Material and commentaries published in the past may or may not be helpful in analyzing current economic or financial market activity. Please note publishing date when reviewing materials.  Please email [email protected] for our current thoughts or to reach an advisor.

 

Rolling Over

David R. Kotok
Wed Sep 15, 2021

“Used car prices fell by -1.5% in August, after a 0.2% July rise, and massive increases over the prior three months of 10.5% in June, 7.3% in May, and 10.0% in April. New car prices rose by 1.2% in August, after solid gains of 1.7% in July, 2.0% in June, 1.6% in May, and 0.5% in April.” (Action Economics summary of CPI report)

 Name Cumberland Advisors Market Commentary - Rolling Over by David R. Kotok


Remember the dire forecasts of inflation acceleration a few months ago. Fingers pointed at car prices and rental car rates. Now look. Remember the lumber price spike? Look at it now.

The biggest and quickest cure for high and accelerating price rise effects is the actual price hike itself. Autos are this month’s example.

Since the virus first reported at the end of 2019 in Wuhan spread around the world in early 2020, we’ve argued that the COVID-19 pandemic is a worldwide shock. That shock is still going on and will likely continue globally for another year or two before the pandemic becomes endemic. Massive global shocks that kill millions of people and disable many millions more have always been deflationary, history tells us. COVID is a huge one. We are just learning about its longer-term effects. For every infected person who ultimately dies of COVID, between 5 and 30 others suffer lingering symptoms; and among COVID’s long haulers, a significant percentage are temporarily or partially or permanently disabled. Long COVID will continue to impact the global labor force for years to come.

We expect more “rolling over” data points in future monthly economic reports. Specifically for Americans, the outlook has worsened because of our horrible American-made politicization of the public health response. The US now ranks last among the G7 countries in vaccination rates; earlier this year we were among the first. The largest unvaccinated cohort is back in schools, and the early evidence is that many school systems are ill-prepared. Infection rates among children have risen sharply. We will see how the numbers trend over the next two to three months.

We still have a cash reserve in our U.S. Equity ETF portfolio. We’re still heavily overweight the healthcare sector. COVID ain’t over, and the inflation forecast scare is morphing into a stagflation scare. What will really happen is still unknown. You can forecast with risk models; you cannot forecast with uncertainty. Risk and uncertainty are two different things.

Stay safe, vax, don’t throw your masks away.

 

David R. Kotok
Chairman of the Board & Chief Investment Officer
Email | Bio


Links to other websites or electronic media controlled or offered by Third-Parties (non-affiliates of Cumberland Advisors) are provided only as a reference and courtesy to our users. Cumberland Advisors has no control over such websites, does not recommend or endorse any opinions, ideas, products, information, or content of such sites, and makes no warranties as to the accuracy, completeness, reliability or suitability of their content. Cumberland Advisors hereby disclaims liability for any information, materials, products or services posted or offered at any of the Third-Party websites. The Third-Party may have a privacy and/or security policy different from that of Cumberland Advisors. Therefore, please refer to the specific privacy and security policies of the Third-Party when accessing their websites.


Sign up for our FREE Cumberland Market Commentaries

Cumberland Advisors Market Commentaries offer insights and analysis on upcoming, important economic issues that potentially impact global financial markets. Our team shares their thinking on global economic developments, market news and other factors that often influence investment opportunities and strategies.