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  • Notes by YBB

    Rates were maintained - fed funds 5.25-5.50%, bank reserve rate 5.4%, discount rate 5.5%. Rates have peaked, but cuts may only be later in 2024.

    QT continues at -$60 billion/mo for Treasuries, -$35 billion/mo for MBS; total QT -$95 billion/mo. Cumulative QT so far is -$1.3 trillion. The pace of QT may be lowered in the near future.

    Inflation is lower but is still too high vs +2% average target; inflation-expectations are lower. Monetary policy is restrictive as the fed fund rate > inflation-expectations. There was a lot of discussion on whether the Fed has enough confidence on the good progress made so far on inflation, economy and labor, but Powell won't commit to any timetables.

    Economy is strong. Labor market is tight. Both are normalizing.

    Housing is weak, being very rate sensitive. Lower equivalent-rents will show in the inflation data. But housing isn't Fed's direct concern; its focus is on inflation and jobs.

    Fed meeting with local businesses are useful for information not yet in the data.
  • edited February 2
    Powell will be interviewed on CBS 60 Minutes Sunday.

    Bonds are getting roughed up a bit this morning as a result of the release of data showing an unexpected sharp jump in hourly wages. Number of job openings also rose, defying expectations. (Good news = bad news for bonds.) The 10-year Treasury was around 3.7% in early morning and has now spiked to around / over 4%.

    As a side note, the metals have also turned very negative with the miners GDX down about 4% this morning. Gold’s price is holding up better than the miners however.
  • Thank you for the updates. The economy is a lot stronger than expected. Agree that rate cut will likely be later this year.

    Just about all bonds were down today after a nice run up this week. Bought more PIMIX.

    Dollar went up too as oversea market fell accordingly. Pick up more ARTKX.
  • Crazy day on Wall Street on Friday. Bonds got absolutely destroyed, but stocks did well. FCNTX went up nearly 4% in one day! Overall, all of my accounts rose in value, even with huge drops in bond funds. I may go ahead and start redeploying money from short term accounts to my intermediate bond funds because it’s hard for me to believe they will keep losing value forever. It’s hard to identify the bottom of any market but I’m inclined to believe we’re nearing that point with bonds.
  • edited February 2
    There was a lot of hype today on mainstream news about the market’s “9th record close of the year”. and that the S&P is nearing 5,000. I agree with the above poster that this all seems rather discombobulated with bonds tanking the way they did.

    I follow 3 “tracking funds” daily which I think combined represent a diversified conservative portfolio. I include ABRZX in the mix because it carries significant exposure to metals & commodities - something most conservative allocation funds avoid.

    Anyway - after all the hype today, here’s how my 3 tracking funds ended the day. Note that all 3 finished in the red.

    ABRZX (Invesco) - 0.70%
    AOK (Blackrock) - 0.39%
    PRSIX (T Rowe Price) - 0.05%

    On average, the combined loss was - 0.38%

    But ya gotta love the action so far this year. Reminds me a bit of the late 90s - a period when the stock markets began to make the network evening newscasts. Reason for all the attention - because they kept going up! (And technology in particular was unstoppable).
  • FCNTX Top holding META 12.52% of the AUM. META was up +20.32% today; it also started paying 0.50% dividend.
  • FCNTX has risen 10.4% year to date. Crazy. I would be worried about that sort of rise with some funds but it’s always done a good job managing risk.
  • edited February 5
    Seems like a slight “tug-of-war” being played out on the airways between Powell, who appeared on 60-Minutes Sunday and Fed member Austin Goolsbee who appeared on Bloomberg this morning. The difference in language is slight. But Powell seems to be saying “Not so fast” to rate cuts next month while Goolsby sounds more undecided or, perhaps, even in favor of the earlier cuts.

    In both his official FOMC press conference and the 60-Minutes interview Powell noted some lack of agreement at the last meeting, framing it as a healthy positive rather than an impediment to their work.
  • edited February 5
    Keep in mind who is voting at the FOMC in 2024. For Cleveland-Chicago representation, it's Loretta Mester in 2024; Austan Goolsbee will be back to voting in 2024.

    While all attend the FOMC meetings and participate in discussions, I have observed that voting members are more careful in their public pronouncements, while nonvoting members can be freer in their public comments.
  • Thanks @yogibearbull. Interesting. I’d assumed Goolsbee was currently a voting member. Apparently not at this time.
  • beebee
    edited February 20
    Here’s an “interesting” take an interest rates and credit worthiness:
    The simple truth is that with or without a personal fortune which is said to exceed $1 billion, Swift is credit personified. Getting more specific, her greatest source of collateral wouldn’t be physical possessions, but the future value of the immense talent that she would bring into any financial institution. It’s just a reminder that credit or interest rates can’t be decreed, rather credit is what we bring to financiers.
    Should we think of the US economy in the same manner?

  • edited February 20
    For true life story, search for Tina Turner who walked away from a bad situation "...with only 36 cents and a Mobil gas card and later hid at the Ramada Inn across the freeway."
    Talent eventually finds a way.
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