


Robert Lloyd, CFA
- Jun 29, 2021
The Market Is Voting Deflation
So far, the market is voting Deflation: higher bonds, higher dollar, weaker commodities and higher tech. There is a potential for inflation to continue at higher rates, but we'll need to see some dramatic Congressional spending along with lots of bank lending. Neither of those developments are sure things as of today. My personal view is that we won’t see a replay of 1970s-style inflation without the banks participating by increasing lending. The indications from the cash mar



Robert Lloyd, CFA
- Jun 28, 2021
Money Market Funds Park Cash At The FED. What gives?
We are up to $800 billion in cash parked at the Fed using the reverse-repo facility. At the same time, Fed rates for IOER and overnight repo were both raised last week by the FOMC. What do you think is happening? My own view is that the money market funds are swimming in cash because stock and bond investors find the current market prices unattractive. Additionally, the US Treasury department has been required since 1Q21 to draw down its cash balance, so there are fewer short



Robert Lloyd, CFA
- Jun 25, 2021
The food is terrible and the portions are small (Part 2)
The housing market continues to weaken. But why? If the Fed is buying tons of mortgages, how could things slow down? Simple: interest rates and housing prices. Higher rates + higher prices = fewer qualified borrowers. Where have we seen this before? The second chart shows plunging homebuyer confidence and this is reflected in the existing home sales data. One of the side effects of very high inflation is consumption falls as people can’t afford to pay the market price. I can


Robert Lloyd, CFA
- Jun 24, 2021
Inflation Slide Deck
Robert Lloyd, CFA® Chief Investment Officer Lloyds Intrepid Wealth Management Lloyds Intrepid LLC is doing business as Lloyds Intrepid Wealth Management. Lloyds Intrepid LLC offers investment advisory services in the State of Texas where registered and in other jurisdictions where exempted. Registration does not imply a certain level of skill or training. Lloyds Intrepid LLC and its advisers do not provide legal, tax or accounting advice. Lloyds Intrepid LLC formulates retire



Robert Lloyd, CFA
- Jun 24, 2021
Video presentation on inflation
Robert Lloyd, CFA® Chief Investment Officer Lloyds Intrepid Wealth Management Lloyds Intrepid LLC is doing business as Lloyds Intrepid Wealth Management. Lloyds Intrepid LLC offers investment advisory services in the State of Texas where registered and in other jurisdictions where exempted. Registration does not imply a certain level of skill or training. Lloyds Intrepid LLC and its advisers do not provide legal, tax or accounting advice. Lloyds Intrepid LLC formulates retire


Robert Lloyd, CFA
- Jun 22, 2021
Too Fed, Too Furious
Last week the Fed hinted at a significant change in policy. This week, 13 Fed speakers tell us what they really think...Whether we like it or not, Fed policy drives the markets. CNBC has a good discussion on the topic that I won’t rehash and a list of all the speakers right here https://www.cnbc.com/2021/06/18/the-fed-will-continue-to-dominate-the-market-in-the-week-ahead-after-sell-off.html. The Fed is caught in a bind. On the one hand, high inflation readings are clearly th



Robert Lloyd, CFA
- Jun 18, 2021
Just a HINT of policy change from the FED...
On Wednesday, we received a note and press conference from the Fed where they commented on higher than expected inflation and how they would react. Bonds, currencies and commodities reacted immediately; stocks sold off today when one of the Fed committee members (Bullard) said, yes, tapering of QE was discussed. The markets are moving as if the Fed is about to embark on a tightening cycle just as stimulus payments roll off. My own view is that the Fed may be forced to start t



Robert Lloyd, CFA
- Jun 14, 2021
Will They Or Won't They?
What is the Fed thinking? Will they or won't they? On the one hand, we have the highest core inflation readings in decades. On the other hand, commodities like lumber have clearly broken as the supply chain gets sorted out. Will the Fed tighten policy? Inquiring minds want to know. What do you think? My own view is that the Fed is looking firmly behind, so they will weigh the core inflation reading heavier than the lumber futures data. If that triggers a Fed tightening cycle,



Robert Lloyd, CFA
- Jun 13, 2021
The Fed Is Sucking Up Liquidity!
Many of you know that the Federal Reserve has a policy called quantitative easing (QE) where they buy bonds and give cash to the banking system. They are currently buying $120 billion/month to support the financial system. But, did you know they also take cash (liquidity) OUT of the market also? They have a tool called the "repo window" that allows banks and money market funds to park unwanted cash to the Fed overnight. Recently, overnight repo has exceeded $500 billion. Wha



Robert Lloyd, CFA
- Jun 11, 2021
Is the Recovery Toast?
If bank lending doesn't pick up soon, the recovery is toast... With the yield curve flatter than the last 3 recoveries, bank incentives to lend are lower than we saw in the 1993, 2002 and 2009 recoveries. The real question is where will bank lending growth bottom? What do you think? My own view is that there is SOME incentive to lend, but not much from a yield curve perspective. What I find most interesting about this analysis is how ordinary this lending cycle is from a Fed