Tech-alicious?

While it seems tech may be in a manic phase, we believe prices have further room to run. 

Both low inflation and near-zero rates are a boon for tech. At less than 1%, inflation is so far below the Fed target, Chair Powell recently said "we are not even thinking about thinking about raising rates."

Low rates benefit tech valuations because tech stocks derive an outsize proportion of their value from long-term deferred earnings. Like bonds, distant profits are especially sensitive to fluctuations in the discount rate.

Also, in the Covid-era, companies, governments and individuals are spending more on hardware and software.Whether WFH arrangements are here to stay is not entirely clear. But it is looking more like WFH has advantages that could give the trend a boost beyond the pandemic. 

So far, most investors have sat out the tech rally as cash holdings - both for investors and households - have surged since the lock-down. When mom and pop (and pipsqueek) start to pile in, that's when things get heady. That's just what happened when the Nasdaq P/E heated up to 200 during the tech bubble (1995-2001). For comparison, today it's a cool 23. 

That said, it's not a ride for the faint of heart and keep your allocations moderate. In the second half of the 1990s despite the overall rise in tech prices, there were 10 occasions when the Nasdaq experienced a more than 10% correction and the index tumbled more than -20% in 1998 before bounding to new highs.

Tech will have its real day of reckoning when inflation starts to rise - unlikely as long as full employment remains a far off reality. 

Help Wanted: Robots

With so much uncertainty in the present, it's hard to consider more uncertainty on the horizon.

So maybe we should just take a deep breath and get certain - the robots are here and more are coming.

Earlier this week, UPS Flight Forward announced that starting in May CVS will deliver prescriptions via drone to a Florida retirement community.

According to an economic study, for the prior three recessions nearly 90% of job losses took place in easily automatable occupations. And while automation tends to accelerate most dramatically during economic downturns, other studies show automation also increased during the post Great Recession go-go years.

In Japan, where there's a structural worker shortage, robots have taken over much of elder care including leading exercise classes. 

This pandemic has laid bare a seemingly untenable level of inequality - both in America and globally.

And to be sure, the fallout of the crisis will hasten automation - easily another stab in the heart of equality.

How can we collectively strengthen our resiliency, promote equality and have cute robots take care of our grandparents?

Solutions are hardly certain yet the need for them has never been more clear.

TIPS top

Since many readers are - understandably - reporting insomnia, it's a perfect time to write about TIPS.

Oh good, I hear you yawning already.

Treasury Inflation-Protected Securities (TIPS) are exactly what their acronym describes. They are Treasuries that have an inflation-protection component. You can think of them as government bonds with a COLA (cost of living adjustment). 

It could be argued TIPS offer an exceptional value when compared with likely future inflation outcomes.

For example, the 5-year TIPS breakeven inflation rate is currently about 30bps and the 10-year rate is about 75bps.

That means a long-term investor will make money on TIPS - versus Treasuries - if nominal inflation averages more than 0.31% per year for the next five years and more than 0.75% per year over the next decade. 

By the by, there's a free positive message hotline Calgary students created, (877) JOY-4ALL. I called. On the Comfort Scale, almost as good as an Andrew Cuomo presser.

Are you asleep yet?

Whatever It Takes

The stimulus package congress ultimately passed represents 10% of GDP. And so far, investors can't seem to plow back in fast enough.

 It also helps that Fed Chair Powell turned the monetary spigot to the proverbial 11. Promising to hoover Treasuries, MBS and even high quality corporate bonds, Powell gave the markets much needed liquidity reassurance.

 Yet, investors in their "yippee" may be more than a tad insouciant.

 What of peak corona and what of jobs lost?

 Heartbreakingly, it is unlikely we have seen the worst of the COVID-19 crisis in the US or globally.

 Also heartbreaking, last week's unemployment data was by far the very worst ever. More than 3.2 million Americans filed for unemployment insurance -5x more than the previous worst (from 1982). 

 We are likely looking at a bumpy and painful path to a U-shaped recovery - probably not the V-shaped one we'd all like to root for.

Hiding in health care

Two signals will help set the bottom.

Firstly: stimulus. The package congress is hoping to pass by is bigger than the 2008 bailout and represents 7% of GDP. Lawmakers have put themselves on a very tight timeline. However, bickering and delays could surely stoke the downdraft.

The second is as important and remains murky: peak infection. If China earlier this year or the SARS epidemic (2003) is a guide, markets could stabilize within days of peak infection. In China, that was on February 13, about three weeks after draconian 'shelter-in-place' government mandates took effect. 

