Resumo do Relatório

Friday Musings: Higher US Rates are a Good Thing

12/02/2021
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Cripto Investimentos Estados Unidos Estratégia Global Fundos Multimercado Geopolitica Macro Internacional

Todays Musings are taken directly from my notes for this morning’s BTV Surveillance show.

There has been a lot of concern about rising US inflation & interest rates. Given the Fed’s liquidity support, the stimulus already in the system, the improving vaccination scene and the anticipated passage of the Biden Rescue Plan  those concerns make sense. Inflation is all but certain to rise in the coming months given the negative inflation prints from last Spring when Covid shut down the economy. Higher rates are likely as well.

I am here to tell you this is good news – not bad. The inflation spike is likely to be transitory and the Fed has already said multiple times it will look thru it – so should we. In addition rising rates suggest an economy on the mend as vaccinations allow for reopening and the return of consumer confidence & a rising cost of money. Consider the alternative scenario: would we really prefer vaccination failure, a recession, deflation and negative yielding UST? Definitely not.

Here is the recipe for investment success over the coming months: ignore the inflation chatter & dont worry about rising rates. As long as rates rise gradually toward my 1.75-2.0% YE target on the 10 yr, equity (other than Big Tech) should be fine. The huge short position in 10 yr UST futures also supports a gradual move higher rather than a spike.

Focus on thematics including Bitcoin where both the largest passive manager, Blackrock, and one of the largest US custodian banks, BNY – Mellon, have stated they will use crypto… its no longer a should I question, its a how much should I have in my portfolio question.

All this and more is covered in the fun Macrohive podcast link… TGIF!

Jay Pelosky

Jay Pelosky
Estrategista Global - TPW Advisory
Nova York, EUA

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