FINANCIaL
FIELd NOTES
Where Do Bonds Go From Here
Nobody is excited to own bonds right now, and for good reason. Bonds are supposed to be the boring part of the portfolio and instead they have delivered the worst stretch in the history of the asset class. In fact, we were recently updating Investment Policy Statements for clients and had to put “N/A” for the “length of recovery” in the bond market benchmark because we are still technically in a drawdown from the 2022 selloff…
Is a Record $1.2 Trillion in Credit Card Debt a Conern?
Americans now owe a record $1.26 trillion on their credit cards. You may have probably seen some version of that headline on the news. It sounds alarming, and it is meant to. A number that big, sitting all by itself, does exactly what it was built to do. It makes you a little nervous about the state of the world and a little more likely to click.
As I’ve written before, most of the figures cited in the news are a single stand-alone number. “The Dow Sheds 500 points, ”Over 1,000 violent crimes reported in Northern Virginia,” and “US Household Credit Card Debt Hits $1.2 Trillion“ all lack perspective. If the Dow Sheds 500 points, what is the total Dow? If there were 1,000 violent crimes, is that crime figure higher or lower than last year? If credit card debt hit $1.2 trillion, what percent of household net worth is it?
The Future of the US Dollar
Every few years, someone declares the dollar is finished. Debt too high, deficits unsustainable, China rising, etc. I've heard some version of this for the past decade, and I want to walk through what the data shows, because I think a lot of clients are genuinely worried right now about the future of the US dollar and their investments.
The dollar has real, legitimate challenges. But it is not losing its grip on global finance, and the most likely alternatives don't hold up when you look at the data…
Market Leadership Changing Hands
For the last couple of years, a small handful of companies have done most of the heavy lifting in the stock market. The hyperscalers (Microsoft, Amazon, Google, etc.), the massive cloud and software companies that have been pouring money into AI infrastructure, pushed the market forward.
Recently, there has been a shift in market leadership, with strong returns coming from value stocks, particularly the semiconductor stocks that actually make the physical chips powering all the AI investments…
Missing IPOs Is Okay
SpaceX has had quite an exciting first few weeks of trading. Space Exploration Technologies Corp. (SPCX) started trading as an initial public offering (IPO) on June 10th and shot up nearly 40% in just a few days, hitting roughly $200 before pulling back sharply. As of June 26th, the stock sits around $153. If you bought at the peak, you're already down more than 20% in under two weeks. If you bought at the open, you’ve roundtripped.
What Markets Do During Geopolitical Crises
One of the hardest things for investors to do during geopolitical uncertainty is nothing. When conflict breaks out, the instinct is to act. Move to cash. Wait it out. Come back when things feel safer. It's a completely understandable reaction.
Here's what the data actually shows. Since 1941, the S&P 500 has endured World War II, Korea, Vietnam, the Gulf War, 9/11, Iraq, and more than a dozen other military engagements. In the year following each of those conflicts, the average return was +11%. Over five years, +94%. Over twenty years, +685%…