Updates, Tips, & Finance News

TL;DR - Too Long Didn't Read

-Stalled stimulus deal could take months for money to be distributed
-Why we're not worried about inflation in the near-term
-10yr US Gov Bond yield spikes, and bonds sold off across the risk spectrum

Hi there—here is this week's update!

Stimulus Deal

There is still no fiscal stimulus deal with the US government. This deal is vital to keep our economy from redlining.

Capitol Hill is about $1 Trillion away from a deal, and the inability to strike a deal quickly will likely lead to further worsening economic data for this month. Even if an agreement is cemented tomorrow, it could take months for the money to be distributed.


This month's economic data shows rising prices for consumers and producers, along with a runup in gold and oil. The key driver for consumer price increases this month was clothing and cars. Additionally, import prices increased, likely due to a weak dollar, and producer prices increased as well.

This seems like a clear sign of inflation. However, we don't believe inflation is a near term risk. One month of rising prices off over already depressed levels is no indicator of inflation. Gold is viewed as a safe haven asset, and oil producers still have production cuts in place.

Longer-term, we believe that stagflation is a risk, which happens when prices increase and economic output declines.


Over the last two weeks, from the trough to the peak, the 10-year US government yield is up about 40%. While a movement from 0.5% to 0.7% may not seem drastic, we saw bonds across the credit spectrum sell-off this week.

Bonds that are viewed as safe-havens lose value as interest rates rise, and gain value when interest rates fall. Lately, we've seen higher credit quality bonds, like Municipal bonds, sell-off as interest rates have been rising quite sharply.

Bonds that are viewed as riskier, like high-yield bonds, are less sensitive to interest rate fluctuations. Even these bonds sold off this week, but this is due to investors requiring additional compensation for taking risk as a lender.

The Consumer

Source: University of Michigan, Bloomberg

The consumer drives the US economy, and retail sales are an excellent barometer for understanding consumers.

US retail sales missed estimates this month, with travel and entertainment continuing to drag on spending. Consumer sentiment is also deteriorating and may get worse with Capitol Hill struggling to put together a stimulus deal.

Hedge Funds Selling Tech

Many large hedge funds have been selling tech names. Viking Global, Coatue Management, D1 Capital, and Renaissance Technologies have all sold positions in some of the largest tech names. Positions were reduced in Amazon, Facebook, Google, Netflix, etc.


More disconnects remain present in the markets, and they continue to mount. Investor enthusiasm is boiling down to nothing more than being an ostrich with its head in the sand.

Most of the hopeful assumptions from March have still not come true. We are far from a V-shaped economic recovery, yet the stock market has had the fastest recovery in history.

The only rallies that we can draw comparisons to were during the great depression. Unemployment remains at record levels, and the only thing keeping the population afloat is the delayed stimulus package.

We maintain our view that by year-end, we will see the markets suffer a significant decline.

See you next week,
-Saul & The Round Team

Have $100,000 or more to invest? You may qualify for Round Private Client. Contact our team at privateclient@investround.com.

Round Investments LLC, dba Round, is an SEC registered investment advisor. Securities offered through Apex Clearing Corporation, Member FINRA, SIPC. The information provided should not be relied upon as investment advice or recommendations, does not constitute a solicitation to buy or sell securities and should not be considered specific legal, investment or tax advice. The information provided does not take into account the specific objectives, financial situation or particular needs of any specific person. Diversification does not ensure a profit or protect against a loss in a declining market. There is no guarantee that any particular asset allocation or mix of funds will meet your investment objectives or provide you with a given level of income. Forecasts or projections of investment outcomes in investment plans are estimates only, based upon numerous assumptions about future capital markets returns and economic factors. As estimates, they are imprecise and hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results. Investing entails risk including the possible loss of principal and there is no assurance that the investment will provide positive performance over any period of time. The opinions expressed by Round represent the current, good faith views of Round and are provided for limited purposes, are not definitive investment advice and should not be relied upon as such. The stock market is in reference to the S&P 500 index. An index is unmanaged, does not reflect management or trading fees, and one cannot invest directly in an index. Stock market performance is in reference to the SPX Index and was provided by Bloomberg Terminal. To view Round's Brochure, Terms of Use, Privacy Policy, and Disclosures go to www.investround.com