Hanging Curve

It is a message we keep hearing about in the mainstream financial media today. Bonds yields are on the rise. The optimists attribute the increase to a budding phase of accelerating economic growth and the higher inflation that comes with it. The more skeptical among us believe that an inevitable outbreak of higher inflation will induce the Fed to tighten more quickly than currently expected. Despite their differing views, both leading narratives rely on the key underlying premise that inflation is going higher. But what about a third outcome? What if higher inflation never comes to pass? And what if this takes place at the same time that the economy sputters while the Fed is still raising rates? What then?

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The Dark Decade (Or The Investment Renaissance)

Stocks are expensive. Yes, we can debate at length about whether today’s premium valuations are justified or not. But they are still expensive today. And if history is any guide, this does not bode well for stock market returns in the decade ahead. But just because the stock market itself may not be setting up to do well over the next decade is not necessarily a bad thing. In fact, it may present an important time for rediscovery for what is starting to become a lost art in stock investing today.

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Crimson And Clover

So, many investors hardly know today’s stock market. They think they do, because it’s been so pretty, happy, and nice to its many suitors for so long since that brief interruption known as the financial crisis ended a few years back. And many investors do think that they could really love the stock market this time around, never mind the fact that it has twice burned its past devotees by more than half over the last two decades. But not today’s investors. The stock market really loves us back this time and will never let us down again. Right? For those that have fallen in love for so long now, get ready for the crimson and clover that lies ahead.

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Beware The Inflation Trap

It is the mainstream financial media narrative du jour. After years of relatively benign pricing pressures during the post crisis period, we are now entering a phase of sustainably higher inflation. This notion has raised the specter that the U.S. Federal Reserve will need to raise interest rates more quickly than expected, has sent U.S. Treasury yields higher, and has shaken the U.S. stock market to the core over the past two weeks. But while the narrative certainly makes good sense, a key question remains critically important to ask. Are we really seeing any signs of the rise in inflation that so many have already assumed as given? And what does the true answer to this question mean for our stock and bond allocations?

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Thunderbolt

Clear and sunny skies have shined brightly on stocks for so many years. Ominous storm clouds have long loomed on the distant horizon, however. And now a loud clap of thunder has boomed out across capital markets in recent days. What are the implications of the sudden sharp pullback that began last week, and what can investors reasonably expect going forward?

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