July 24 this year the S&P 500 traded around 4600. At the time, gains were almost 20% for the year. The bulls had all the momentum and analysts were ratcheting up their end of year forecasts. Some felt 20% YTD gains were not enough – calling for even greater upside. What happened? Stocks corrected around 10% offering investors a better opportunity. The game of near-term forecasting is a fool’s errand…
Macro / Economy
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Did Ackman Just ‘Ring the Bell’ on Bond Yields?
Over the weekend – I made the case for investing in fixed income. I think there’s a compelling longer-term opportunity for investors – where fixed income warrants exposure in your portfolio. Turns out, it may not be just me thinking this way. For example, last week I referenced Howard Marks’ latest memo. He explained how some are offering equity-like returns for investors (e.g., above 8% for non-investment grade debt). What’s more, Warren Buffett said he was increasing his exposure to bonds (at the short and long-end) a couple of months ago. Today billionaire investors Bill Ackman and Bill Gross were sounding the horn. Question: are we getting closer to a near-term peak in long-term yields?
Why Powell Oscillates b/w Dovish & Hawkish
Is Powell dovish or hawkish? The answer is he is both. And it’s intentional. Part of the Chairman is looking in the rear-view mirror (strong jobs, GSP growth, wage pressure and inflation); and part of him is looking ahead (weaker growth; falling jobs; lower inflation). He straddles both sides. But what she he pay more attention to? The answer is the latter – but he can’t ignore the former. That said, I also think the Chair’s choice of language was interesting. He believes above trend growth and strong jobs are what’s causing inflationary pressure – maybe in part. But I will argue it’s the lagging effect of monetary policy… when you increase money supply by 40% in just 2 years.