Macro Observations

Everything should have lined up for a strong run for small-caps. Except it hasn’t. Instead of rallying because of risk-on conditions, they’ve given us a reminder of why you need to look beyond just GDP growth to see if conditions really are favoring everybody the same. Everything changed with the arrival of inflation. So how can you play it in your portfolio? It probably requires an active approach.

While the financial markets focus on whether or not central banks will continue cutting rates, wondering where inflation is headed next or the impact of a global trade war, there’s one risk to the economy that’s never really gone away - the U.S. housing market. How big is the housing inflation problem? Take it out of the equation and inflation has been running near or below 2% for more than a year and a half.

It was a big week for retail earnings as two of the industry’s heavyweights - Walmart and Target - reported 3rd quarter results. So what do we make of this? These are two of the biggest retailers in the world. How can one hit a home run, while the other strikes out? Let’s take a look at a few reasons why this may have happened.