Friday, April 14, 2023

Economic Update (video)

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Attention Non-Client subscribers: Nothing in this video should be construed as investment advice. The examples expressed relate to portfolio management we perform on behalf of our clients, and, again, under no circumstances are they to be considered recommendations to the viewer.


  1. Thanks Marty!
    Do you have a chart that tracks the Fed Fund month over month? The Fed is continuing with its monetary tightening, except for the month of March where the Fed expands its fund because of SVB. I don't think the banking crisis is over yet until the situation of First Republic Bank is resolved.
    Risk/Reward is definitely tough with the current market.
    Like always, thank you for the video!

    1. Hi Sam,

      Yes, we do track the Fed's balance sheet weekly... And, yes, it had spiked up since the banking issues arose, although the character, and the intent, of the rise is different than QE, and, for certain, it wouldn't have occurred without the banking stress... I.e., QT is continuing on schedule, and you'll see the balance sheet resume its contraction (in fact, it's actually down 119 billion over the past 3 weeks), until, that is, it's obvious that we're in recession... at that point, depending on the severity, and to the extent markets fracture, it wouldn't surprise me to see them halt QT... However, at least one Fed governor has suggested that they could continue QT while simultaneously cutting rates -- we'll see... In a typical recession scenario, they'd stop QT and begin cutting rates. Once the lower Fed funds bound hits zero%, and the economy's still waning, they'd start QE (that would be the expected course of action, anyway)...

      The new "temporary" (we'll see) Fed lending program (and the protecting of depositors) likely quells any systemic (crisis) risk stemming from the present ills in the banking system... The continued strain on their stock prices, in my view, is as much about the economic challenges to come as it is any looming bank-run/balance-sheet risk.

    2. Agree! Thanks Marty! Have a great weekend!