Of course, immediately-speaking, there's today's Fed meeting... To give you our take, here are some highlights from my part in a text conversation with a friend this morning... The topic being the supposed lack of communication to markets that the new chairman appears to advocate for going forward.
"... in terms of transparency, it’s not about the actions they take, it’s about the communicating to the public ahead of time what they’re thinking.
... I have always been a critic of this forward guidance stuff. This is a newer thing pretty much from Bernanke on.
It essentially is the Fed constantly trying to manipulate markets, and getting a really bad rap when whatever they do hurts in the short run.
From Greenspan on, being fed chairman has been kind of like a beauty/popularity contest. Back in Volcker's day, for example, he did not care in the short run how markets reacted, he did his job and he did it with integrity, and he would never tell the market what was going to happen before they did it.
Guidance is actually considered a tool. Moving markets (with their commentary) can influence financial conditions. Problem with guidance is that they will never guide the market into a painful inflation setup. They have been sugarcoating it, and therefore causing bubbles.
The Fed is supposed to be a thermostat on the economy, that’s BS, the Fed has done nothing but try to keep markets bubbly since Bernanke and to some extent since Greenspan.
Warsh does not want to tell the markets what the Fed really thinks right now. Which is that inflation is a bigger problem than he’d like to confess.
That said, he doesn’t necessarily want to paint an incorrect public picture, he’d lose credibility on the board, he’d rather simply say less. Although, that said, he’s got the president breathing down his neck, so my guess is he’s gonna sound pretty dovish in his first press conference.
And yes, I think he’s going to try to pivot the board to use the most friendly inflation gauge they can come up with.
They’re really setting themselves up for a challenge, Nick Timarose said it very well on the balance sheet challenge."
"Yes, I had a ton of respect for Volcker. Thing is though, we have to recognize that when he was fed chairman, the government debt to GDP was only 30%. That gave him the ability to raise interest rates aggressively.
Today with debt to GDP of close to 130%, the Fed is almost completely handcuffed. They can raise rates a bit, but no way they can push borrowing costs up substantially with so much government debt coming due over the next two years.
And that’s the big challenge, and that’s what Warsh is there for. Keep the short end of the curve suppressed so the treasury can refinance into T bills at very low rates for the time being. Also, the government is running a 6% budget deficit which has to be financed, you can’t have high rates.
So there is gonna be some real manipulation of the yield curve, which will happen by the Fed printing money and buying T bills as they’re issued, to the extent that nobody else will. That’ll keep the bid high and the yield low.
It’s a potentially great setup for financial stocks (low short term/high long-term interest rates) as long as we don’t have a recession.
Longer-term, it’s also a great set up for gold, and likely for non-US equities, emerging markets in particular."
6/16/2026
MRB largely shares our go-forward thesis:
"The Art Of The Iran Deal
June 15, 2026
Iran and the U.S. appear to have reached a 60-day ceasefire deal that will re-open the Strait of Hormuz and kick-start negotiations over Iran’s nuclear program and sanctions, among other issues. There are still snags that could de-rail the ceasefire, including relations between Israel and Lebanon, but the U.S. and Iran have clear interests in ensuring the deal is agreed and honored, at least for a while. Our key conclusions for investment strategy and positioning are as follows:
- While the opening of the Strait and the ceasefire are unambiguous positives in the near term, the duration and magnitude of the likely risk-on phase will be determined by the behavior of bond yields. The next upleg in bond yields, which we expect to emerge not far down the road, will eventually begin to stifle investor optimism.
- Global oil prices have scope to decline further, but the combination of damage to Middle East production facilities and a rebuilding of global oil reserves imply that prices will stabilize at well-above pre-war levels.
- The deal will bolster the outlook for global economic growth, especially in Mideast energy-dependent Asia and Europe. Consumer and service sector confidence should gradually recover, which will complement the still fledgling recovery in manufacturing and ongoing expansion of global trade.
- Global monetary and fiscal policies remain pro-growth and pro-risk taking. That said, central banks will continue to be biased toward hiking interest rates in the year ahead given an improving global economy and stubborn inflation. The next move by the Fed will be a hike.
- Downside for bond yields is limited. We expect yields to be higher 6-12 months from now. In the near term, yields will be dampened by a modest further decline in inflation expectations as oil prices fall, but an improving global economy implies higher real bond yields.
- The opening of the Strait will add to optimism about global earnings expectations and thus equity prices. However, already elevated equity valuations and earnings expectations will eventually act as a constraint on overall, and especially U.S., equity performance over the next 6-12 months.
- Non-U.S. equity markets, especially in Europe and Asia, should be the biggest beneficiaries in the near term as investors rotate away from the perceived safety of the U.S. and technology.
- We recommend overweight exposure to emerging markets, Japan and the euro area within a global equity portfolio. We recommend a minor underweight on the U.S., which, contrary to many investors’ perception, has underperformed for most of the past two years.
- A firming of global economic growth implies downside for the U.S. dollar. Stay underweight the dollar in a global currency portfolio.
- While the opening of the Strait and the ceasefire are unambiguous positives in the near term, the duration and magnitude of the likely risk-on phase will be determined by the behavior of bond yields. The next upleg in bond yields, which we expect to emerge not far down the road, will eventually begin to stifle investor optimism."
6/16/2026
El Nino looks to be a very big thing in the coming months.. While some crops (soybeans for example) could benefit in terms of yield (lower prices), on-balance this is likely bullish for PDBA.
https://www.usatoday.com/story/news/weather/2026/06/13/el-nino-economy-impact/90505575007/
6/16/2026
Key Highlights from the World Gold Counsel’s latest Central Bank Gold Reserves Survey:
"Similar to findings from previous surveys, central banks continue to hold favourable expectations on gold. Respondents overwhelmingly (89%) believe that global central bank gold reserves will increase over the next 12 months.
This year, a record 45% of respondents expect their own gold reserves will also increase over the same period. The majority of the remaining respondents indicated they expect no change while 1% expect their institution’s gold reserves to decrease.
Gold’s performance during times of crisis, portfolio diversification and inflation hedging are some of the key factors for central banks to hold gold. In addition, gold as a geopolitical risk hedge and gold as part of a reserve diversification policy also feature as key reasons for increasing allocations to gold.
The majority of respondents (74%) see moderate or significantly lower US dollar holdings within global reserves over the next five years. Respondents also believe that the share of other currencies, such as the euro and renminbi will remain unchanged over the same period, while gold holdings will increase.
This year’s survey asked respondents how they would fund their new gold purchases. Half of respondents indicated through a domestic purchase program in local currency, while 38% indicated through selling existing reserve assets."
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