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The economy is slowing, inflation is coming down, and the Fed has done a good part of its work. Housing is showing the most weakness. Trucking survey (highest correlation with GDP of any single sector) is near recessionary levels. PMI indexes are another favorite indicator - 46 reading in November is well below past decade. However, the labor market is still realtively strong. Concerned about money supply contracting, quantative tightening (QT), inverted yield curve. If QT is taken into account, fed funds rate is 6% not 4%. Appropriate path for Fed would be 25 bps increase in December then wait and see. There has never been a tightening cycle without a shock or crisis - no exceptions.
Thanks for the summary, @Observant. That episode is the first time I've ever heard Smilin' Ed not be bullish, and that data-dense presentation was enlightening and convincing.
The talk about the policy lag of Fed tightening's impact on the economy was also interesting; also a little surprising, that counting QT and the earliest rate bumps, there's been enough time already for economic weakening like his group is reporting on to take effect.
J. Gundlach and Felix Zulauf are having a "macro and markets" webcast Monday, which I'll be tuning in to see how much of Ed's view those guys have adopted. If interested, see here: Macro & Markets, Gundlach & Zulauf
Thanks for the webcast info! Felix Zulauf is a former long-time member of Barron's Roundtable. IIRC, Mr. Zulauf was always bearish in the Roundtable sessions. He states his predictions in the current issue of Barron's. No surprise - he's rather pessimistic. Link
Ed Hyman’s interview is different from the past where he was more relax and bullish. But this year turned out to be quite different and he is being more realistic of what is coming. Still very informative.
re-runs lately....... Yes, I watched this one before. But maybe some have missed a few of these. good idea to post the link. Clare Hart was interesting. On target, I think.
As we move into 2023, the best advice for investors remains the same – “Don’t fight the Fed.” The Federal Reserve is being clear about its intentions to continue raising short-term interest rates and tapering its bond purchases until it reaches its target of bringing inflation down to 2%.
Richard Clarida, a highly respected expert in Fed policy and Vice Chairman of the Federal Reserve under Chairman Jerome Powell, will be discussing these topics and more in this episode.
The missing piece in all the Fed discussions is this: what measurement are they talking about when they refer to the 2% inflation target? Clarida's statement that inflation now is running "about 5%" means he's looking at year-over-year change -- which, if that's also the Fed's take, at least in part contradicts his point that the Fed is "forward looking."
Nothing says backward looking like a year-over-year measure, but what that choice would mean for the economy and investing is that they're going to stick with tightening for a good while beyond what more current measures of inflation would indicate is the best course of action, and so yes, the risk of overtightening is very real. I hope they're going to be willing to change course when needed. (They're not idiots; just very careful with communication, and in some ways not all that transparent.)
P.S. Thanks @Bee; I'd forgotten to look for WealthTrack episodes lately, and this one was for sure worth a listen.
McLennan will examine the risks of monetary and fiscal tightening amidst high debt levels in the U.S. and discuss the types of companies that can succeed despite these challenges.
Legendary Fed Chairman Paul Volcker was highly critical of the Fed’s policy of targeting 2% inflation, saying he saw “no theoretical justification” for it and that if successful, it “would mean the price level doubles in little more than a generation.” In this EXTRA exclusive, Former Fed Vice Chair Richard Clarida defends the 2% solution.
This week’s guest has experienced multiple economic and market cycles during his more than 50 years of managing money and thinks the current one is particularly perilous for investors. In an exclusive WEALTHTRACK appearance, he felt it was important to tell us why and what steps we should consider taking to mitigate its effects.
03 March, 2023: Jonathan Clements. Smart. Savvy. Predictable.
That pretty much describes Mr. Clements. He's found an investment strategy that works well for him and basically sticks with it. I often read his articles (and those of other authors) on the HumbleDollar website.
First Eagle’s small-cap portfolio manager, Bill Hench, has a long track record of beating the market and the competition by discovering hidden gems among small-cap stocks with short-term problems.
Quick glance: Informative interview and Bill Hence laid out First Eagle strategy well. He previously managed Royce Small Cap Opportunity fund before co-managing this First Eagle fund (1.5 year old) with 2 other managers. FESAX is a NTF at Fidelity (most likely at Schwab). ER is at 1.42%. A bit high and there are alternatives with lower ERs https://fundresearch.fidelity.com/mutual-funds/summary/32008F226
Leading Wall Street economist Nancy Lazar discusses the resilience of the U.S. economy, despite several canaries in the coal mine examples of financial strain. Lazar shares her insights on why the economy is holding up better than expected and what we can expect moving forward, including the impact of the Federal Reserve’s efforts to slow down the recovery.
