Japan recently let their currency collapse. You don't hear much about it, but this policy is deliberate because in creates inflation for the local economy and lowers the cost of their exports to other countries. It turns out the Japanese aren't alone in devaluating their currency. In the following chart I compare the US Dollar to the currencies of our major trading partners excluding China. All have done a remarkable job of devaluing vis-a-vis the dollar, creating a competiti

Shorter duration bonds have held value as almost all other bonds have declined. Why can't your mutual fund prevent losses in a rising rate environment? They are WAY too big to hedge or rotate their portfolios. Sorry, that's the business model. We've been overweight short duration bonds for months and while it didn't feel good before, it sure feels good now! Robert Lloyd, CFA® Chief Investment Officer Lloyds Intrepid Wealth Management Lloyds Intrepid LLC is doing business as L

Well, yeah. Thanks for stating the obvious, Rob. The point is that bonds are getting pounded for a very specific reason: inflation has remained persistently high and the Fed is dragging its feet about fixing it. While the current bout of inflation is complicated because of Covid, don't forget the Federal Reserve has been trying to increase inflation since 2009. They are a major factor in today's high inflation and refuse to move aggressively to rectify it. But why are stocks

1. Strong energy prices that hurt consumer spending power 2. Financial defaults that jeopardize the financial system 3. Falling markets as investors de-risk portfolios Some Russian bonds are getting marketed down to zero at the broker-dealers and Russian equities are not trading publicly anywhere that I can see. Additionally, these well-meaning Russian sanctions are hurting the West as well as the East; someone is going to get caught holding the bag when debts default and tra

I'm starting to see Wall Street writing about nuclear war...I guess we are going to pretend lower Manhattan isn't on the list of targets. Here are two excellent articles on the topic: https://www.theatlantic.com/ideas/archive/2022/02/how-ukraine-could-become-nuclear-crisis/622915/ https://thefederalist.com/2022/03/04/nato-involvement-in-ukraine-could-spark-nuclear-genocide-heres-how-it-could-happen/ Robert Lloyd, CFA® Chief Investment Officer Lloyds Intrepid Wealth Management

Here is our monthly research note: https://conta.cc/35E3Yd1 Since I wrote this on Sunday, the Russians responded to economic sanctions by refusing to pay their external debts. This is a form of default, so watch the European banks closely. This may trigger a European bank crisis. Here is a recent article discussing the default: Here is an article discussing the default: https://finance.yahoo.com/news/analysis-ukraine-war-raises-spectre-141908711.html Robert Lloyd, CFA® Chief

The bond market remains skeptical that the current 7% inflation will be sustainable for a long period of time. After all, even in this environment, the US 10-year bond can barely get above 2%. However, we have to remember that there are non-economic players suppressing bond yields (central banks, foreign governments, and regulators). But maybe, just maybe, that inflation will be sustainable. What might the Fed to reduce it? How high will they raise rates? How much quantitativ

The Russian activity in Ukraine will push up oil prices and this will drive up the inflation impulse throughout the world. The analysts calling for Fed stimulus to offset this problem are likely going to be disappointed. Will the Fed cut rates from here? No. Will they do more QE? No. They are still doing the last little bit of pandemic QE right now! There are many, many similarities to the early 1970s. As a reminder, I've attached a history of interest rates and inflation 196

If the WSJ is printing this the narrative on inflation, QE and Fed Funds rate policy is broadly changing. This has profound implications for market behavior going forward. Jerome Powell Is Wrong. Printing Money Causes Inflation. - WSJ https://www.wsj.com/articles/powell-printing-money-supply-m2-raises-prices-level-inflation-demand-prediction-wage-stagnation-stagflation-federal-reserve-monetary-policy-11645630424?mod=opinion_lead_pos6 Robert Lloyd, CFA® Chief Investment Office