Winthrop Capital Management: Recent Episodes
Winthrop Capital Management
Join us as we discuss recent developments currently shaping the markets and industries in the global economy. Winthrop Capital Management is an institutional investment firm and thought-leader in the industry.
Coming into 2022, our base case for the economy was that the Fed would begin to unwind its easy money policies, raise short term interest rates, and try to reduce the size of its bond portfolio. The assumption was that economic growth would begin to slow and the narrative from the Fed would help to […]
Economy Monetary policy in the first half of this year stands in stark contrast to the past 15 years and investors are navigating capital markets that no longer have government support. The cumulative budget deficits, trade tariffs, supply chain disruptions and rapid money growth have pushed the rate of inflation to 9.1% measured by the […]
The investment environment has changed dramatically from six months ago. After the S&P 500 peaked on December 26th , 2021 at 4766, we are now navigating a much different market environment with higher turbulence. The economy is showing signs of slowing, the Federal Reserve is intent on raising short term interest rates to combat accelerating inflation, […]
Macro View Our concerns of a slowing economy were laid bare over the past two weeks as the Commerce Department reported a decline in Gross Domestic Product of -0.4% for the first quarter of 2022. This was the first decline since the early days of the pandemic, and a reversal of the 1.7% growth seen […]
Macro View The factors that investors evaluate to determine valuation and risk have changed dramatically over the past five months, which has shifted expect returns lower. Here is a summary of the changes in the factors investors are evaluating: The global economy is slowing instead of expanding as initially thought. The spread of the Delta […]
This was supposed to be the year of economic recovery after a two-year pandemic nearly destroyed the global economy. However, the International Monetary Fund (IMF) recently reduced its growth forecast for the world economy. According to its latest World Economic Outlook, published in January, the IMF now expects global gross domestic product to grow 4.4% […]
Macro View The war in Ukraine is contributing to a global slowdown in economic growth and dominating the focus of the capital markets. At the same time, the Federal Reserve is indicating plans to remove monetary stimulus from the capital markets and begin to raise short-term interest rates this week by 25 bps. Here is […]
Macro View The Russian invasion of Ukraine last week has disrupted global capital markets. In the United States, the S&P 500 dropped -5.25% only to finish the week where it began at 4385. In the absence of the aggressive monetary and fiscal stimulus investors have been accustomed to following the Financial Crisis and through the […]
Since the beginning of the year, the S&P 500 is down by -8.76% and the yield on the 10-year U.S. Treasury has increased by 30 basis points to yield 1.93%, after touching 2.00% earlier in the week. Last year, valuations of domestic equities, measured by the S&P 500, had touched their second highest level at […]
For a generation of investors and Wall Street Traders, they have not experienced the pace of inflation we are navigating today. The January Consumer Prices Index of 0.6% released last week puts the annual rate near 7.5%, which is the largest increase in the rate of inflation in 40 years. But this time it’s different. […]
Macro View We have competing agendas: the Fed is trying to curtail the impact of rising inflation and provide confidence to the market that it knows what it’s doing. Meanwhile the economy is showing signs of surging as the Omicron variant declines, workers are getting back to work and more of the economy is opening […]
Monetary Policy The Federal Reserve announced a more aggressive switch to its accommodative monetary policy this past week. In doing so, the Fed is acknowledging inflation is more persistent than it had previously hoped or believed. During the Financial Crisis of 2008, the economy lost over eight million jobs, and it took nearly three years […]
Risks to the Market Market volatility is spiking. Volatility, measured by the VIX, is approaching levels similar to last January, when the market was navigating the GameStop news. The increase in volatility is a reflection of investor sentiment expressed through an increase in buying of put options, a method of portfolio protection. With equity valuations […]
Risks to the Market We have quickly become accustomed to new vocabulary words, such as “double vaxxed” and “Covid variant.” The global pandemic continues to shape the capital markets, global economic growth and how investors view risk. A market is a clearinghouse for the price of risk. Markets have a way of digesting risks and […]
With the rate inflation running over 5%, will the Federal Reserve keep interest rates low? In our opinion, the answer is no, they will not. Since the Financial Crisis, the Fed has longed desired a scenario of economic growth accelerating above 2.5% and inflation tipping over 2%. Now, with inflation running at a solid 5% […]
The Labor Force Participation Rate is Stuck During the early weeks of the pandemic, nearly 8 million employees lost their jobs as companies closed down. Through the last year and a half of the pandemic and the reopening of the economy, over 4 million jobs have been created, and the unemployment rate has dropped to […]
The Economy The acceleration in the rate of Inflation is real. According to the Bureau of Labor Statistics, wages in the United States increased 4.6% annually in the third quarter of 2021, measured by the Employment Cost Index. We expect wage pressure to continue into the end of the year as companies look to expand […]
Last week, interest rates moved higher, stocks moved higher and earnings moved higher. The headline this past week read, “Budget Deficit Declines from Prior Year.” However, the real story is more sobering. After a record budget deficit in 2020 of $3.2 trillion, we incurred the second highest budget deficit of $2.8 trillion this past fiscal […]
Through the pandemic, demand has remained strong while supply has been disrupted. We are seeing supply chain disruptions in raw materials, manufacturing, single family homes, and the labor market. Amidst a shortage of workers, we are seeing the power shift in the labor market from employers to the employees. Last week, nearly 10,000 members of […]
So far this year, the performance of Chinese equities is down -40% after the government had initiated a wave of antitrust and regulatory actions and taken steps to reign in its technology companies. Any investor that has been active in the global financial markets over the past 30 years should not be surprised by the […]
The Economy As we approach the end of the third quarter, we are stepping back to look at a few primary variables in the economy and investment markets. We have prioritized and outlined our thoughts and investment initiatives. The Delta Variant – In spite of the re-opening, economic growth is slowing. The spread of the […]