The one thing we are all blessed with is curiosity. Most people don’t excersize their curiosity for may reasons. But when you do, you start to formulate ideas.
I’ve been reading a book call The Lords of Easy Money. It’s about the Federal Reserve and it’s history over the last 60 years and the policies that have gotten us to where we are today.
My curiosity has brought me to theses ideas. We have two forces in motion within the economic system, Federal Reserve Monetary Policy and consumer, industrial economy. With the Federal Reserve on a mission to squash inflation, the raising of the Fed Funds rates is slowly making progress. Yet it’s effects after each increase are just filtering in to the economy since their start in March of 2022. Unfortunately the Federal Reserve has a history of over doing their efforts. I expect an additional .25 to .50bps from the Fed before they pause or pivot. Unfortunately the last move from the Fed won’t show up in our economic system for 6 to 9 months.
Over the last month we have seen economic numbers from industry production, unemployment, job creation, consumer price index and now will begin to see earnings reports from corporations on their first quarter of 2023 achievements or disappointments. Expectations are more disappointing news, but the question will be how disappointing? I expect this will be the beginning of CEO’s guiding 2nd quarter expectations lower and markets reacting accordingly. The bond market is already showing signs that we will be in an official recessions in the coming quarters ahead.
So what do you do?
Like a river or large body of water, money will go somewhere. Presently we are seeing a move from savings account to money market accounts. From short duration bonds to long duration bonds. As I’ve pointed out in a recent video on Best of US Investors YouTube channel, the bond market has front run the equity markets before every recession or pandemic. Today is know different.
For those of you who subscribe, you see how I’m allocated to best preserve capital but also take advantage of the flow of money. In the coming weeks I will most likely be allocating more money towards the position I presently have but also adding new positions as both the Fed and the corporate world play out.
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