📑 Research Notes for 2022-05-02
This week, we look at the unexpected decline in U.S. GDP, the credit system "breaking", the BoJ's fascinating bond buying program, and Blackrock's "Great Acceleration"
We conduct extensive investment research and share the most interesting content that we come across every week. Here is a curated list of this week’s top observations.
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Short Video of the Week.
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What Caused the Unexpected Decline in U.S. GDP?
U.S. GDP unexpectedly declined 1.4% in the first quarter, the economy’s first post-pandemic contraction. Analysts have attributed the reversal to an upswing in Covid-19 cases, surging inflation and geopolitical strife. However, the outlook is far from gloomy. Here’s why overall conditions may be more resilient than the data suggests.
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Yardeni Says Worry Over Credit System ‘Breaking’ Is Overblown.
“Inflation is eroding everybody’s purchasing power, but in terms of something breaking in the credit system, I just don’t see it,” the chief investment strategist at Yardeni Research Inc. told Bloomberg Television’s Surveillance on Wednesday. “I’m watching the junk-bond yields to see whether that’s going to signal some real serious problems. So far, it’s pretty calm.”
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El-Erian Calls BOJ Bond-Buying Program 'Fascinating'.
Mohamed El-Erian, a Bloomberg Opinion columnist, says ultimately the Bank of Japan will have to follow the path of other central banks.
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The Great Acceleration.
With humans pre-wired to think linearly, market participants often fail to recognize exponential growth opportunities. The future is nearly impossible to predict because innovation unfolds in an exponential manner, leading us to consistently underestimate its long-term impact. The tendency to overlook exponential trends in early and even mid-life stages presents opportunities for investors to capture associated mispricing.
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Last Week’s Market Performance Heatmap
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Curated by Joseph Lu, CFA®
Joseph is the founder and managing director of Conscious Capital Advisors and a CFA® Charterholder.
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