and separate their feelings about the broader economy (which may be dour) from their personal situation (which may be solid). And for investors, consider: All this speaks to sentiment that is still disconnected from a brighter-than-appreciated reality. Take your mind back to 2009 – 2020’s global bull market. It was probably history’s least-loved—amid the aforementioned Occupy protests and widespread fears from the political right and left about income inequality and limited opportunity. Yet it was also history’s longest, which isn’t a coincidence: Lack of love means wall of worry to climb.