Is the 'Don't Fight the Fed' Strategy Dead? Ed Yardeni Weighs In

[@joannemeeks745]

As always, a timely and informative show.

[@apothe6]

Ed Yardeni is fantastic, always watch his morning briefings.

[@carstars]

That explained why we had that short window of 5% to 6% one-year CD rates then they disappeared. Bank Term Funding Program! What is going to keep savers from continuing to move savings to bonds and MMF? Likely nothing. And the inflation is still making returns negative...

[@tsabo8227]

Some of these bank failures could be a blessing in disguise. Possibly no more rate hikes, but inflation may be with us. For awhile. double-edged sword, but maybe no crashing of the economy

[@George-jm4rn]

Based on our experience, Mr. Yardeni is underestimating inflation. Our city and school district RE taxes just went up by more than 25%. My barber increased his fee by 20%. Construction costs continue to escalate. Restaurant items continue to climb. Coke/Pepsi/Etc. just increased prices by high single or double digits. Ed also seems to be ignoring core PCE inflation data. I fear the inflation genie has been left out of the bottle.

[@lorenzmuller3542]

Wages are rising too!

[@rof8200]

The world is dedollarizing. It's not a zero chance event.

[@HappyDog6]

Consuela, you had to ask your last question twice to get him to answer it. I wish your guests would be more direct in stating their advice. Also that you would require them to answer the question: “So, what’s in your personal portfolio“? (Yes, I understand that peoples situations are different. Even so…)

[@brianwray4320]

I hope Mr. Yardeni is right!

[@robertjordan7922]

As the Fed takes money out of the economy, the opposite of quantitative easing, banks aren't awash in money to lend. How much stress will this put on banks? How much will it put on all but the strongest businesses that can't access loans? Even though there is a shortage of houses for sale, banks lending criteria has tightened. I fear the standoff over the debt ceiling might not have a happy ending in June. Cash might be better until that passes.

[@gordonsteen8415]

Please have a guess to talk about commercial real estate.

[@victorsaumarez3714]

It feels like the Fed is the economy. How many times does the word 'Fed' get used in any conversation about the economy and investing? If you aren't going to fight the Fed when it lowers rates, the corollary must be do the opposite when it raises rates. It low rates are good for asset prices, they are bad when rates rise, all things being equal. So, that could be taken to mean, disinvest, ie hold cash.

[@michaelswami]

Or just ignore the Fed and always be buying.

[@tastypymp1287]

Why must it be the opposite?

[@victorsaumarez3714]

@@tastypymp1287 Hypothetically, simply by following the inverse relationship between interest rates and prices. It's not a given, but there's some logic to it.

[@tastypymp1287]

@Victor Saumarez Can you expand on that please? I'm not convinced of this inverse relationship.

[@victorsaumarez3714]

@@tastypymp1287 Bond prices have an inverse relationship to interest rates, which is easier to explain. When rates go up investors will shun bonds that pay a lower rate, so its price has to reduce to attract investors. Mathematically, you'd only have to invest half the amount to get the same income if rates doubled. With homes, the relationship is less clear cut, but higher mortgages makes homes more expensive, so the price has to adjust to make them affordable again. A share's price is said to be its present value discounted by future cash flows. However, if you look at how the stock market reacts to monetary policy it's a behavioral thing. The rising cost of debt due to higher rates impacts earnings, which impacts investor appetite so they sell and prices fall. Markets have become increasingly sensitive to interest rates, because rates have been so low for so long. They have quite literally become addicted to them. We are in the throes of a multi-asset bubble bursting. It is difficult to imagine many scenarios, where rates are rising quickly and high asset valuations remain lofty.

[@vb4567]

Five point two TRILLion, presently invested in money market funds has got to go somewhere when the starting gate opens.

[@tastypymp1287]

Plenty of places to go.

[@vincentmurphy9252]

Fed has NOT DONE ENOUGH do not be surprised not to see 8 print on interest rates

[@michaelswami]

Excellent conversation. Consuelo, any way to have him on every day?

[@veronica2764]

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