FED, Investment Analyst, Financial Engines Research Center discussed on Financial Engines Investing Sense
A charter holder in senior investment analyst in the Financial Engines research center, and as usual Bilas brought along a lot of charts that contain the ideas and data that really will help you visualize. What he's about ready to talk about. Now, you'll find those at investingsensEcom Bill. It's great to have you back on the show with us. Yeah. So far here today, we've been talking about a couple of risks the trade wars and interest rates in we'd like to get to both of those here in just a second. But wow, what a week. It's been. It's been a week. Right. So actually if you look at the news flow on trade this week in the markets. I mean, we're not really seeing much of an impact on on Wall Street. And I am I reading that right now. Yeah. Always got a kind of expect the unexpected when it comes to markets right back in April may whenever we'd get that in the next round of news on those US, China tariffs kind of see some some selling. But this week get an announcement for those proposed tariffs on another two hundred billion and imports. And just the fact that it's a ten percent tariff. Instead of a twenty five percent tariff has helped push the Dow S P five hundred back to all time highs. So that's Wall Street on main street. You know from your research perspective in the team's perspective. What impact is it actually having on businesses on the ground and on kind of main streets across the country. Look at things like that leading economic indicators index. We've talked about before not really seeing an impact there, certainly not seeing the impact on small business sentiment has the chart posted over on investing sense shows, you know, what's at a new peak for small business sentiment other areas like jobless claims, definitely no sign there right now that it's bleeding over kind of a c- jobless claims keep coming in at a multi decade lows overall really so far it seems that the impact of the tariffs kinda remains a small relative to the pro growth fiscal policy in place right now with this tax cuts increase spending. You know, kind of in one area. We are looking at is that we saw bond yields backup this week with the ten year back over three percent. So seeing some worry, you know, that that fiscal policy and its impact on flation inflation down the road, you know, in the trade dispute, which might add a few tenths of a percent to inflation could be having some impact on the bond markets. We did some good data from cornerstone macro this week looking at that increase in the ten year yield and showing that half of the yield injuries. This week was due to increased inflation expectations. So that's an area where there might be some spillover effect from those trade disputes that could be a risk to portfolios that some might overlook Bill. Let's talk a little bit about inflation. Because when you talk about inflation, you talk about one of the key issues. The fed is looking at when making the decision to hike rates. So what do you think that we'll see from the fed the rest of the year right now, we've got the fed funds futures fully priced in another hike at that meeting next week. So, you know, a lot of attention is going to be paid to the dot plot. We want to see what the path of rates in the future will be life since we are. You know, it's already kind of a foregone conclusion that next week. We get another increase. So on that note, another move in December as we show in the second chart we posted over on investingsense dot com is also largely priced and so the probability of that December move over eighty percent right now. So one risk. We're looking at is any sort of surprise out of the fed next year, not not very likely, but you know, if got a hike at a meeting where markets really expecting it or or maybe a fifty basis point hike instead of the usual twenty-five that could could increase uncertainty about the future moves and impact yolks. All right. So you talk and uncertainty. We've we've hit trade wars. We've hit inflation. What does all of these different types of risk mean for portfolios as you are looking at the investments in as you're looking at the allocations can one specific area that we're looking at what we're talking rates and trade wars is within fixed income, right? Always important. And and I know you guys hit on this point over and over again to know what you're invested in. So in the long run income is the most important driver of total returns for bonds. But those bond prices do move when rates move, and you know, it's important to know how sensitive your holdings to that. So who touched on some of that positive economic data earlier, which kind of leads to environment that's remains pretty supportive of credit risk. So we do always want to know what we're investing in. And know that we're working with teams that are doing that fundamental analysis on the securities that they're investing in. So we really want to know that our managers, I know what's in their portfolios, and they manage the risks accordingly when it comes to trade wars and interest rate Bill, Tracy senior investment analysts from the Financial Engines research is he not just the nicest guy. That we talked to all we end, smarter and smarts a great recipe. Thanks for taking some time here. And this was great. Thanks, guys. Always always going to be here. And remember if you want to.