27 Feb 2023

Considering Inflation Protected Bonds (Again)

In the first quarter issue of Portfolio Insights in 2017, I wrote that Acropolis was phasing out our exposure to inflation-protected bonds, also known as TIPs (for Treasury Inflation-Protected Securities). At the time, inflation was low and stable, and although I whole heartedly supported removing TIPs, I wondered what would happen when we were hit with surprise inflation, which is when TIPs work best. Well, it took five years for… Read More

6 Feb 2023

Acropolis Clients Market View

Since January, I’ve offered previews for the Investor Social, which we held last week to great success. Mother nature threw us a little snow, but we still managed to pack the house and will need to find a larger venue next year, and put it online. In the meantime, we’ll provide the presentation to anyone that asks. The highlight of the show for me is when we ask the audience… Read More

5 Dec 2022

The Risk of Stagflation

Way back in March, I wrote about stagflation, an economic state with high inflation, unemployment, and slow economic growth. I grade my own articles on a curve, and I give that one a C because I didn’t talk much about stagflation, instead writing about the related Misery Index. Two or three weeks ago, I saw a thematic ETF launched that is designed to benefit from periods of stagflation which got… Read More

14 Nov 2022

Good News for Stocks & Bonds (Less so, for Crypto)

Stocks were sharply higher last week, more than erasing the prior week’s declines. Although Wednesday suffered a tough selloff of more than two percent, Thursday’s 5.6 percent rally and Friday’s 0.9 percent move higher took the S&P 500 Total Return for the week to 5.9 percent. The big move is easily attributed to the better-than-expected Consumer Price Inflation (CPI) index, which was finally a step in the right direction (more… Read More

31 Oct 2022

When Recessions End

I’ve written about recessions a half dozen times this year, probably because it’s obvious to everyone that the risk of a recession is very high. A recession is not certain, and a handful of economists think we can avoid it (including the Federal Reserve staff economists, apparently), but I think common sense dictates that a recession is likely. Last week, the yield on the 10-year note was less than the… Read More

3 Oct 2022

Returns: Before, During and After Recessions

My article from last week,¬†which you can read here, prompted a few people to ask derivations of, “Why don’t we sell our stocks – or at least reduce them – until the recession is over and sidestep some losses?” It’s an understandable question, but it makes me uncomfortable because I have some powerful memories of the 2008 global financial crisis when clients who bailed out of the market still felt… Read More

26 Sep 2022

Fed Indirectly Signals Recession

When the Federal Reserve raised interest rates last week, they also published their Summary of Economic Projections, which you can find here. You won’t find the word ‘recession’ in the document, but there is a pretty strong signal that the Fed thinks a recession is on the horizon in 2022. The second page includes a nice table that shows what the Federal Reserve Board members and presidents estimate for economic… Read More

19 Sep 2022

Core Inflation Knocks Market

Stocks sold off sharply this week, as noted above, mostly because markets had anticipated good news on the inflation front and didn’t get it. When I first saw the release, I thought it looked pretty good because the headline rate of inflation was only a tenth of one percent for the month, which brought the rolling one-year rate down to 7.8 percent.¬† While 7.8 percent is still far too high,… Read More

29 Aug 2022

The Word From Jackson Hole

In the 1970s, the Federal Reserve Board of Kansas City put on a series of three-day symposiums and invited economists, central bankers, and journalists to the Great American West to discuss the day’s topics. Former Fed Chair Paul Volker, who famously broke the back of inflation, liked to fly fish, so he steered the conference to Jackson Hole, Wyoming, in 1981, where it’s stayed ever since. The event became a… Read More

15 Aug 2022

Fed Tightening and Stocks

While inflation may or may not have peaked, Federal Reserve officials are still talking about raising interest rates. Several Fed officials called for rate hikes through 2023, and St. Louis Fed President said that the overnight rate should be four percent by the end of this calendar year (it’s currently between 2.25 and 2.50 percent). Although the Fed is already raising rates, a process also known as tightening, I wondered… Read More