SCHX

We believe we have started a new economic expansion and new bull market in stocks, and that we are in the early phase in which stock returns are the greatest.This is why we view any correction in stocks to be a buying opportunity to increase our exposure to stocks and commodities above our benchmark's neutral allocation, rather than the start of a new bear market.With interest rates back at zero and likely to stay there for years to come, cash and bonds, in our view, have poor long-term return characteristics.Over the last month, we began to divest a few positions that had erased the undervaluation we saw when we first bought them as we saw growing opportunities in other areas. One of the areas that has the greatest long-term appeal, in our view, is commodities.

After the end of 2019, the U.S. economy went straight into negative territory, as the pandemic-related shutdowns produced unprecedented contractions in activity.If the Atlanta Fed is correct, the U.S. economy has made progress beyond anyone's imagination just a few short months ago.If growth can snap back earlier than expected, what happens if inflation returns more quickly than anticipated as well?

A truer picture of the employment situation is extracted from the Unemployment Insurance Weekly Claims (UIWC) report.Persons receiving some form of unemployment benefits account for 16.2%.Monitoring of the weekly insured unemployed can provide early indication of recovery from the COVID-19 crisis.The current UIWC report shows that the economic recovery seems to be improving.

Transportation equipment and sales of motor vehicles & parts were instrumental in driving through a strong durable goods number for July.Without any likely stimulus until elections, Americans will be required to dip into their elevated savings and net-worth.Investors may consider, XTN, IYT, CARZ, or CAT.

The major central banks of the world have increased their assets by 46.7% since the beginning of the year.If you don't think this affects the equity markets, I beg to differ.It is not just the vertical shift, the amount of assets they currently have, but the horizontal expansion of their intentions.

Simply stated, companies require economic growth to prosper, and gains in productivity and the working-age population are what drives that growth.If population growth contributes to economic prosperity and stock valuations, United Nations (UN) population forecasts offer a glimpse of the future.If an expanding population is critical to global economic growth and stock returns, with the world population expected to grow over the next 80 years, why is the outlook so dire?

On the surface, it would seem there are few similarities between today and the late 1990s.Digging deeper, we find more similarities than dissimilarities.It should serve a warning sign.

Several GDP nowcasts for the upcoming Q3 report (due on Oct. 29 from the Bureau of Economic Analysis) are pointing to a strong rise.After plunging in March and April, the US MEI rebounded sharply but has been treading water in recent weeks.The standard numbers still leave plenty of room for caution. That includes the weekly jobless claims numbers.