For now, we are looking to heath care (and TIPS*) as safer spots. 

Positive feedback to our link on good corona news compels us to share another.

To help us enjoy our weekends and not go crazy, here's an article on the benefits of going outside - whilst practicing social distancing of course.

*A longer and less obvious conversation we'll have soon.

Bottom feeding

Investors with higher risk tolerance should consider buying into the weakness.

At this point we are almost certainly looking at two quarters of recession (Q1 and Q2).

Surging demand for pharmaceuticals will likely boost some health care stocks. And what about e-learning, remote access software, on-line retailing, tele-medicine and household cleaning products?

There's opportunities for those willing to take some risk. 

Here's a link to some good COVID-19 news (yes, you read that right).

More soon and stay tuned.

Golden

We are in a reflationary economic environment that is also characterized by geopolitical uncertainty - a good combo for good old glitzy gold.

Reflation can be thought of as "good" inflation. With reflation, yes, prices are rising, but steadily back to a healthy trend level.

To be exact, prices are currently rising at an ideal 2.3%/year.

When price increases are crazy above trend that would be inflation.

In the US, we've not experienced serious inflation since Jimmy Carter was president and all I really (really!) wanted was a pair of Jordache jeans.

In the decade from 1971 to 1981, the S&P 500 added 110%, while gold increased more than 1500%.

Gold was - dare I say - a shining investment.

In terms of geopolitics, in the 1970s, conflict with Iran was the thing.

Eerily familiar, no?

Monthly Market Update, January 2020

Last month the S&P 500 declined -4bps even as the Dow Jones lost -67bps, the Russell 2000 declined -3.21% and the Nasdaq added 2.03%.

As for US bonds, they added 1.92%.        

Globally, the MSCI World Index lost -50bps and the Barclays Global Aggregate Bond Index was up 1.28%.

The Euro Stoxx 50 added 1.02% in local-currency (Euro) and 36bps in USD. Meanwhile, the Topix added 1.16% in local-currency (Yen) and 58bps in USD.

A risk to our optimistic outlook

Over the next few weeks and months we'll delve into some of the risks to our optimistic market outlook.

One of the primary risks is a too-strong USD.

The dollar is a countercyclical currency that typically declines when global growth accelerates and vice versa.

USD countercyclicality is partly due to the US's primacy as a consumer driven and services-based economy, with a relatively smaller proportion of our economy devoted to manufacturing and exports.

Less sensitivity to global trade and industrial activity means the currencies of more industrially-focused countries will - all things equal - strengthen relative to the USD during periods of global growth.

As the world economy strengthens, not only does capital flow to more industrial-oriented countries and regions - such as the EU, Japan and China - the world's need for the "safe-haven" of the USD including USD-denominated assets also diminishes.

During periods of global duress, international capital seeks safety in the relative stability of US markets, boosting demand for US dollars and USD-based assets.

Also, many advanced economies and emerging market nations have USD-denominated debt (totaling around $12 trillion!). A strong USD increases the costs of servicing this debt, forcing these countries to reduce spending - squeezing economic growth.

Lastly, when the USD remains strong, US goods become uncompetitively expensive for foreign buyers. When sustained, exports fall.

In short, a continued strong dollar would indicate global growth is likely not on track and geopolitical and economic risks remain too elevated - certain threats to our benign outlook.

Weekly Market Update, Week ending January 10, 2020

Last week the S&P 500 was up 98bps even as the Dow Jones increased 67bps, the Russell 2000 declined -18bps and the Nasdaq was up 1.76%.

As for US bonds, they lost -9bps.          

Globally, the MSCI World Index increased 65bps and the Barclays Global Aggregate Bond Index was down -48bps.

The Euro Stoxx 50 added 1.02% in local-currency (Euro) and 36bps in USD. Meanwhile, the Topix added 1.16% in local-currency (Yen) and 58bps in USD.

Happy New Year and here's to 2020!

The beginning of the end

All good things must end, and this bull market is no exception. The good news is chances are we are not - quite - there yet.

While the markets feel frothy, there are signals the US and the global economy are still set for a decent 2020.

• Both Trump and Xi need the win a trade war reprieve provides. A trade truce would provide the stability major companies - and equities - need for further growth.

• Monetary policy in the US, Europe, and Japan remains accommodative. Low interest rates help spur spending - both for families and corporations. Eventually if untamed, too low rates can goose inflation. The likelihood central banks remain dovish 'till its too late is a real risk, but only once there are signs of inflationary impulse.

