Become a Better Investor Newsletter – 12 August 2023
Noteworthy this week
- Cleveland Fed expects inflation to reaccelerate
- S&P Global drops ESG ratings
- Chinese export prices see a massive drop
- Factory-building boosts US GDP growth
- World debt at $225trn
Cleveland Fed expects inflation to reaccelerate: US CPI was at 3% in June, and Cleveland Fed expects it to rise to 3.4% in July and 4.1% in August. Year-on-year change in oil prices is a driving factor, and you can see that core inflation measures are expected to continue to slow. But it still shows that inflation is sticky.
The fight against inflation is about to get really interesting.
Here are expectations for CPI inflation according to the Cleveland Fed:
– June 2023 (Reported): 3.0%
– July 2023: 3.4%
– August 2023: 4.1%
Inflation is set to begin rising again just as a Fed “pause” is… pic.twitter.com/GUyIMsPrUG
— The Kobeissi Letter (@KobeissiLetter) August 9, 2023
S&P Global drops ESG ratings: The agency will no longer numerically rank companies’ environmental, social and governance risks but provide text-only analysis on ESG. It shows that the providers know that much of ESG ratings are inaccurate at best.
BREAKING: S&P Global, one of the largest independent credit rating firms in the world, has dropped ESG scores from its debt ratings, after we exposed ESG for what it truly is: a scam used to force a political ideology onto the people.https://t.co/QNlUXDwklu
— Will Hild (@WillHild) August 8, 2023
Chinese export prices see a massive drop: It’s the biggest drop in a decade for the China Export Price Index, which creates deflationary pressures on the Chinese economy.
Coming to theatre near you pic.twitter.com/aPj6KON2ET
— Michael A. Arouet (@MichaelAArouet) August 8, 2023
Factory-building boosts US GDP growth: Re-shoring boosts the US economy as the contribution to GDP growth from manufacturing construction is the highest since 1981.
Impressive. The recent factory-building boom has contributed the most to US GDP growth since 1981!
The positive fiscal impulse is having a pronounced economic impact, particularly within manufacturing construction.
This spending has also helped to offset Fed tightening impacts. pic.twitter.com/RDCZjA94EG
— Markets & Mayhem (@Mayhem4Markets) August 6, 2023
World debt at $225trn: In 1995, world debt was around $25trn; today it’s at $225trn! Debt has certainly been key to the growth of the past few decades.
World debt has rapidly increased since 1997
And is now around $225 trillion
This is not sustainable pic.twitter.com/9MDUvgjVLh
— Game of Trades (@GameofTrades_) August 6, 2023
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Weekly market performance
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Chart of the week
Discussed in the Become a Better Investor Community this week
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Podcasts we listened to this week
The Direk Khanijou Show – #29 Investment trusts, reverse leverage, history rhymes
“Direk Khanijou talks about investment trusts from the 1920s and the dangers of reverse leverage.”
Readings this week
The hedge fund titan who’s been watching for ‘black swans’ for decades says the ‘greatest credit bubble in human history’ is set to pop—but he’s not worried
Book recommendation
The Hero with a Thousand Faces (The Collected Works of Joseph Campbell) by Joseph Campbell
“In these pages, Campbell outlines the Hero’s Journey, a universal motif of adventure and transformation that runs through virtually all of the world’s mythic traditions. He also explores the Cosmogonic Cycle, the mythic pattern of world creation and destruction.”
Get the book on Audible or Kindle
Audible is great; have you tried it? If not, click here to get 2 books for free.
Memes of the week
— GSP (@GlobalStockPick) July 24, 2020
Epstein Client List To Be Posted On Threads Where No One Will Ever See It https://t.co/0GhHSRLhf0 pic.twitter.com/1GmAT0IYlr
— The Babylon Bee (@TheBabylonBee) August 9, 2023
New My Worst Investment Ever episodes
Ep718: Christopher Panagiotu – Go With Your Gut, but Verify
BIO: Christopher Panagiotu hosts the “CAPitalize Your Finances” podcast and is the original CAPitalizer: one who is obsessed with understanding what there is to know about their passion.
STORY: Chris was suckered into buying Ford and GameStop shares by the high dividends the companies were offering. However, both companies couldn’t afford to pay those dividends. Chris also started a business to steal customers from his father, whom he despised. The business lasted only seven months, and it was a complete failure.
LEARNING: When in doubt, read more. Acknowledge that you made a mistake, and move on. Never invest in a company because of a celebrity CEO, founder, or CFO.
Access the episode’s show notes and resources
ISMS 29: Larry Swedroe – The Shiny Apple is Poisonous and Information is Not Knowledge
In this episode of Investment Strategy Made Simple (ISMS), Andrew gets into part two of his discussion with Larry Swedroe; Ignorance is Bliss. Today they discuss two chapters of Larry’s book Investment Mistakes Even Smart Investors Make and How to Avoid Them. In this ninth series, they discuss mistake number 16: Do You Fail To See The Poison Inside the Shiny Apple? And mistake number 17: Do You Confuse Information With Knowledge?
LEARNING: Trust, but verify even when working with a financial advisor. Don’t confuse information with knowledge when buying individual stocks.
Access the episode’s show notes and resources
Published on Become a Better Investor this week
In this episode, John and Andrew unpack a few of the myths Dr. Deming identified that continue to destroy organizations from the inside. John explains how these myths also negatively impact schools and kids – and what to do instead.
Listen to Tackling Management Myths: Deming in Schools Case Study with John Dues (Part 7)
Andrew is talking about a book that has landed on his desk; Stocks for the Long Run: The Definitive Guide to Financial Market Returns & Long-Term Investment Strategies. In his book, Siegel tells us to expect a 5% long-term real US stock market return. One of the first charts that he shares in the book shows the US nominal returns.
Read ISMS 28: Stocks for the Long Run
King Slide Works Company Limited (2059 TT): Profitable Growth rank of 1 was same compared to the prior period’s 1st rank. This is World Class performance compared to 830 medium Info Tech companies worldwide.
Read King Slide Works – World Class Benchmarking
Central banks’ aggressive rate hikes and QT crash the stock markets. If inflation reaccelerates, we could miss out on rising commodities prices. Our high gold allocation could get hit by higher rates or improved market sentiment.
Read A. Stotz All Weather Strategies – July 2023
PT Indofood CBP Sukses Makmur Tbk (ICBP IJ): Profitable Growth rank of 4 was up compared to the prior period’s 8th rank. This is above average performance compared to 560 large Cons. Staples companies worldwide.
Read Indofood CBP Sukses Makmur – World Class Benchmarking
DISCLAIMER: This content is for information purposes only. It is not intended to be investment advice. Readers should not consider statements made by the author(s) as formal recommendations and should consult their financial advisor before making any investment decisions. While the information provided is believed to be accurate, it may include errors or inaccuracies. The author(s) cannot be held liable for any actions taken as a result of reading this article.