Sunday, July 24, 2022

Quote of the Day: So Why Bother?

Video viewers have heard me repeatedly pronounce that, in my humble view, despite the tough talk, Jerome Powell and company do not aim to purposely wreck the economy and the financial markets (as unavoidable as that may be) in order to halt the wrecking ball that is present day inflation. 

Bloomberg's "Macro Man" Cameron Crise echoes that sentiment:

"If the object of policy is to tighten financial conditions, why bother with the last-minute press leaks to ensure that markets are not surprised and shocked by the outcome of a policy meeting? Wouldn’t a surprising rate move have a greater effect in shifting market risk premia, thus implying that the central bank could achieve its goals sooner?"


  1. Good Afternoon Marty, thanks for this update. I am curious about the bond market for the rest of 2022 and in 2023. What do you think? Is there be any opportunity in the bond market?

    1. Hi Sam, we're actually cautiously constructive on bonds right here for the first time in a while... Have recently added long and intermediate-term treasuries to the core portfolio mix (scaling in slowly)... This reflects our deteriorating economic growth view, which, ironically (in that bonds are inversely correlated to interest rates), stands to get exacerbated by Fed interest rate hikes...

      Beyond that, I really like emerging market bonds going forward... particularly in spots like Brazil... however, tough to go there without going big (we looked at Brazil govies for client accounts but could only buy in million dollar increments), so we opted to begin scaling into EMB (emerging market bond ETF). Granted, we may be early, so we're starting small, but this is an excellent way to play a weaker dollar (longer-term) and the fact that spots like Brazil have aggressively raised their benchmark interest rates -- leaving tons of room to ease when inflation begins to abate...