"As long as inflation is pro-cyclical (demand-pull), stocks tend to perform well, as higher inflation is associated with stronger growth. When inflation is counter cyclical (cost-push), however, stocks suffer."
Jamie Williams, EIG Wealth Advisor, talks with Barry Mendelson, CEO of Capital Market Consultants, about the significance of investment research for due diligence, quality metrics, and diversification of portfolios.
After gaining 28% in a straight line since the last “wobble” (last October), the S&P 500 index is wobbling again and is down 2.4% from its April 1st high.
US Treasury yields on the long end have risen to their highest level since November, dampening risk appetite and putting the S&P 500 on track for its third consecutive weekly decline.
The S&P 500’s dividend yield has moved down to 1.35%, the lowest since Q4/2021. The all-time low was 1.12% in Q1/2000. To put this in perspective: in the late 80s/early 90s the dividend yield stood at 3-4%.
The natural rate of interest is an important economic concept that signifies the point of equilibrium for the interest rate, at which inflation remains stable.
