May 2, 2022
This week Phil laments the portfolio woes of a traditional balanced account. A standard 60% equity / 40% fixed income portfolio has seen significant drawdowns in both stocks and bonds so far this year, leaving investors feeling like there is nowhere to hide. Add to that persistent, rampant inflation and a “double-barrel” shock to interest rates this week – with an expected 50bp hike and the beginning of Quantitative Tightening (QT), and markets start to look scary. By digging a bit deeper, Phil manages to highlight some important positive signs that may be getting overlooked. Continued strength of consumer spending may support healthier US GDP growth than initial readings suggest, and solid corporate and consumer balance sheets as well as an exceptionally tight labor market also bode well for economic fundamentals. Listen in to hear why the 10-year U.S. Treasury yield closing in on 3% for the first time in a long time shouldn’t scare investors, but rather harken a return to normal, and even invite a buying opportunity later this year.