Resource equities: Inflation protection at a discount
Whether this year’s price rises are merely transitory or something longer lasting, the opportunity in energy and metals companies looks very appealing from a historical perspective. Energy and metals companies are trading at a discount of over 70% to the S&P 500 Index, the biggest discount seen with the exception of other points in the last year or so. In fact, energy companies are trading at the cheapest levels in absolute terms ever seen prior to Covid.
Inflation
The core CPI price index is now firmly above the pre-COVID trend.
Three categories that comprise ~5.5% of core CPI drove half of the monthly increase:
i) used cars & trucks
ii) car & truck rentals
iii) public transportation (largely reflecting airline fares)
Reopening
During the peak of COVID-19, the US box office didn't just slow down — it completely disappeared. So, it's somewhat comforting to see that on May 28th A Quiet Place Part II, the sequel to the successful horror film from 2018, managed to rack up almost $20m on its opening day, and more than $57m over the course of the entire Memorial Day Weekend.
Benefits of not seeking validation
There is a fundamental mismatch between the frequency of the feedback an investor gets from market quotations and the time required to determine whether a specific investment or a strategy is working. There will always be critics who are not shy about second guessing your decisions. When it comes to investing, there are massive benefits that accrue to those that can totally ignore short term market movements.
Visualizing the Snowball of Government Debt