• Recessions are a result of imbalances - such as a large debt build up and/or too tight monetary policy. Such imbalances are not yet present in the US or global economy. For example, despite the recently fast growing US government deficit, public debt accumulation has not been strong enough to cause the total US (private + public) debt load to budge.

While stocks may seem expensive, bonds are even more dear. Unless we enter a recessionary environment this year - a scenario we deem unlikely in light of current data - stocks will outperform bonds in 2020.

Monthly Markets Update, November 2019

Last month, the S&P 500 was up 3.63% even as the Dow Jones increased 4.11%, the Russell 2000 added 4.10% and the Nasdaq was up 4.65%.

As for US bonds, they lost -5bps.           

Globally, the MSCI World Index increased 2.84% and the Barclays Global Aggregate Bond Index was down -76bps.

The Euro Stoxx 50 added 2.81% in local-currency (Euro) and 1.61% in USD. Meanwhile, the Topix added 1.95% in local-currency (Yen) and 62bps in USD.

Defensives

As the possibility of a trade war recedes, markets are looking set for an upward thrust.

A waning trade war notwithstanding, we should not be completely complacent regarding war.

Unfortunately, it's folly to feel trading and warring are mutually exclusive.

Indeed, UK/German trade steadily increased until the outbreak of World War One. Also, the US and Japan were trading partners until mid-July 1941, just a few months before Pearl Harbor.

As we’ve talked about in the past the world is increasingly multi-polar.

Ebbing US geopolitical clout means China, Europe, Russia and Japan will only increasingly vie for regional - and in some cases perhaps even global - hegemony.

We don't foresee a world war. (But let's face it who ever does?) Rather, there's little doubt China aims to dominate its near abroad.

Just as a burgeoning US drew its own sphere of influence with the Monroe Doctrine (circa 1820s), Chinese aggression in the South and East China Seas is likely a matter of "when" not "if" (circa 2020s).

Such possibilities beg the question - do defense/aerospace stocks have a rightful place in a socially conscious portfolio? Perhaps in some cases and for some clients they do.

Monthly Markets Update, October 2019

Last month, the S&P 500 was up 2.17% even as the Dow Jones increased 59bps, the Russell 2000 added 2.63% and the Nasdaq was up 3.71%.

As for US bonds, they added 30bps.           

Globally, the MSCI World Index increased 2.57% and the Barclays Global Aggregate Bond Index was up 67bps.

The Euro Stoxx 50 added 1.11% in local-currency (Euro) and 3.36% in USD. Meanwhile, the Topix added 4.99% in local-currency (Yen) and 5.16% in USD.

The Fed listens

I consider myself terribly well informed - and yet until it was over - I had no idea the Fed conducted a listening tour.

There was sadly no Las Vegas show type stop on this tour. Indeed, it was the rather dour set you just might expect from the Federal Reserve, Trumpian "bonehead" comments aside.*

What the Fed is hearing from the normal-ish citizens who get invited to these things (kindly available online for hoi polloi) is that few are basking in the economic recovery we are supposedly enjoying. As one Cleveland participant opined "It doesn't feel like a boom yet."

That's a rough analysis considering we're likely somewhere near the final inning of the - statistically speaking - longest economic recovery ever.

On Wednesday, the Fed will almost certainly lower rates by -25bps to below 1.75%, the third rate reduction this year.

And then what? After Wednesday's cut, rates will be at what economists consider a generally neutral rate, that is neither stoking nor taming the economy.

After the rate announcement, pundits will be parsing Powell's words divining what's next. Most are hopeful there's a little stoking - more rate cuts - yet this coming year and many are fearful if there's not.

Weekly Markets Update, Week ending October 25, 2019

Last week the S&P 500 was up 1.22% even as the Dow Jones increased 70bps, the Russell 2000 added 1.53% and the Nasdaq was up 1.90%.

As for US bonds, they detracted -15bps.           

Globally, the MSCI World Index increased 1.26% and the Barclays Global Aggregate Bond Index was down -17bps.

The Euro Stoxx 50 added 1.26% in local-currency (Euro) and 50bps in USD. Meanwhile, the Topix added 1.63% in local-currency (Yen) and 1.31% in USD.

*This is where I can't resist a wee pitch for Elton John's "Me." Frankly, I don't especially care for his music or even his shtick, but his life story and how he tells it - amazing, inspiring and hilarious.

