Here at BF&A we were fascinated as we read about the recent emergence of the Brood X Cicadas (yes, we wear the Nerd Badge proudly). After having spent 17 years in subterranean lairs, they burst forth by the millions, eager to continue their life cycle. It seems that most of humankind can identify with those insects and how good it feels to resume life after having spent the last year dealing with lockdowns, or the various other restrictions we experienced as we collectively dealt with the COVID-19 pandemic. Welcome back to what almost feels like life as we knew it before the word COVID became part of our vocabulary.
It seems that many of you are eager to return to face-to-face meetings with us here at our Sunset Road office. We welcome folks coming in for an annual account review or special circumstance meeting. The coffee is as good as you remember, and we have missed the hugs and handshakes. Throughout the pandemic we continued to refine our technology and processes, but one of our top priorities is our relationship with you and being responsive to your needs. With that objective in mind, we recently added a new administrative associate to our team. Brandon Gomez joined us in June to assist with the services that Diane and Holly have provided for over 20 years. Brandon is a graduate of The University of Texas at San Antonio and has worked in the financial services industry since 2018.
In the last year, we have witnessed economies across the world roar back to life and consequently have seen very pleasant returns across clients’ portfolios. During the last year, the personal savings rate in the U.S. soared. Now flush with cash, U.S. consumers are eager to spend! Pent up demand for goods, services and leisure activities has helped to fuel a robust economic recovery. U.S. air travel has nearly recovered to pre-pandemic levels. In fact, United Airlines is so confident that bookings will continue to recover that they recently ordered 200 new Boeing Max jets and 70 Airbus aircrafts. This is the largest order in company history for a total investment of more than $30 Billion. An improved employment landscape, stimulus checks, and the introduction and rapid adoption of effective vaccines, have all contributed to greater consumer confidence and a dramatic improvement in global economies. We expect to see the global recovery continue as vaccines are distributed around the world. The charts below give us a good idea of growth projections for the remainder of this year and next.
Following the lockdowns of 2020, shortages of many materials and consumer goods began to occur, many due to supply chain interruptions. High demand and the scarcity of supplies caused prices to spike sharply in some instances. Earlier this year markets reacted with volatility out of fear of increased inflationary pressure and possible rate hikes by the Federal Reserve. The initial burst of price jumps seems to have slowed down and, in some cases, reverse. Lumber, the commodity which skyrocketed this year to levels never seen before, has fallen more than 50% from its all-time high. Copper, too, has declined, along with other agricultural commodities. Should the economy and employment continue to improve, we anticipate that rate increases will begin to occur in 2022, but the consensus is that growth is slowing, and that the inflation seen up to this point is transitory and already beginning to moderate. For now, we remain on inflation watch and Fed watch for signals of coming interest rate increases and will keep you apprised as changes occur. As the next phase of the pandemic begins to evolve, with new variants of the COVID virus beginning to cause increased case numbers, we do expect to see some periods of market jitters. Try not to be too distressed when choppy markets show up. Periodic pullbacks, while uncomfortable, are a normal part of the investment cycle.
We can always find reasons to be nervous about current events and challenges. Last year when COVID threatened global economies and caused illness and death for millions, it was hard to imagine that anything good could come out of the pandemic. But, out of necessity, in a very short time many businesses made a quantum leap in terms of adaptation and the adoption of new technologies. Digital payment systems, telemedicine, streaming services, and e-commerce all forged ahead. Just as the space program produced many new technologies that are commonplace today, the mRNA vaccines for COVID-19 could drive health care innovations for years to come and digitization will continue to impact all aspects of our lives. When the world fully returns to normal, those trends will stay in place. As disciplined investors, when we look at the market with a long-term focus, there is much to feel optimistic about. We wish you a safe and relaxing summer.
All the best,
— Priscilla "Cilla" McKinley
President - Brent Forrest & Associates LLC
*Brent Forrest & Associates, LLC may discuss and display, charts, graphs, formulas, and specific holdings which are not intended to be used by themselves to determine which securities to buy or sell, or when to buy or sell them. These are offered with limited information and should not be used on their own to make investment decisions.