Today the man who helps to oversee $170 billion told King World News that investors need to prepare for turbulence in global markets.
November 12 (King World News) – Rob Arnott, Chairman of Research Affiliates: “Powell’s presser the other day was shocking in some ways. He was asked by the Wall Street Journal whether he worried about the economy doing too well to cut rates, and whether he worried about long bond yields going up with each rate cut? And he dismissed the latter. He didn’t use the word ‘transitory,’ but for all intents and purposes he said that run up was a blip and it can reverse. That’s what he said about inflation in March of 2021. He said, ‘It’s transitory.’ He retired that term eight months later in November of 2021. Inflation was already running 6% and rising fast. And at that time the Fed funds rate was still .25%. That’s all. So he was already 6% behind the curve.
Eight months after that inflation crested at just over 9%. What do you think the Fed funds rate was in July of 2022 when we had 9% inflation? It was 1.25%. It was now 8% behind the curve. And here we are now with inflation having moderated but we’re not out of the woods yet. The overspending is still stupendous — at enormous scale — and you have the Fed cutting when the economy is [supposedly] doing extremely well. You don’t stimulate a strong economy. So he stuck with zero interest rates long after the economy was doing fine. And then finally started raising rates fast when inflation was already 7 or 8%. And then when inflation recedes, he’s cutting rates…to continue listening to Rob Arnott discuss how investors around the world can prepare themselves for the turbulence in global markets that lies ahead CLICK HERE OR ON THE IMAGE BELOW.
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