Trump is demanding the Federal Reserve lower rates. However, Fed Reserve Chair Jay Powell – is having none of it (and nor should he). This is setting up another showdown between the President and the world’s top central banker… a repeat of what we saw in 2018. As we all know Trump is a real-estate guy. Property is a business that relies heavily on cheap money. And this is the same lens Trump is taking with respect to his growth agenda. But he may not get what he wants…
Interest Rates / Bonds
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Are We Closer to a Market Bottom?
It’s very difficult to know if we’re at or close to a market bottom. They rarely occur over the space of weeks – it generally takes months. But I cannot predict when (or what) the bottom will be. However, I think the ~20% correction from the market high (6147) to the low (4834) tells me a large portion of the selling is behind us. For example, we’re now starting to see equity exposure significantly reduced and cash levels raised. This is a good sign… as there are a lot less people to sell.
Fed Minutes: Time to Pause QT?
Four things caught my eye with yesterday’s release of the January Fed Minutes: (i) worries over tariffs and their impact on inflation; (ii) some members suggesting the fed funds rate is now close to neutral (not the majority); (iii) concerns over the pace of balance sheet reduction targets; and (iv) inflation needing to come down more before lowering rates further. Makes sense to me… But I can’t help but wonder when Powell ran a victory lap last September – whether it was premature.