“Help Wanted”. We expect semiconductor, vehicle and other goods bottlenecks to resolve themselves in the months ahead, and interpret declining business surveys as the result of a temporary supply shock and not a sign of inadequate demand. As a result, growth should rebound in 2022, and positions that benefit from reflation should benefit (energy, value and cyclicals). However, while goods bottlenecks will dissipate, the US will still face tight labor markets and rising wages that are at odds with current Fed policy

Eye On The Market

Help Wanted

The global supply chain mess will require increased global vaccination and acquired immunity, semiconductor capacity expansion and the end of extraordinary housing/labor supports to resolve. We expect all three to occur over the next few months, leading to a global growth bounce in 2022

Dude, Where’s My Stuff

Topics: if people avoided SPACs instead of avoiding COVID vaccines, the US would be both wealthier and closer to herd immunity.  An update on our SPAC analysis from last February, and a look at the strange mathematical paradox that ends up understating some critical COVID vaccine efficacy data

Spaccine hesitancy

 Politics, vaccination resistance and the Delta variant; US economic recovery update; big tech reliance on acquisitions to fuel growth

Red Med Redemption

COVID and the Delta variant; the Fed as firefighter and arsonist; US-China economic divorce picks up steam; and the pig-snake inflation timetable (how long until we know if there’s a permanent wage/price rise).

Thy Brother’s Keeper

Every two years, we take a close look at the performance of the private equity industry given its rising share of institutional and individual portfolios.  Our findings this year: the private equity industry is still outperforming public equity, but this outperformance narrowed as all markets benefit from non-stop monetary and fiscal stimulus, and as private equity acquisition multiples rise.  We examine manager dispersion, benchmarks, co-investing, GP-led secondary funds, the torrid pace of industry fundraising and manager fees in this year’s piece.

Food Fight: 2021 Private Equity Update

Absent decarbonization shock treatment, humans will be wedded to petroleum and other fossil fuels for longer than they would like. Wind and solar power reach new heights every year but still represent just 5% of global primary energy consumption. In this year’s energy paper, we review why decarbonization is taking so long: transmission obstacles, industrial energy use, the gargantuan mineral and pipeline demands of sequestration and the slow motion EV revolution. Other topics include our oil & gas views, President Biden’s energy agenda, China, the Texas power outage and client questions on electrified shipping, sustainable aviation fuels, low energy nuclear power, hydrogen and carbon accounting.

Future Shock

Biden goes for broke on growth, driving coincident and leading indicators to all-time highs; the Value recovery and where it goes from here; COVID herd immunity, the path to normalcy and rising concerns about thrombosis risks from vector vaccines.

Absolute Value

If long-term US interest rates stay below 2%, that’s a great sign for equity investors. But if they don’t… it’s amazing to see the pretzels that people contort into to convince themselves that rising rates are not a problem for equities. Also: an early look at the Zoom shock on commercial and residential real estate, and the diverging COVID trends in the US vs Europe.

Interest rate pretzels and the Zoom shock on real estate

Short stories on the global recovery, plummeting COVID infections, Larry Summers & the bond market, SPAC sponsors, renewable energy, the Texas power outage and the battle for the Republican Party.

Very short stories

In this month’s note, we look first at the SPAC capital raising boom. Our main focus: returns to date for SPAC sponsors and investors, and the large wealth transfers taking place among SPAC participants. Second topic: Biden’s early stage energy policies (ban on new oil & gas leases on Federal lands, Keystone XL pipeline termination and conversion of Federal fleet to EVs) will probably end up increasing US oil & gas imports more than they reduce emissions.

Hydraulic Spacking

Equity markets are flying. So is COVID. So are corporate reactions to Congressional objectors.

Fear of Flying

Michael Cembalest’s views on what will drive markets and the economy in 2021, as well as the challenges we face that stimulus and vaccines can’t solve.

Outlook 2021: The Hazmat Recovery

The belief in election illegitimacy is spreading faster than COVID. With field reporting from Alexander Fleming, Rutherford B Hayes, Richard III, Bob Newhart and the Attorney General of Ohio.

Holiday Eye on the Market: The Winter of Our Discontent

The Armageddonists were not rescued from underperformance purgatory by COVID, and markets are at all-time highs again with prospects for further gains in 2021.   However, I can think of something that could rescue them, at least temporarily: the risk of electoral illegitimacy and Constitutional mayhem on January 6th.

The Armageddonists, Revisited

Join Michael Cembalest as he explores a wide variety of investment topics, including the economy, policy and markets.

hubhopper

Eye On The Market

hubhopper