Mastering the Fed

TheMancusoWatch Teaser (25)

What may be the best non-holiday week of the year, The Masters has officially kicked off in Augusta, albeit in a weather related start and stop fashion.  For those who haven’t been, what an amazing experience it is.  The majesty, the tradition.  The place where time stands still.  Where sandwiches and adult beverages can be had for what seems like 1955 prices.  More importantly, where you are still expected to say thank you and you’re welcome, although as a patron it’s almost exclusively THANK YOU.  

Just in time for the Par 3 contest to kick off today, the Fed minutes were just released and we’ve decidedly moved lower (higher yields).  Not in a big way, but given our recent trend to lower rates you get this sense that we hit a road block on the road to 2.0.  Here’s my take:  Near term, I don’t don’t love the implication.  We’re talking about balance sheets and reinvestments and these have been hot topics of late.  The Fed has been a huge buyer and that pretty heavy lifting has to be picked up by someone.  Pun intended.   If I push out a bit further however, I can find some things I like about these minutes. Firstly, the consensus was that fiscal stimulus wouldn’t hit until next year.  That doesn’t mean soon and could even mean not at all.  We also know about how well the Fed seems to predict these things.   ; )  

Perhaps more importantly there was a re-affirmation that hikes would be gradual, predictable and well telegraphed.  We’ve liked this in the past.   What do these two positives coupled with a balance sheet move versus a rate hike move tell me? #lower4longer  

We like that too.

So what does this mean?  The bottom line is we are at the lower end of our range.  If we clear Friday without any major events that would push rates lower, I’d expect the range to remain intact for a few weeks.  If you are a follower, you know what to do.  If not, subscribe AND read previous posts!!!  Watch out for a smattering of market movers in the interim, but bigger picture is Q1 GDP and PS, N-man ISM missed pretty good this morning.  In the end, if we were hoping to have real direction after getting through everything we needed to get through this week save NFP, the answer is sorry not sorry. Fore Left and we’ll wait on Friday.

#homeontherange #lower4longer #fore #tradition 

If I can get off topic a second.  My son’s HS baseball team is raising money for Pediatric Cancer.  I’d never use this forum to hawk fund raisers for the kids, but this is a different story and is a tremendous cause.  To be clear, my son has already hit his goal.  He did that on day one by donating his own money, so againI’m not reaching out for any personal gain.  It’s never the right time for someone to fall ill, but for a child, well I just couldn’t imagine it.  Please do what you can and while I’d say that myself or my son appreciate it, in reality, the families we are helping are the ones that really do.  

Here’s the link:

https://donate.go4thegoal.org/fundraiser/947640

Thank you

-Philip Mancuso

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