Consider the role of the strategist in modern-day portfolio management. Her primary goal is to figure out if the Federal Reserve is going to stop raising interest rates. She has to try to figure out why the longer end of the yield curve is predicting a recession. Given what the yield is saying — that we have to have a recession — can the Fed avoid a downturn given its limited tools and the inability to slow what seems to be a runaway economy? No matter what the Fed seems to do, it's become a game of whack-a-mole — whether it be wages, home prices, creeping commodities, or Fed subsidies that are about to roar in. The combination of incipient re-inflation led by a housing market that goes up in price, not down, as mortgage rates go higher, seems as strong as the possibility for deflation. The idea that the Fed is driving the price of a house to further unaffordability has taken hold. It's a nightmare. The economy is too strong to be on the verge of a recession. But the Fed knows that, too, so there's no reason for it to relent. The truly intractable part of the moment? The yield curve can't be wrong, so it remains a matter of time before Fed Chair Jerome Powell crashes the plane — and let's not forget that lurking, lurking election. |
إرسال تعليق