In today\u2019s Steady Investor, we dive into key factors and\ncurrent events that we believe are influencing the current market, such as:<\/p>\n\n\n\n
Lumber Prices Plunge from\nHighs \u2013 <\/strong>We have written in this\nspace before about the rising costs of raw goods and commodities in 2021,\nincluding the cost of lumber. Any reader who has made a trip to the Home Depot\nin the last couple of months has likely seen these rising costs first-hand. The\ncause is fairly straightforward: in the throes of the pandemic last year, many\nlumber mills and homebuilders were anticipating a prolonged recession, much\nlike what we saw in the 2008-2009 financial crisis. Demand plummeted. But as we\nknow today, the economic recession was ultimately very protracted, and housing\nwas arguably the least affected sector. In fact, housing prices and home\nproject demand soared, pushing lumber prices higher. Lumber futures\nskyrocketed, ultimately reaching a record $1,711.20 in May. Eventually,\nhowever, supply started to catch up, and lumber futures have fallen some -42%\nfrom highs. Lumber producers who had been hoarding lumber are now offloading it\nto try and secure an attractive price, which is helping to correct some of the\nsupply and demand imbalances in the market. Even still, lumber prices are\nelevated from recent history, and robust demand in the housing market is likely\nto keep them above historical averages.1<\/sup><\/p>\n\n\n\n ___________________________________________________________________________<\/p>\n\n\n\n Learn How to Protect Your Investments from Market Bubbles<\/a><\/strong><\/p>\n\n\n\n With real estate prices souring and cryptocurrencies gaining popularity, many investors may be fearful of a bubble forming. To help you understand how bubbles form and what you can do to prepare for one, we have created our guide, Tulips, Dotcoms, and How Market Bubbles Form.<\/em> ___________________________________________________________________________<\/p>\n\n\n\n The End of a\nLong-Simmering Trade Dispute \u2013 <\/strong>For\n17 years, the United States and the European Union have been embroiled in a trade\ndispute, though much of the tension has been masked by an overall good economic\nrelationship. The dispute has been between the two biggest aircraft\nmanufacturers in the world: U.S.-based Boeing Co. and EU-based Airbus SE. At\nthe center of the dispute was the U.S.\u2019s objection to Airbus receiving\ngovernment subsidies, giving the company a competitive advantage over Boeing.\nThe result was tit-for-tat tariffs that have arguably hurt bottom lines for\nboth businesses. This week, however, it was announced that the U.S. and EU\nagreed to suspend tariffs for five years, as the two sides agreed to set aside\nthe dispute temporarily in a joint bid to confront a bigger issue: China.3<\/sup><\/p>\n\n\n\n Don\u2019t Over-Analyze\nthe Fed\u2019s Two-Day Policy Meeting \u2013 <\/strong>Federal Reserve Chairman Jerome Powell\u2019s\npress conference this week made a splash in the financial media, but we would\nargue its advertised importance\u2014and ultimate impact\u2014is overblown. Much was made\nof the Fed slightly raising its inflation forecast for 2021, while also\nsignaling the expectation to raise rates by late 2023. There was also the\nmatter of tapering bond purchases, which the Fed Chairman provided few\nspecifics on \u2013 other than to say the Fed will be meeting to discuss it soon. In\nother words, the Fed is largely maintaining its dovish stance, and they remain\nmore concerned about employment than they do inflation. At the end of the day,\nhowever, we would argue that the financial media and pundits alike place far\ntoo much importance on Fed statements. A common worry is that Fed tapering and\neventual rate hikes will doom the bull market, but this fear is not validated\nby recent history. When the Fed started to taper and raise rates in the\nprevious cycle, the market experienced volatility but continued its longer-term\nupward trend. Fed statements may be meaningful to short-term traders, but for\nlong-term investors, they matter far less.4<\/sup><\/p>\n\n\n\n Retail Sales Fell\n1.3% in May. Is the U.S. Consumer Losing Steam? \u2013 <\/strong>Consumers cut back on\nspending a bit in May, with retail sales falling by 1.3% from the previous\nmonth. A closer look at the data shows that consumers softened purchases of\nbig-ticket items, like cars, furniture, and building materials, and instead\ndeployed their dollars in the services sector with spending on hotels,\nrestaurants, and bars. Americans also spent more on clothing and beauty\nproducts, signaling a pivot to smaller ticket items geared to re-engaging in\npublic. Online sales also fell slightly, as consumers made their way back into\nstores. Even though retail sales in aggregate fell slightly on the month, it is\nimportant to note that spending is already well past its pre-pandemic high.\nBusinesses are hiring quickly and scrambling to stock inventories to meet the\ndemand.5<\/sup><\/p>\n\n\n\n The market has seen a history of bubbles forming. And with real estate prices soaring and cryptocurrencies gaining popularity, you may be fearful of a bubble forming. <\/p>\n\n\n\n
In this guide, we look back at previous market bubbles throughout history and explore the question, Is there a bubble forming, and if so, is it destined to burst soon?<\/em> \u00a0We believe that examining past bubbles can help investors understand how they form and when they can get dangerous.
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If you have $500,000 or more to invest and want to learn more, click on the link below to get your free copy:
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Learn About Tulips, Dotcoms, and How Market Bubbles Form! <\/a>2<\/a><\/sup><\/strong><\/p>\n\n\n\n