Total Return Webcast

Date: June 11, 2024

Lecture Highlights: 1968 and Current Parallelism

• Introduction:
  • Reflecting on 1968, a year of significant political and social unrest globally and its parallels with today.
  • Example: Columbia University protests in April 1968.
  • U.S. and global protests against the Vietnam War, significant events and political movements.

Key Events of 1968:

• Start of 1968:

  • Noted with optimism; New York Times headline: “World bids Ado to a violent year”

• January:

  • 22nd: Debut of Rowan & Martin’s Laugh-In, a hit TV show.
  • 23rd: North Korea seizes USS Pueblo, leading to an 11-month standoff.
  • 30th: North Vietnam's Tet Offensive, contradicting U.S. President LBJ.

• February:

  • 1st: Death of two Memphis sanitation workers leads to a civil rights movement shift.
  • 7th: An American officer’s controversial quote during the Vietnam War.
  • 27th: Walter Cronkite’s critical report on Vietnam.

• March:

  • 12th: Primary elections in New Hampshire.
  • 16th: Robert F. Kennedy enters the Democratic race after Eugene McCarthy’s surprising performance.
  • 31st: LBJ announces he will not seek re-election.

• **April - August:

  • 4th: Assassination of Martin Luther King Jr., widespread riots in over 100 U.S. cities.
  • May 26th: Supreme Court rules against draft card burning as a free speech protest.
  • June 4th: RFK wins California primary, assassinated that night.
  • August 28th: DNC in Chicago marked by police and National Guard violence.

• September - December:

  • 16th: Nixon appears on Laugh-In.
  • November 5th: Nixon wins presidential election; Shirley Chisholm elected to the House of Representatives.
  • December 23rd: North Korea releases USS Pueblo crew.

Housing and Economic Conditions:

• Observations of home construction dynamics between the 1960s to today.
  • High multi-family unit construction in the late 60s akin to today.
  • Mortgage affordability issues increased household income percentages from approx. 20% in 2018 to 30% today.
• Unemployment trends:
  • Comparison of consecutive months with unemployment below 4% in 1968 and today.
  • Yellow flashing light (12-month moving average) and red light indicator (36-month moving average) show economic caution signs.

Inflation and Economic Indicators:

• Payroll revisions have shown unpredictable patterns.
• Part-time unemployment for economic reasons has slightly risen.
• Small business hiring plans index signals potential increasing unemployment.
• Average weekly hours in manufacturing declining, consistent with recession patterns.
• Large budget deficits: Current deficits 5.7% of GDP, compared to 1968.
• High interest on debt relative to defense budgets both in 1968 and today.
• Treasury yield curve inversion since the late 70s, ongoing debates on recession indicators.

Market Reactions and Predictions:

• FED policy and market impacts:

  • Reduction prediction in the number of FED rate cuts.
  • Yield curve behavior – no significant signs indicating strong economic slowdown yet.
  • Consumer confidence and business optimism hinting hesitation in economic forecast.

• Commodities Update:

  • Potential bottoming out in commodity prices, gold performance, mixed trends across commodities.
  • CPI year-over-year expected to reflect tomorrow, auto insurance inflation notably high (22.6%).

Summary and Outlook:

• Watching unemployment trends and inflation indicators closely for recession signs.
• FED’s next moves to be monitored, market reactions will be indicative.
• Commodity rice movements and overall construction/home sales provide insight into broader economic conditions.