The devil is in the tails

"Tail risk is the additional risk of an asset or portfolio of assets moving more than three standard deviations from its current price, above the risk of a normal distribution."

To the lay non-statistician this means an unlikely risk, but a risk nonetheless.

Does that sound like something that rhymes with en-reach-ment?

In client correspondence, we've recently mentioned a few other tail risks that could affect markets - Brexit No-deal, Iran/oil price spike, etc.etc. It really does feel like these are risk-filled times.

Markets tanked -33% the year after Nixon's impeachment inquiry/resignation and they rallied 39% the year following Clinton's impeachment inquiry/Senate acquittal.

In late 1973/early-1974 the economy was already weak and in recession. And in 1998 the economy was gaining strength and ripe for a rebound. In both cases impeachment almost certainly didn't play a role in market directionality.

Based on history impeachment is probably not a risk to the stock market - unless quid pro quo a socialist becomes president.

Is this an impossibility or just very unlikely?

Weekly Markets Update, Week ending October 18, 2019

Last week the S&P 500 was up 55bps even as the Dow Jones lost -13bps, the Russell 2000 added 1.57% and the Nasdaq added 40bps.

As for US bonds, they added 10bps.                    

Globally, the MSCI World Index increased 74bbps and the Barclays Global Aggregate Bond Index added 30bps.

In September, the Euro Stoxx 50 added 27bps in local-currency (Euro) and 1.24% in USD. Meanwhile, the Topix added 1.67% in local-currency (Yen) and 1.66% in USD.

Global growth rebound

Today's headlines are doom/gloom on China growth. Yet up ahead we see sunshine peeking through those 中文 clouds.

As the world's top trading nation and second largest economy Chinese activity sets the pace for global growth and is an important barometer of the global economy. That's why news on Chinese growth makes headlines worldwide.

While China has many capitalist features make no mistake it is a party-run country. And for anyone who just woke from a 70-year coma that party is called the Communist Party.

China's Communists Party's has many tools to reflate its economy and it's starting to deploy them - massively. For example, Chinese equipment purchases are growing at a 30% annual rate presaging a revival in manufacturing.

Also China's M1 to M2 ratio is rebounding, a sign of improvements in global trade, commodity prices and industrial production.

While our Chinese "weather report" is not quite worry-free - auto sales are unusually soft and capex is still moderate - the overall turnaround in credit and other data suggest smooth sailing ahead.

Weekly Markets Update, Week-ending July 12, 2019

The S&P 500 was up 82bps even as the Dow Jones gained 1.54%, the Russell 2000 declined -34bps and the Nasdaq increased 1.01%.

As for US bonds, they were down -21bps.

Globally, the MSCI World Index increased 35bps and the Barclays Global Aggregate Bond Index decreased -22bps.

In June the Euro Stoxx 50 lost -85bps in local-currency (Euro) and -42bps in USD. Meanwhile, the Topix declined -1.02% in local-currency (Yen) and -45bps in USD.

Here's a TIPS for ya

Now's the time to start thinking about Treasury Inflation Protected Securities (TIPS).

TIPS are bonds indexed to inflation. As inflation rises, the face value of TIPS also rises thus helping protect investors from the negative effects of rising prices.

Inflation is so... '70s. But like all things '70s, inflation could be back "in" and in a flash.

Let's just say it would be no surprise if current Fed policy unfolds in a two-stage process. This has been the case historically when the Fed has conducted precautionary easing.

Currently we're in the first stage - a period of excessively easy monetary policy that could well stretch until end-2020. That is until the US presidential election-or so.

The second phase is a burst of inflation that forces the Fed to hike rates. This is when TIPS show their strength.

Even in the meantime though they are not exactly wallflowers. So far this year TIPS are up nearly 6% (on a total return basis). And during the crisis? Up a neat 8%.

Monthly Update, June 2019

In June the S&P 500 was up 7.05% even as the Dow Jones gained 7.31%, the Russell 2000 added 7.07% and the Nasdaq increased 7.51%.

As for US bonds, they added 1.26%.              

Globally, the MSCI World Index increased 6.63% and the Barclays Global Aggregate Bond Index added 2.22%.

In June the Euro Stoxx 50 added 6.04%% in local-currency (Euro) and 7.91% in USD. Meanwhile, the Topix increased 2.69% in local-currency (Yen) and 3.30% in USD.

