News

From a medical perspective, is the pandemic over? The answer is simple: I don’t know. The same is true if we look at it on a global basis: I don’t know. But when we look at the U.S. and when we consider the economic—rather than the medical—effects, then I think the answer is pretty clearly yes. We are now in the post-pandemic era.

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Last week saw a number of economic updates, with a focus on housing, the minutes from the Fed’s most recent meeting, and the weekly initial jobless claims report. This will be another busy week for updates, with news to come on consumer confidence in May and April’s durable goods orders and personal income and spending reports.

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Banks have been deeply out of favor for a long time. In fact, you can see in the chart below just how poorly the S&P 500 Financials Index has performed compared with the rest of the index in this century. Bank stocks had barely started showing signs of life after a lost decade since the great financial crisis when the COVID-19 pandemic hit. The Fed quickly sprang into action and brought the federal funds rate back to the floor after barely taking it halfway up to the pre-2008 level. Economic activity shut down and millions lost their jobs. Banks paid a price yet again, as their stocks were one of the worst hit when the pandemic brought the world to a grinding halt in 2020.

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As we discussed yesterday, the current inflation data simply is not that scary. Yes, there are signs of inflation, and the most recent numbers were startling. But when you break down those numbers, take out the pandemic effects, and normalize over a longer time period, inflation is pretty much where it was in 2018 and 2019.

Today’s post was cowritten by Peter Essele, vice president of investment management and research.

I was going to write a piece on inflation today, but I got sidetracked. Sorry about that, and I promise to post on that topic tomorrow. Today, I am spending some time on getting back to work—in the office.