With respect to the late, great Amy Winehouse, the team at Nottingham Advisors gets paid to sit around and think about all the “ifs, ands and buts”. It’s a large part of what we do. That said, there are many days when we feel like we’re drinking out of a fire hose, given the amount of research, opinion pieces and things that claim to be research, that comes into our email inboxes on a daily basis. Separating the wheat from the chaff is the key to unlocking valuable insights into the current investment zeitgeist.
A case in point supporting Ms. Winehouse’s observation above is the recently concluded Georgia Senate race, where the two Democrats defeated the two incumbent Republicans, in what can only be deemed an upset of epic proportions. The “market” had for weeks been handicapping at minimum a single incumbent win, thereby keeping the Senate in the hands of the Republicans, and offering a check to the “blue” House and Oval Office occupants. Now with control of both Congress and the White House, Democrats may feel emboldened to try and push through more liberal legislation, including large-scale tax hikes, infrastructure and green energy bills, and major public welfare spending. Time will tell.
As I write, the bond market is showing the most acute reaction to the Georgia upset, with yields surging across the board. Among the least mentioned black swan events that might derail this 11+ year bull market, a surge in interest rates would seem the most plausible (right there after “global pandemic”). Much of the tailwind for the remarkable run in equities following the Great Recession of 2008 has been the decline in government bond yields, largely driven by overt central bank intervention.
Larry Whistler, CFA
Larry joined Nottingham in 2006 and heads the Investment Policy Committee, along with portfolio and relationship management responsibilities. Prior to joining Nottingham in 2006, Larry worked as an independent RIA for two years, and before that spent a decade as a bond trader for Merrill Lynch Capital Markets in Los Angeles and New York City.
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