Safe-ish havens

On October 9, 2007, the Dow hit its pre-recession high. By March 5, 2009, it had dropped more than -50%. The S&P 500 dropped almost -55% over the same period.

Just writing that sentence I feel sort of crushed. Those were dark days.

Over the same period, gold (ticker GLD) was up 26% and plain old vanilla AGG was up almost 8%. Does that un-crush me?

Sort of.

Over the long-run, the Dow and the S&P500 are the serious - serious - outperfomers.

Since 1976 the Dow Jones Industrial average is up more than...10,000% The S&P 500 is up almost 8,000%.

High quality bonds? Meh. Up 2,000%.

Gold? Meh. Meh. Up 950%.

Over long periods, bonds and gold - on a total return basis - so underperform.

So why are we starting to talk about adding these long-term losers?

Well, during recessions, they're the real winners. And while we're not there yet, we know we'll get there. It's another reason active management matters.

Weekly Update, Week Ending June 14, 2019

The S&P 500 was up 53bps even as the Dow Jones gained 46bps, the Russell 2000 added 58bps and the Nasdaq increased 73bps.

As for US bonds, they added 2bps.

Globally, the MSCI World Index increased 24bps and the Barclays Global Aggregate Bond Index declined 34bps.

The Euro Stoxx 50 added 9bps in local-currency (Euro) and lost -1.06% in USD. Meanwhile, the Topix was up 93bps in local-currency (Yen) and 53bps in USD.

Pro-cyclical

At least for the rest of 2019 cyclicals are set to outperform defensives.

Cyclical stocks benefit from economic expansion whereas defensives do relatively better in a flatlining or declining economy. 

The classic examples of defensive stocks are health care and consumer staples. Items such as toilet paper and prescription drugs tend to have what economists call inelastic demand. Regardless of the overall economic climate people need to take care of “business” and people need to take their meds.  

On the other hand during periods of economic expansion individuals and companies take risk, buy more goods and buy more expensive goods - like cars, computers and pricey fanny-packs.

With the expected pick-up in global growth, the Fed on the sidelines and USD appreciation decelerating, the data show cyclicals are in a for a relative boost.

Monthly Update, April 2019 The S&P 500 advanced 4.05% even as the Dow Jones added 2.66%, the Russell 2000 increased 3.40% and the Nasdaq added 4.78%.

As for US bonds, they added 3bps.              

Globally, the MSCI World Index added 3.60% and the Barclays Global Aggregate Bond Index declined -30bps. 

The Euro Stoxx 50 added 5.47% in local-currency (Euro) and 5.43% in USD. Meanwhile, the Topix was up 1.65% in local-currency (Yen) and 92bps in USD.

Real estate's role

Strictly speaking residential investment provides only a modest contribution to GDP.* Yet it has considerable spillover effects on other parts of the economy.

 Rising real estate prices have a positive wealth effect and helps drive discretionary spending. Data show consumers are quicker to spend an increased portion of their housing wealth than their stock wealth.

 Nearly 70% of GDP is based on consumer spending and 1/3 of all personal spending is on goods, according to the Bureau of Economic Analysis.

Currently in much of the US, housing prices are 50% above their pre-financial crisis peak.

 For the Denver-metro area, prices are about 90% above their previous peak. For example for the Denver area the pre-crisis peak average home price was $276K while today the average is $519K.

Increasing income is a major determinate of housing demand and growth in personal income is set to accelerate in 2019. Along with steady or declining interest rates - a major factor affecting home affordability** - housing prices are only likely to continue their rise.

However in light of overall affordability housing prices are not expected to rise as dramatically as in prior years and maybe not at all in areas that have already appreciated at a rate much higher than the norm.***

At the national-level a second wind for the housing market would have knock on effects for the broader economy helping extend the current record-long expansion.

 Weekly Update, Week ending April 26, 2019

The S&P 500 was up 1.21% even as the Dow Jones lost -6bps, the Russell 2000 increased 1.67% and the Nasdaq added 1.86%.

As for US bonds, they added 48bps.               

Globally, the MSCI World Index added 68bps and the Barclays Global Aggregate Bond Index increased 5bps.

The Euro Stoxx 50 added 26bps in local-currency (Euro) and lost -34bps in USD. Meanwhile, the Topix was up 19bps in local-currency (Yen) and 55bps in USD.

*Residential real estate investment includes construction of new homes and apartments, remodeling, production of manufactured homes and brokers fees. Such activity contributes 3-5% of the total GDP.

