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Week of November 8 Thumbnail

Week of November 8

Inflation Investing News

In this week's edition: Market Commentary, Thanksgiving Dinner Shortages, and Air Travel During the Holidays.

Market Commentary for November

From the Chief Investment Office at Merrill Lynch, an excerpt from the Viewpoint: 

In early November, the Federal Reserve (Fed) has communicated the adjustment to their bond purchase plan, or tapering, and the futures markets will begin to further discount when interest rate hikes are potentially coming. This is the “pivot” we have been discussing since the summer months.

Given the outsized gains in equity prices off the lows in March 2020 (in the past 20 months) it is natural, in our opinion, for future gains to slow down back to more “normal” levels. This is our base case, but the attractiveness of Equities relative to Fixed Income currently remains fully in place.

Maintain a high level of diversification across sectors and Value/Growth exposure. We continue to prefer economic sensitive sectors such as Industrials, Materials, Energy, Financials and Growth through large-cap Technology.

Within Fixed Income, we remain lower duration. A rising yield backdrop plus changes to the yield curve are the main story in the coming months and through 2022.

Buy Your Cranberry Sauce Now. Thanksgiving Dinner Staples are in Low Stock 

Shop early.

The supply-chain crunch is about to hit another part of American life: Thanksgiving dinner. Supplies of food and household items are 4% to 11% lower than normal as of Oct. 31, according to data from market-research firm IRI. That figure isn’t far from the bare shelves of March 2020, when supplies were down 13%.

For grocery shoppers this holiday season, it means that someone with 20 items on their list would be out of luck on two of them. By Stephanie Stamm of the Wall Street Journal.

What Could Holiday Travel Look Like This Year?

If you will be traveling by air this holiday season, what might you expect? The Government Accountability Office (GAO) has an interesting blog post on exactly this. In short, air travel was down 96% at the worst of 2020 and about 60% overall. While US domestic vacation travel is getting back to 2019 levels, Airlines make a higher margin on business and international travel which have continued to lag. Airlines will likely continue to struggle with the sometimes dramatic changes in demand caused by the pandemic. The industry is trying to address challenges by hiring additional workers and adjusting operations.

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