Implications from a very important FOMC meeting. How I adjusted my asset allocation, including Gold, Gold Miners, FTSE 100, Nasdaq, Dow Jones and Tesla
Well said. Highly agree. Surprised that you chose tesla over something like btc to express your views on debasement. Would love to know more on this if you would care to comment.
While I completely agree that Powell had the chance to snuff out the budding bubble, I disagree with the characterization of it being ultra-dovish. There’s another meeting in May, and if March CPI/PCE come in too hot Powell and Company will likely tamp things down. Cleveland Fed Inflation Nowcast is showing March coming in much more subdued so far, though. Maybe they’re on to something? He also said over and over that three cuts are caveated with the data playing nice.
They’re trying to thread the needle with the coveted “soft-landing”. At the March meeting that meant not showing panic about the Jan/Feb inflation pick-up, even though they clearly are based on their dot dispersion getting tighter, and showing a group of people ready to reduce their rate cut forecasts. That dot plot screams itchy trigger finger, just waiting for the sign. Powell made a choice. Why spook the market today when it’s too soon to be sure that things aren’t going your way?
Right or wrong, your thinking is sound and clear…always expect a positive skew in an election year, although I’m not sure whether Biden or Powell is the biggest puppet!
Perhaps JPOW takes his orders from the deep state, who want the economy & stockmarket juicy going into the election to benefit the elderly man who reads the teleprompter.
Well reasoned and I agree with the thesis, although perhaps not with all the portfolio picks, but that's what makes markets. I guess the real trick will be to see if inflation picks up relatively quickly or not, because given the recent trend, we could see higher prints the next two months and that will really leave them in a bad place.
personally, I have been long "stuff" for quite a while and remain comfortable
I am fully on board with your position on gold. Gold stocks remain a quandary. For the past several months gold has outperformed the stocks, I think, because the primary buyers have been central banks. Unlike private sector buyers, they don’t pair the two. The slide in gold ETP holdings suggests private sector is selling gold to the central banks. But I agree that Powell was quite dovish in his presser and if that spurs private sector gold buying gold equities should do better.
On a different topic what do you make of the lack of dissents in the voting? The St Louis Fed has a history of FOMC voting and Powell’s record on consensus is far and away the best ever. We were one dot away from removing a cut this year and the press conference didn’t reflect that at all. I don’t know what had changed with regards to voting but it looks like something has
why is shorting 30yr (or TLT) a hedge? the long leg is all about the reflation/no-landing hypothesis and if that doesn't work out then either we have a recession or a runaway hyperinflation. the latter doesn't need a hedge - your long would fly. In the recession case however, your TLT short won't help
Well said. Highly agree. Surprised that you chose tesla over something like btc to express your views on debasement. Would love to know more on this if you would care to comment.
Thank you, very well written and well thought-out. Wishing your a great Post-FOMC day!
While I completely agree that Powell had the chance to snuff out the budding bubble, I disagree with the characterization of it being ultra-dovish. There’s another meeting in May, and if March CPI/PCE come in too hot Powell and Company will likely tamp things down. Cleveland Fed Inflation Nowcast is showing March coming in much more subdued so far, though. Maybe they’re on to something? He also said over and over that three cuts are caveated with the data playing nice.
They’re trying to thread the needle with the coveted “soft-landing”. At the March meeting that meant not showing panic about the Jan/Feb inflation pick-up, even though they clearly are based on their dot dispersion getting tighter, and showing a group of people ready to reduce their rate cut forecasts. That dot plot screams itchy trigger finger, just waiting for the sign. Powell made a choice. Why spook the market today when it’s too soon to be sure that things aren’t going your way?
Right or wrong, your thinking is sound and clear…always expect a positive skew in an election year, although I’m not sure whether Biden or Powell is the biggest puppet!
Perhaps JPOW takes his orders from the deep state, who want the economy & stockmarket juicy going into the election to benefit the elderly man who reads the teleprompter.
Great points. So you think the Russell will stay flat or go down since funds will fly to the qqq?
Well reasoned and I agree with the thesis, although perhaps not with all the portfolio picks, but that's what makes markets. I guess the real trick will be to see if inflation picks up relatively quickly or not, because given the recent trend, we could see higher prints the next two months and that will really leave them in a bad place.
personally, I have been long "stuff" for quite a while and remain comfortable
I am fully on board with your position on gold. Gold stocks remain a quandary. For the past several months gold has outperformed the stocks, I think, because the primary buyers have been central banks. Unlike private sector buyers, they don’t pair the two. The slide in gold ETP holdings suggests private sector is selling gold to the central banks. But I agree that Powell was quite dovish in his presser and if that spurs private sector gold buying gold equities should do better.
On a different topic what do you make of the lack of dissents in the voting? The St Louis Fed has a history of FOMC voting and Powell’s record on consensus is far and away the best ever. We were one dot away from removing a cut this year and the press conference didn’t reflect that at all. I don’t know what had changed with regards to voting but it looks like something has
It was really easy to understand! Thank you very much for providing such wonderful articles for free!
I didn't have a position because, me too didn't expect JP to become dovish, but I bought a gold ETF today.
Always insightful and interesting, thanks Florian
When the facts change, I change my mind .... this is great, and thank you for sharing!
why is shorting 30yr (or TLT) a hedge? the long leg is all about the reflation/no-landing hypothesis and if that doesn't work out then either we have a recession or a runaway hyperinflation. the latter doesn't need a hedge - your long would fly. In the recession case however, your TLT short won't help
Great take, thank you Florian!