What Begins With The Letter “I”?

What Begins With The Letter “I”?

June 28, 2021

The Markets

Infrastructure is essential but often taken for granted.  Pipes carry drinking water to our homes, offices and healthcare facilities.  They also carry away sewage and wastewater.  Highways, airports, railroads, waterways, roads and bridges allow efficient transportation of goods and make safe travel possible.  Energy systems and transmission lines keep the lights on and the stove cooking.  Broadband data transmissions systems assure high speed internet access.

On Thursday, President Biden and a bipartisan group of senators announced that progress had been made on the framework for a bipartisan infrastructure plan.  Investors were happy to hear it.  Randall Forsyth of Barron’s reported:

“…Washington this past week finally took steps to address the nation’s manifest deficiencies in its infrastructure…Perhaps tellingly, the bond market had only a minimal reaction to the prospect of further government spending. But stocks of companies that could see a bonanza of dollars flowing from D.C. had double-digit gains on the week, and the indexes notched gains averaging around 3%, with the S&P 500 ending at a record.”

Financial markets paid less attention to the other “I” – inflation.

On Friday, The Bureau of Economic Analysis reported on the Federal Reserve’s favorite inflation measure, core personal consumption expenditures (PCE).  The Core PCE Price Index, which measures prices, excluding food and energy, was up 3.4 percent from May 2020 to May 2021.  From April 2021 to May 2021, PCE increased 0.5 percent, which was lower than the previous month-to-month increase.

Yields on 10-year U.S. Treasuries moved slightly higher last week and U.S. stocks had their best week since February, reported Naomi Rovnick and Francesca Friday of Financial Times.

(The one-year numbers in the scorecard below remain noteworthy.  They reflect the strong recovery of U.S. stocks from last year’s coronavirus downturn to the present day.)

 

IT’S HARD TO GET EXCITED ABOUT A "C-".

Since 1998, the American Society of Civil Engineers (ASCE) has been grading infrastructure in the United States.  "A" is exceptional, fit for the future.  "B" is good, adequate for now.  "C" is mediocre, requires attention.  "D" is poor, at risk.  "F" is failing, unfit for purpose.

The 2021 Report Card for America’s Infrastructure graded 17 categories of infrastructure.  The grades were poor enough that, if the report card had been handed to a student to take home, it might never have been delivered to the parents.

The report’s authors stated, “If the United States is serious about achieving an infrastructure system fit for the future, some specific steps must be taken, beginning with increased, long-term, consistent investment.  To close the nearly $2.59 trillion 10-year investment gap, meet future need, and restore our global competitive advantage, we must increase investment from all levels of government and the private sector from 2.5% to 3.5% of U.S. Gross Domestic Product (GDP) by 2025.  This investment must be consistently and wisely allocated...”

As many teachers have told many students over the years, a poor grade means there is room for improvement.  Another "I".

 

Weekly Focus – Think About It

“There is no greater burden than great potential.”

 –Charles M. Schultz, Cartoonist

 

 

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.

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. * This newsletter was prepared by Carson Coaching. Carson Coaching is not affiliated with the named firm or broker/dealer. * Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. * Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful. * The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee it is accurate or complete.

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. * Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features. * 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 source for gold data is Federal Reserve Bank of St. Louis (FRED). * 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.* The Dow Jones Industrial Average (DJIA), commonly known as “The Dow,” is an index representing 30 stock of companies maintained and reviewed by the editors of The Wall Street Journal.* 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. * 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 NASDAQ Composite is an unmanaged index of securities traded on the NASDAQ system. * The DJ Equity All REIT Total Return Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones. * 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. * Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.

There is no guarantee a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.* Asset allocation does not ensure a profit or protect against a loss. * Past performance does not guarantee future results. Investing involves risk, including loss of principal. * Consult your financial professional before making any investment decision.