The World is Relatively Happy

The World is Relatively Happy

March 22, 2021

The Markets

What are professional asset managers thinking about?

Bank of America recently published the results of its March Global Fund Manager Survey, which polls 220 professionals, mutual fund and hedge fund managers, responsible for about $630 billion in assets, according to 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 is a record high)
  • 89 percent anticipate global profits will improve (the highest since the survey began)
  • 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. Nicholas Jasinski of Barron’s reported that ninety-three percent of those surveyed expect inflation to rise during the next 12 months and that could affect stock prices. 

“…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 is possible the bond market is pushing yields up because bond investors see inflation ahead. Associated Press journalists, 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 one-year numbers in the scorecard are noteworthy.  They reflect the strong recovery of U.S. stocks from last year’s coronavirus downturn to the present day.)

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.”

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

The remarkable stability of happiness may reflect the fact that certain population groups are not normally included in the surveys – people who are in nursing homes, hospitals, prisons and refugee camps, as well as the homeless – were also 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





Securities offered through LPL Financial, member FINRA/SIPC. Investment advice offered through Treiberg Wealth Management, a registered investment advisor and separate entity from LPL Financial.   This newsletter was prepared by Carson Coaching. Carson Coaching is not affiliated with the named firm or broker/dealer.  These views are those of Carson Coaching, not the presenting Representative, the Representative’s Broker/Dealer, or Registered Investment Advisor, and should not be construed as investment advice. The information has been obtained from sources considered to be reliable, but we do not guarantee it is accurate or complete.  The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index. * All indexes referenced are unmanaged. The volatility of indexes could be materially different from that of a client’s portfolio. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. You cannot invest directly in an index. * The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index. * The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market. * Gold represents the 3:00 p.m. (London time) gold price as reported by the London Bullion Market Association and is expressed in U.S. Dollars per fine troy ounce. * The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998. * All indexes referenced are unmanaged. The volatility of indexes could be materially different from that of a client’s portfolio. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. You cannot invest directly in an index. Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful. Investing involves risk, including loss of principal.   Past performance does not guarantee future results. Consult your financial professional before making any investment decision.