With all due respect to the good folks at Merriam-Webster, we at Nottingham feel that it is the US Federal Reserve chair’s definition of the word transitory that carries the most weight these days. Barely a reference to inflation goes by without some Fed official using the term transitory in the next breath. A LOT is riding on the Fed’s definition of the adjective, namely the future length of this bull market, which has benefitted both bond and stock investors. Given the rise in the level of inflation that we’re currently seeing, the Fed of 20 years ago (led by legendary Chair Alan Greenspan) would surely be raising short-term interest rates to counteract the pernicious impact of such a rise in the general price level.
Today’s Fed, however, is sticking by Chair Powell’s infamous utterance of a year ago that the Fed was “not even thinking about thinking about raising rates.” This, despite May’s CPI reading showing a 5.0% rise in year over year (YoY) prices (up from April’s +4.2% YoY surge). Even the Fed’s preferred measure of inflation, the PCE Core Index, rose +3.1% YoY in April. Anecdotal evidence of price increases are everywhere, especially pronounced in recent Q2 earnings commentary from S&P 500 CEO’s & CFO’s. The brief table below highlights some changes from early 2020.
Larry Whistler, CFA
Larry joined Nottingham in 2006 and heads the Investment Policy Committee, along with portfolio and relationship management responsibilities. He brings over 32 years of investment experience to the team. Prior to joining Nottingham in 2006, Larry worked as an independent RIA for two years and, before that, spent a decade as a bond trader for Merrill Lynch Capital Markets in Los Angeles and New York City.
Nottingham Advisors offers both institutional and individual clients experience, sophistication, and professionalism when helping them achieve their goals. With over 40 years of serving Western New York and clients in more than 30 states, Nottingham tailors each solution to fit the specific needs of each client.
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