September 20th, 2021, Season 3 Episode 35
"Enlightenment" - A Herold & Lantern Investments Podcast featuring Mr. Keith Lanton, President.
Keith begins this week's podcast by citing a few words of wisdom from American entrepreneur Napoleon Hill's novel, Law of Success. Perhaps the most powerful of the citations is to always believe in oneself and be confident in oneself; one can do anything if he believes that he can. But, in order to do so, one needs to get rid of his (1) ignorance and (2) fear. This seems particularly apropos for the moment, as individuals are currently experiencing fear in financial markets. How individuals manage that fear, Hill would say, will be a substantial determinant of their success.
Much of the current angst, Keith says, is a byproduct of the possibility of the Fed tapering and slowing down their asset purchases, China cracking down on tech, commodity prices rising, and inflation picking up at a faster rate than wages are rising. Additionally, the Biden administration is pursuing a tax hike, including a roughly five percent increase in corporate taxes, as well as a fiscal stimulus, and proposing a large infrastructure package.
Internationally, geopolitical tensions have been rising between the United States and China, with US warships moving through the Strait of Taiwan. Tensions are also brewing between the United States and France over the recent Australian nuclear submarine deal brokered by the Biden administration. There is also potential default of Chinese real estate developer Evergrande that is looming. And, the Chinese Communist Party has been doing reference pricing recently, suggesting what asset prices should be; this is encouraging appraisers to price closer to the reference price.
In other news, there has been a significant dip in futures as of late, with averages gapping below their 50-day moving average; at least in the short-term, this does not portend well. And Pfizer has come out with data this morning suggesting that their COVID-19 vaccine is safe for individuals aged 5-11, though vaccine-maker stocks have dipped this morning as the FDA recommended on Friday that booster shots only be administered to those 65 and older as well as the immunocompromised.
In the commodity market, oil is down a bit over two percent, and natural gas is down by about one cent. Gold is up $7.30 this morning, with most cryptocurrencies down. And treasury yields have been lower this morning as well.
On Wednesday, the Federal Open Market Committee will be announcing its monetary policy decision, which is expected to keep the federal funds rate relatively unchanged, though the Committee may signal pairing asset purchases later this year. And, on Thursday, there will be conference calls to discuss quarterly results from Costco and Nike.
Barron's has said that, while there is much to fear, worries about a stock market correction are overblown. They have also said that we could see a pullback of up to 15 percent, but that the bull market nevertheless remains intact because of self-correcting mechanisms the market has in place. Furthermore, Barron's has discussed the possibility of COVID-19 pills to provide both preventative and palliative care against the virus, which could be available by the end of 2021. Lastly, Apple stock dropped last week following a new lineup of iPhones, but Barron's feels that this could change moving forward.
Brad Harris concludes the podcast with some advice to watch the asset allocations and stick to your plan every week, and that it never hurts to be diversified. Even though municipal bonds are down, Brad says, sticking to your allocations will pay off in the long-run.
We hope you enjoy the show and share it with colleagues and friends.
Press interviews or market commentaries, please contact Keith or Sal Favarolo directly at 631-454-2000 to schedule a time.