WEEKLY MARKET COMMENTARY

The Markets

What are professional asset managers thinking?

Bank of America recently published the results of its March global asset managers’ survey, which polls 220 professional investors responsible for about $630 billion in assets, reported Julia La Roche of Yahoo! Finance.

Many of those surveyed were optimistic about 2021. During the next 12 months:

• 91 percent of those polled expect the economy to strengthen (that’s a record high)
• 89 percent anticipate global profits will improve
• 52 percent expect value stocks to outperform growth stocks

So, what were managers most worried about?

For the first time since April 2020, the COVID-19 pandemic was not the most pressing concern for professional money managers. That spot was filled by inflation. Ninety-three percent of those surveyed expect inflation to rise during the next 12 months, reported Nicholas Jasinski of Barron’s, and that could affect stock prices. Jasinski reported:

“…higher bond yields mean higher borrowing costs, which could hinder the recovery and weigh on corporate earnings. Plus, a higher discount rate produces a lower present value for assets like stocks. And, when Treasuries produce enough yield, there’s greater competition for stocks.”

The discount rate is the Fed’s rate for lending to other banks.

One place to look for signs of inflation is bond yields. Recently, yields on U.S. Treasury bonds have been moving higher despite efforts by the Federal Reserve to keep them down, reported Lisa Beilfuss of Barron’s. It’s possible the bond market is pushing yields up because bond investors see inflation ahead. The AP’s Stan Choe and Alex Veiga explained:

“Inflation means future payments from bonds won’t buy as much – because the price of a banana or a bouquet of flowers will be higher than it is today. So, when inflation expectations rise, bonds are less desirable, and their prices fall. That pushes up their yield.”

Major U.S. stock indices finished last week lower.

THE WORLD HAPPINESS REPORT IS OUT – AND IT WAS SURPRISING

COVID-19 has disrupted just about every aspect of people’s lives – work, home, family, friends, and health – in every country of the world. Knowing this, it seems logical people would be less happy in 2020 than they had been in previous years. However, the findings of The World Happiness Report tell a different and more complex story. The authors explained:

“Many strands of data have been pieced together to produce a picture of almost astonishing resilience…Although there were significant increases in average sadness and worry, we found that overall life evaluations, and happiness rankings, were surprisingly stable. The top countries before the pandemic remained the top countries in 2020, so there is little change in the overall rankings.”

For the world as a whole, it appears negative changes in some variables, such as emotions and unemployment, were offset by positive changes in other variables, such as trust and generosity.

The remarkable stability of happiness may also reflect the fact some of the population groups are not normally included in surveys – people who are homeless, in nursing homes, hospitals, prisons, and refugee camps – were also some those hit hardest by the virus.

There was another notable aspect of the study. Young people were significantly less happy in 2020 than they have been in previous years. The Economist explained:

“[In Britain], and in other rich countries, the age profile of happiness before the pandemic struck was roughly U-shaped when plotted on a graph. People began their adult lives in a cheerful state. They became glummer in middle age. Then, after about the age of 50, they started to become happier again…Today the pattern is an upward slope. The young are less satisfied than the middle-aged, who are less satisfied than the old.”

So, which countries were happiest in 2020? The top 10 included:

1.   Finland
2.   Iceland
3.   Denmark
4.   Switzerland
5.   Netherlands
6.   Sweden
7.   Germany
8.   Norway
9.   New Zealand
10. Austria

Weekly Focus – Think About It

Let us be grateful to the people who make us happy; they are the charming gardeners who make our souls blossom.”

–Marcel Proust, French novelist

At G&S Capital, we build dynamic portfolios and risk management strategies for each of our clients. Our client projects are led by knowledgeable, dedicated financial planners and supported by the G&S Capital team of specialists to provide personalized portfolios, unparalleled service, and independent advice

Sites & Sources

* These views are those of Carson Group Coaching, and not the presenting Representative or the Representative’s
Broker/Dealer, and should not be construed as investment advice.
* This newsletter was prepared by Carson Group Coaching. Carson Group Coaching is not affiliated with the named
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and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund
shares is not guaranteed and will fluctuate.* Government bonds and Treasury Bills are guaranteed by the U.S.
government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and
fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate.
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to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield,
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* The DJ Equity All REIT Total Return Index measures the total return performance of the equity subcategory of the
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* Consult your financial professional before making any investment decision.

Sources:
https://finance.yahoo.com/news/bank-of-america-fund-manager-survey-for-march-2021-121053204.html
https://www.barrons.com/articles/investors-are-wary-of-covid-but-their-new-top-risk-is-inflation-51616197535?mod=hp_DAY_10
https://www.federalreserve.gov/monetarypolicy/discountrate.htm
https://www.barrons.com/articles/the-bond-market-is-fighting-the-fed-and-yield-sensitive-assets-are-getting-hit-51616094084?mod=hp_DAY_Theme_1_1
https://apnews.com/article/why-rising-rates-unsettling-wall-street-explained-4a672f914e9396a9e9bcda44eebf74d6
https://www.barrons.com/market-data?mod=BOL_TOPNAV
https://happiness-report.s3.amazonaws.com/2021/WHR+21.pdf (pages 18, 34-39, 50, 168)
https://www.economist.com/international/2021/03/20/the-pandemic-has-changed-the-shape-of-global-happiness
https://www.goodreads.com/quotes/tag/happiness