Watch Our Third Quarter 2021 Economic Commentary with Michael C. Yeager, CFA, CPA, Director of Research

Read our Third Quarter 2021 Review

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Rather than being in the thirteenth year of an economic expansion, the U.S. economy is in the seventeenth month of a new economic cycle following the shortest recession in U.S. history – lasting only two months.  In response to the pandemic, the federal government has spent an incremental $5 trillion above what would likely have been spent had the prior economic expansion been uninterrupted.  The incremental $5 trillion of federal spending in an economy that generated $20.9 trillion of goods and services in 2020 largely achieved the goal of mitigating the economic fallout created by the pandemic.  For example, government transfer payments lifted personal incomes to higher levels post-pandemic than pre-pandemic.  However, the impact of injecting an amount of stimulus equal to nearly a quarter the size of our national economic output is still reverberating through the economy.

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Read our Third Quarter 2021 Review: International Equities Strategy

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Economic and Capital Markets Commentary

As we have moved through the Delta wave of the pandemic, the focus turns towards the challenges with responses in the supply chain.  Demand remained surprisingly strong as a result of extraordinary monetary and fiscal stimulus, and asset prices have benefited from historically low interest rates.  The mismatch in supply and demand has prompted a price response by managements as they struggle to both satisfy customers and preserve margins.  Economists have adopted increasingly divergent outlooks on how global markets will respond to these forces.  As the outlook remains uncertain, our team feels like we are watching things unfold in slow motion.  Views continue to be constructive in the short term with resilient demand, but longer term forecasts into inflation, growth, and rates, which will ultimately be our destination, exist beyond the purview of the current economic lens.

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Read the Wall Street Journal Transcript: Investing in Competitively Advantaged Companies with Strong Managements

TWST: Please give us a snapshot of Luther King Capital Management, a bit about the company’s history and business today.

Mr. King: Luther King Capital Management was founded in 1979 by Luther King, after he had served for nearly a decade at Lionel D. Edie. He stepped out on his own to establish a firm here in Texas. The initial clients were from the Fort Worth and Dallas area. The requests from initial clients were for him to establish a firm based in Fort Worth and to focus on the investment research as opposed to marketing.

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