Dividend-paying stocks are gaining new respect among investors, and they are proving to be a protective asset in times of market volatility. ClearBridge Investments’ Dividend Strategy Fund has been named one of “The Best Dividend Funds” for 2023 by Morningstar. Michael Clarfeld, co-portfolio manager of the fund, is with us to explain why high-quality companies with histories of growing their dividends are particularly valuable now.
March 31, '23. Christine Benz is a longtime Morningstar personality. She's back with her bucket approach for retirement portfolio construction. It's never been a strategy I could ever hope to actually employ. And if I had the wherewithal, I find it to be just plain too complicated, anyhow. But have a listen, if you'd like: https://wealthtrack.com/build-a-better-more-resilient-retirement-portfolio-with-morningstars-christine-benz/
Comments
The economy is slowing, inflation is coming down, and the Fed has done a good part of its work.
Housing is showing the most weakness. Trucking survey (highest correlation with GDP of any single sector) is near recessionary levels. PMI indexes are another favorite indicator - 46 reading in November is well below past decade. However, the labor market is still realtively strong. Concerned about money supply contracting, quantative tightening (QT), inverted yield curve. If QT is taken into account, fed funds rate is 6% not 4%.
Appropriate path for Fed would be 25 bps increase in December then wait and see.
There has never been a tightening cycle without a shock or crisis - no exceptions.
The talk about the policy lag of Fed tightening's impact on the economy was also interesting; also a little surprising, that counting QT and the earliest rate bumps, there's been enough time already for economic weakening like his group is reporting on to take effect.
J. Gundlach and Felix Zulauf are having a "macro and markets" webcast Monday, which I'll be tuning in to see how much of Ed's view those guys have adopted. If interested, see here: Macro & Markets, Gundlach & Zulauf
Thanks for the webcast info!
Felix Zulauf is a former long-time member of Barron's Roundtable.
IIRC, Mr. Zulauf was always bearish in the Roundtable sessions.
He states his predictions in the current issue of Barron's.
No surprise - he's rather pessimistic.
Link
https://wealthtrack.com/leading-strategist-jason-trennert-is-uncharacteristically-bearish-he-explains-whats-changed/
Latest episode posted on Wealthtrack website - originally broadcast on 10/28/2022.
https://wealthtrack.com/chinas-economic-slowdown-political-crackdowns-have-enormous-implications-for-the-world-economy/
Didn't realize he's a Pimco guy.
The missing piece in all the Fed discussions is this: what measurement are they talking about when they refer to the 2% inflation target? Clarida's statement that inflation now is running "about 5%" means he's looking at year-over-year change -- which, if that's also the Fed's take, at least in part contradicts his point that the Fed is "forward looking."
Nothing says backward looking like a year-over-year measure, but what that choice would mean for the economy and investing is that they're going to stick with tightening for a good while beyond what more current measures of inflation would indicate is the best course of action, and so yes, the risk of overtightening is very real. I hope they're going to be willing to change course when needed. (They're not idiots; just very careful with communication, and in some ways not all that transparent.)
P.S. Thanks @Bee; I'd forgotten to look for WealthTrack episodes lately, and this one was for sure worth a listen.
McClennan is smart, interesting, erudite. The time went by quickly!
https://wealthtrack.com/fifty-years-in-a-random-walk-down-wall-streets-investment-advice-has-stood-the-test-of-time/
https://wealthtrack.com/portfolio-financial-planning-adjustments-for-rising-interest-rates-inflation/
Informative interview and Bill Hence laid out First Eagle strategy well.
He previously managed Royce Small Cap Opportunity fund before co-managing this First Eagle fund (1.5 year old) with 2 other managers.
FESAX is a NTF at Fidelity (most likely at Schwab).
ER is at 1.42%. A bit high and there are alternatives with lower ERs
https://fundresearch.fidelity.com/mutual-funds/summary/32008F226
Christine Benz is a longtime Morningstar personality. She's back with her bucket approach for retirement portfolio construction. It's never been a strategy I could ever hope to actually employ. And if I had the wherewithal, I find it to be just plain too complicated, anyhow. But have a listen, if you'd like:
https://wealthtrack.com/build-a-better-more-resilient-retirement-portfolio-with-morningstars-christine-benz/