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 the highest in decades. While the readings may be temporary, they are politically damaging. President Biden does not want to be remembered like President Jimmy Carter who was unlucky enough to be president during an inflation that crushed the lower and middle class. Additionally, the Fed has two mandates and if employment is good and inflation is hot, the inflation mandate kicks in and they tighten policy. Higher rates and less QE will not be supportive for markets. Here are some charts of markets where the “froth” has come off. They aren’t pretty.
Robert Lloyd, CFA®
Chief Investment Officer
Lloyds Intrepid Wealth Management
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