I suppose that we shall find out if what we learned about tariffs in Econ:101 is true. In the meantime, we lack sufficient data to make unequivocal pronouncements. Nowhere is this more certain than in the current spat over interest rates between the White House and the Fed. I predict that Chairman Powell will only act after more data becomes available. The next release of the Consumer Price Index (CPI) is due May 13. If the numbers are good, Powell may lower rates. Should inflation continue rising, Powell will have justification for standing pat. Ultimately, the market will set interest rates.
While I am very interested in the upcoming numbers, I would like to remind everyone that we are overweighted to short-term government bonds and to international stocks. The first pay well, are relatively liquid, and have less price volatility than stocks and long-term bonds. International stocks, particularly European companies, have been performing quite well recently, although anything can change. Nonetheless, our prudent allocations have served conservative and moderate clients rather well and we are strategically positioned to take advantage of opportunities as they present themselves.
Always call us with any questions or concerns.