**Generally a 1% decrease in the real mortgage rate increases real housing prices by around 2%.

***Yep, lookin' at you Boulder/Denver.

Class squeeze

Upper middle-class families are feeling the pinch. New Fed data suggests everyone is slipping – except the tippy tippy top.

The costs of college, property tax, cars and other services and products upper-middle class families buy are outpacing inflation and pay raises.

Concomitantly, equity ownership has been sliding for these households. For families in the 50th to 90th percentile of net worth, equity ownership has dropped dramatically. Peaking at 23% in 1990, by end 2018 these families owned less than 13% of corporate equities and mutual fund shares.

According to Fed data most of this wealth transferred to the top 1% of households.

On this lovely tax day it is worth noting the most wealthy are getting the best breaks with Trump’s tax cuts too.

Besides changes to the estate tax that benefit the wealthiest, the top fifth of tax payers - families earning more than $350K/year - will have an average -3% reduction to their 2018 taxes.

For comparison the poorest taxpayer - making less than $14K/year - will see a tax reduction of less than -½ of 1%.

Weekly Update, Week ending April 12, 2019 The S&P 500 was up 56bps even as the Dow Jones lost -3bps, the Russell 2000 increased 16bps and the Nasdaq added 58bps.

As for US bonds, they lost -12bps.              

Globally, the MSCI World Index added 50bps and the Barclays Global Aggregate Bond Index increased 16bps.

The Euro Stoxx 50 added 9bps in local-currency (Euro) and 84bps in USD. Meanwhile, the Topix was down -1.25% in local-currency (Yen) and -1.52% in USD.

Snooze

With the markets firing on all cylinders – as predicted – it’s a little harder to cook up salient tidbits.*

So perhaps it is an excellent moment to review with you the power of sleep. Last year I read Matthew Walker’s “Why We Sleep.” It was a rather terrible feeling to be up in the middle of the night, insomniatically reading a book about the importance of uninterrupted sleep. But I got through it.

We’d all like to think we are in that amazing group who don’t need much sleep. It turns out true “short sleepers” probably make up about 0.5% of the population. Scientists refer to short sleepers as those who consistently get less than six hours of sleep per night - without any impairment.

It is likely a genetic mutation that allows short sleepers to enter a deep and restorative sleep in just four to six hours - when the rest of us need between seven and nine to get the same effects.

True short sleepers are usually thinner than average, are characterized by upbeat moods and seem to have higher than average tolerances for pain and psychological setbacks.

However, according to one study, short sleepers are “high in behavioral activation and reward drive, often with hypomanic characteristics (e.g., high activity, distractibility, inflated self-esteem or grandiosity...).”

Hmm, maybe on this one, the Donald is telling the truth.

Weekly Update, Week ending April 5, 2019 The S&P 500 was up 2.16% even as the Dow Jones added 1.95%, the Russell 2000 increased 2.80% and the Nasdaq added 2.73%.

As for US bonds, they lost -30bps.                         

Globally, the MSCI World Index added 2.05% and the Barclays Global Aggregate Bond Index decreased -48bps.

The Euro Stoxx 50 added 2.86% in local-currency (Euro) and 2.80% in USD. Meanwhile, the Topix was up 2.14% in local-currency (Yen) and 1.27% in USD.

*I’m pretty sure April is metaphor month.

Replacement rate 2.1

Working age populations are in decline in Japan and Europe and the growth of the wage earning population is slowing sharply in the US.

A stable population requires that on average 2.1 children are born for every woman. In the US the rate is currently only 1.9 and it is just 1.5 in Japan.

Besides the devastating effects of less cuddles, the combo of fewer taxpayers and increasing retirees is toxic.

The baby-boomer generation has accumulated a huge amount of government debt and hasn't had enough children to help ease the fiscal burden for future generations.

Migration is the logical economic solution to help re-balance the replacement rate. Yet immigration is -unfortunately - more unpopular than ever.

Weekly Update, week ending March 22, 2019 The S&P 500 was down -75bps even as the Dow Jones lost -1.34%, the Russell 2000 decreased -3.05% and the Nasdaq lost -51bps.

As for US bonds, they added 85bps.                     

Globally, the MSCI World Index lost -63bps and the Barclays Global Aggregate Bond Index increased 95bps.

The Euro Stoxx 50 lost -2.31% in local-currency (Euro) and -2.50% in USD. Meanwhile, the Topix was up 91bps in local-currency (Yen) and 2.24% in USD.