Market Moment
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  • Currently around 80% of all chips in the world are made in Northeast Asia. President Biden is trying to change this with his plan for $50 billion in spending on chip research. Until that happens however, the price of cars, which are heavily reliant on chips, may continue to rise, while the availability will decline. Consequently, used-car prices have risen by around 20% in the first half of 2021.
  • In the decade following the Great Financial Crisis, the emerging-market stock index rose just 8% compared to the developed nation benchmark, which more than doubled.  Some analysts believe this trend will reverse soon driven by the fact that commodity prices have risen and the amount of liquidity provided by the Fed, which was one of the key drivers of the US’ outperformance over the past decade, will decrease.
  • As the Fed ultimately tapers their bond purchases, U.S. investors fret it will lead to a rise in yields. They still remember 2013, when yields jumped from 2% to 3% in roughly four months. Yet they forget that in 2013, foreign investors only accounted for around 28% of purchases in the 10-year auctions, whereas today it is closer to 77%. This additional demand could prevent the “taper tantrum” many expect.
  • Aided by historically low interest rates, there is a newfound focus on re-onshoring manufacturing and building clean-energy infrastructure. Many countries are moving away from monetary policy measures towards fiscal policy to kickstart infrastructure, energy and other public works. Case in point, the US Senate recently passed a $550 billion infrastructure package and the UK Prime Minister Johnson is calling for a £600 billion infrastructure bill. This bodes well for construction-related stocks.
Barrons -The Chip Shortage Looks Like the Oil Shortage of the 1970s. What it Means for Stocks and the Economy
Bloomberg - Goldman Sachs, BofA See Lost Decade Over for Emerging Markets
Reuters – Foreigners may temper the taper
WSJ - Ride the Global Construction Boom With Caterpillar

Economic Calendar

Monday: Markit manufacturing PMI (Aug), Markit services PMI (Aug),Existing home sales (Jul)
Tuesday: New home sales (Jul)
Wednesday: Durable goods orders (Jul)
Thursday: GDP revision (Q2)
Friday: Personal income (Jul), Consumer spending (Jul), Core PCE price index (Jul), Trade in goods, advance (Jul), UMich consumer sentiment index (Aug)
US Futures
S&P 4451.75 +0.33%
DOW 35,205.00 +0.42%
NASDAQ 15,129.50 +0.28%

World Markets
FTSE 7116.08
NIKKEI 27,494.24 +1.78%
Hang Seng 26,109.59
3 Mo 0.04%
10YR 1.28%
30 YR 1.89%

Euro $1.1725
Pound $1.3668
Yen $110.069

Gold 1789.70
WTI Crude 64.10 +3.15%
Silver 23.38

Upcoming Earnings Calls

Monday - N/A
Tuesday - AAP, INTU
Wednesday - BBY, CRM, ADSK, ULTA
Thursday - SJM, DG, DLTR, GPS, GPS, HPQ
Friday - N/A

Client Focused Trading® for large institutions, pensions, hedge funds, wealthy families, and private equity for over 30 years.

Glen Eagle Wealth, LLC is a member FINRA and SIPC
This desk commentary is for informational purposes only

Ansie Monaghan
Carol Ann Fernandez

Glen EagleWealth, LLC
4422C Route 27
PO Box 399
Kingston, NJ 08528
(609) 631-8231

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