David Fuller and Eoin Treacy's Comment of the Day
Category - General

    Election Cycle Still Intact

    Thanks to a subscriber for this note by Kevin Muir for his MacroTourist blog. Here is a section:

    Before we examine the fourth year, remember back to the stat from the third year; since WWII there had never been a down year.  The fourth year is also tilted to the positive, but not quite as unblemished.  Bush vs. Gore at the turn of the century saw a 9.1% loss.  And then 2008 witnessed a blistering 37% decline with the Great Financial Crisis.

    Yet what's interesting about both dates is that they coincided with the end of a protracted bull market.  Will 2020 prove the same?  It certainly feels like that might be a possibility.  But I warn that before those two declines, there had also not been a post-WWII fourth year of the Presidential cycle that had fallen either.  From 1948 to 2000, the returns were all to the green side of the ledger.

    Perhaps both declines (2000 and 2008) were the result of a Federal Reserve bent on slowing down the economy. With Powell & Co. increasingly looking willing to let the economy run hot, the fiscal pumping from a President (and party) wanting to get re-elected might keep a bid to risk assets.

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    Email of the day on property investment

    CBS MarketWatch posted an article today advising against investing in residential property.  See attached.  This runs counter to the experience of most of us in the “Anglo-sphere” since the end of World War 2, but all good things come to an end one day. 

    An end to the current boom in asset prices, because of low interest rates, seems inevitable if not imminent but, more than equities, residential property is illiquid and a long-term option which may entail more risk than most contemplate.  Does Fuller Money have a view on this matter?

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    China Denies Report of Forced Labor Over Tesco Christmas Cards

    This article by Corinne Gretler for Bloomberg may be of interest to subscribers. Here is a section:

    Such notes have been discovered in products sold by brands like Walmart Inc. and Saks Inc. in the past decade as western companies’ reliance on Chinese production has meant exposure to chains of sub-contractors that reportedly make use of prison labor. Low-cost sourcing in China has been a double-edged sword for companies caught up in questions over the provenance of the goods they sell.

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