Central Markets by Robert Lloyd, CFA

The information contained herein has been obtained from sources believed to be reliable, but the accuracy of the  information cannot be guaranteed. All opinions and outlooks are subject to change.

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Let Them Eat Cake


Upset about the price of your food, rent and health care? Too bad.


This of course is the attitude of our fearless leaders at the Fed and the politicians in Washington. The last time core inflation was this high, the US 10yr yield was ~8% and short term interest rates were 5.5% (see attached chart). The policy of allowing inflation to run hot is called "Financial Repression" by many market analysts. Believe it or not, it wasn't until the pandemic unleashed massive stimulus spending that headline inflation actually responded.


Today's speech by Fed Chairman Powell focused on the weak state of unemployment, implying that Fed stimulus (ie Financial Repression) will continue for now. Inflation will be allowed to run hot to achieve "policy" goals and the Fed mandate to maintain stable prices (low inflation) will be ignored.


This is of course good news for the wealthy who invest in stocks and bonds. However, eventually the party will end when the Fed raises interest rates, but for now the music is blaring. Markets will love this speech.


For those living on a budget, the message from the Fed is this: TOUGH. The beatings will continue until moral improves.


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 retirement plans, investment strategies, portfolio construction and investment due diligence for clients with signed investment advisory agreements with us. The information contained herein has been obtained from sources believed to be reliable, but the accuracy of the information cannot be guaranteed. All opinions and outlooks are subject to change.


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