My goodness, speaking of a paradigm shift, that's certainly what we got yesterday when Amazon fell through the floor. So I thought it right on target that Consuelo Mack would devote this week's WeathTrack program to this very topic and bringing in Richard Bernstein to shed light, one of the market's foremost gurus. Enjoy the broadcast and enjoy the remainder of the weekend, though it may be quite wet. But that's an appropriate metaphor for how the market is doing.
April 28, 2022
Dear WEALTHTRACK Subscriber,
As Bob Dylan sang in 1964: The Times They Are a-Changin'. The U.S. economy shrank in the first quarter, down at a 1.4% annual rate after expanding 6.9% in the final quarter of last year. It was the weakest showing since the short, sharp covid induced contraction in the spring of 2020. The market shrugged it off because it’s being blamed largely on a big increase in the trade deficit. U.S. imports accelerated while exports fell as supply chain disruptions continued. Evercore ISI economist Ed Hyman reports that inflation-adjusted “real” imports surged 17.7%, knocking 3.2% off real GDP growth. That’s a big hit. Also reassuring, consumers continued to spend, and capital spending by businesses surged 9.2%.
The market is not going to be as sanguine digesting Amazon’s earnings report announced after Thursday’s closing bell. Amazon experienced its first quarterly loss since 2015 as consumers slowed their online spending, costs increased for labor, goods and services, and the online behemoth coped with supply chain disruptions. The company’s 18% stake in electric vehicle manufacturer Rivian also took its toll. Rivian’s stock has fallen more than 65% this year. The one bright spot: the company’s cloud business. Amazon Web Services reported a 37% sales increase in the first quarter.
These developments are not a surprise to this week’s guest. He talked about a new world financial order when we interviewed him a few weeks ago. The conversation is as valid today as it was then. The scenario he discussed with us then is now unfolding.
He is Richard Bernstein, Chief Executive and Chief Investment Officer of Richard Bernstein Advisors, which he founded in 2009. The firm now oversees or advises nearly $16 billion dollars in assets, largely in multi-asset allocation strategies for financial advisors using ETFs.
A noted investment strategist known for his macro analysis and thematic investing, Bernstein discussed why he expects long term inflation to be higher than it's been in the past decade and believes most portfolios are not positioned for this new reality. In fact, he says the vast majority of investors, institutional and individual, are holding the winners of yesteryear instead of the winners of future years. He has recommendations to bring us up to speed!
In his EXTRA feature Bernstein explains how to be a clear eyed investor in the face of pessimism and evil.
If you miss the show on public television, you can watch it on our website over the weekend. You can also find the WEALTHTRACK podcast on Stitcher and SoundCloud as well as iTunes and Spotify.
Have a lovely weekend, and make the week ahead a healthy, profitable and productive one!
Best regards,
Consuelo
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